Drawing from 'The Problem with Interest' by Tarek El Diwany and Larry Hannigan’s provocative essay 'I Want the Earth Plus 5%", here’s a clear, definitive explanation of why interest (riba/usury) is not only economically destructive but also ethically and spiritually haram in Islam.
đź’Ł Why Interest (Riba) Is Bad and Haram
1. Divine Prohibition and Moral Clarity
- In Islam, riba is explicitly forbidden in the Qur’an—not once, but repeatedly and emphatically. Allah declares war on those who persist in dealing with interest after receiving guidance (Surah Al-Baqarah 2:278–279).
- Riba is not just a financial misstep—it’s a moral transgression. It exploits need, commodifies time, and turns money into a tool of oppression rather than exchange.
> Tarek El Diwany writes: “Riba is not merely a technical flaw in the financial system. It is a moral wrong that distorts human relationships and undermines justice.”
2. Unjust Enrichment Without Risk or Effort
- Interest allows lenders to profit without participating in the risk or productivity of the borrower’s venture. This violates the Islamic principle of risk-sharing and just exchange.
- In contrast, Islamic finance promotes profit-and-loss sharing (e.g., mudarabah, musharakah), where gains and losses are mutual and ethical.
> Hannigan’s metaphor—“I want the Earth plus 5%”—exposes the absurdity: if every dollar must be repaid with more, eventually all wealth concentrates in the hands of lenders. It’s a mathematical trap.
3. Perpetual Debt and Economic Slavery
- Interest-based systems create cycles of debt that are mathematically impossible to escape. Since interest is demanded on money that doesn’t yet exist, borrowers must compete endlessly for new loans just to stay afloat.
- This leads to bankruptcies, foreclosures, and social instability—not because of lack of productivity, but because of artificial scarcity created by interest.
> El Diwany shows how central banking and fractional reserve lending amplify this injustice, creating inflation and systemic instability.
4. Mathematical Impossibility of Universal Repayment
- Hannigan’s essay brilliantly illustrates that if all money is created as debt with interest, there is never enough money in circulation to repay all debts. Someone must default.
- This isn’t just unfair—it’s engineered failure. The system demands winners and losers, not based on merit, but on timing and access.
5. Distortion of Human Values and Priorities
- Interest incentivises hoarding, speculation, and short-termism (high time preference). It penalises patience, generosity, and community-based economics.
- In El Diwany’s analysis, interest corrupts the pricing of time, turning it into a commodity rather than a divine trust.
> “The lender is paid for the passage of time, but time belongs to God,” El Diwany reminds us.
6. Global Injustice and Neo-Colonialism
- On a macro level, interest traps entire nations in debt dependency. Developing countries pay billions in interest to wealthy nations and institutions, often more than they spend on health or education.
- This is modern-day economic colonialism—masked as aid, enforced through IMF and World Bank policies.
The Islamic Alternative: Justice, Risk-Sharing, and Real Economy
Islamic finance isn’t anti-profit—it’s anti-exploitation. It promotes:
- Trade over lending
- Partnership over parasitism
- Real assets over speculative bubbles
Riba is haram not because Islam is anti-modern, but because it is pro-human. It protects dignity, promotes fairness, and aligns economics with ethics.
