Usury in Christian and Islamic Economic Thought

- By : Camille Paldi

Christian and Islamic Economic Thought

By: Camille Paldi

Abstract

This paper highlights the key features of the Christian and Islamic Economic systems and encourages Christians and Muslims to work together to develop not only a system of Christian Economics, but also a pan-Abrahamic system of economics called Holy Book Finance. The paper outlines various methods of inter-faith collaboration to make this vision a reality. 

Introduction

It is an interesting exercise to examine Christian and Islamic Economic thought as Christianity as a religion did not develop an extensive doctrine of Christian Economics as Islam (and Judaism) has done. An all dictating law such as the Shari’ah in Islam, which guides every aspect of the Muslim’s life including economic life, is absent in Christianity. In fact, Christianity is critical of legalism, which can be found in Judaism and Islam. What we have in Christianity is more of a certain set of spiritual principles, which can be extracted from the Bible and interpreted with an economic twist and applied to material life. However, I must point out that this is an opportune time for Christians to develop a set of Christian economics based on Biblical principles and to study and learn Islamic Economics as a strong example of how this course might be pursued and developed. This paper highlights both Christian and Islamic economic thought and wraps up with a few recommendations for the development of Christian Economics and also Holy Book Finance in light of the framework for Islamic economics, which already exists.

Christian Economic Thought

            The Bible lacks a comprehensive teaching on economics. Andre Habisch points out that “The silence of the biblical scriptures in this regard (economics) marks a clear difference to the Holy Scriptures of the other monotheist religions Judaism and Islam, which both contain explicit wisdom thought about different aspects of day-to-day life including Economic practices.” (Habisch 2023: 47) Habisch states, “There are multiple reasons for the striking fact. The most important factor is the eschatological horizon of the Jesus movement itself, which dominates the New Testament writings. As exegetical research has elaborated, the historical Jesus of Nazareth movement expected the end of history for the immediate future.” (Habisch 2023: 47) Habisch says, “Jesus himself refrained from reflections or exhortations on ‘good’ economic practices.” This is completely opposite from the Prophet Muhammad (PBUH) in Islam, whom professed economic advice on a regular basis. (Habisch 2023:  47) However, according to Beed and Beed, the bible is not completely devoid of economic principles.  Beed and Beed state that, “The Bible emphasizes ‘stewardship, useful work, protection for the disadvantaged and the preservation of institutions such as marriage and family life’ (Hay 1989: 140) as of primary importance to economic life.” (Beed and Beed 2006: 101) Similar features can be found in Islam. Beed and Beed also point out that “Christianity is a supernatural belief system in which people are called to practice certain behavior toward the unseen entity of God (including Jesus Christ) who responds to them. God as the creator and owner of the earth’s resources, maintaining continual and explicit recognition of this belief, praying to God and waiting on His responses, seeking God’s guidance, acknowledging Jesus as God’s Son, accepting Jesus as the way to God, and loving and obeying God and Christ. These normative principles of spiritual behavior are intended to guide people in their material life.” (Beed and Beed 2006: 102) Through extraction of spiritual principles of the Bible, one can find guidance in the material world. God is seen as the Creator of all things including natural resources and people must utilize resources for the benefit of God’s will and protect family through various institutions such as marriage, which can be seen as a divine and economic institution.

Christian economic thought is based around several Biblical principles including but not limited to ‘Love thy Neighbor,’ service to God, and people as being made in the image of God or imago dei.  The concept of neighbor includes the widow, the wayfarer, the orphan, the needy, the poor, and the people in general. According to Meeks, “Neighbor love is the chief identifier of human participation in the economy of God and is the actual experience of salvation.” (Meeks 2014: 8) Meeks points out that, “God’s love is immediately connected with the needs of the neighbor. The neighbor may be the one in closest proximity, but according to the Gospel Jesus proclaims, the love of neighbor is nothing less than the love of all human beings. Love of God and love of neighbor are inseparable.” (Meeks 2014: 8) Therefore, by loving thy neighbor, one is in essence worshipping God. “The Christian conception is that people should love God with all their hearts and minds and their neighbors as themselves.” (Beed and Beed 2006: 107) According to Beed and Beed, “…believers are called to have their dealings with people influenced as much by altruism as by self-interest, to ‘love your neighbor as yourself (Mt. 22:39)” (Beed and Beed 2006: 102) As much as one would take care of oneself, one should also care for one’s neighbor.

Furthermore, service to God is central in Christianity and may at times have economic motivation as well as produce economic outcomes. Meeks vociferates, “Economy in the Christian Scriptures, however, entails more than physical means of life. It also includes questions of the relations of those within the household and those without, relations that serve God’s purposes for life in the whole of creation.” (Meeks 2014: 3) Beed and Beed elaborate, “For God wants people to act in communion with Him – to follow certain spiritual principles – and He wants people to be at least as altruistic as they are selfish in all situations, in short, to serve God in all situations.” (Beed and Beed 2006: 107) Hence, there is a connection between the spiritual and material, and between serving God and economic outcomes, which must be preserved in Christian economics.

According to Wikipedia, “The history of the Christian interpretation of the image of God has included three common lines of understanding: a substantive view locates the image of God in shared characteristics between God and humanity such as rationality or morality; a relational understanding argues that the image is found in human relationships with God and each other; and a functional view interprets the image of God as a role or function whereby humans act on God’s behalf and serve to represent God in the created order.” (Wikipedia 2024) For the purpose of Christian economics, this paper emphasizes the functional and relational definition of the Image of God. “The functional view interprets the image of God as a role in the created order, where humankind is a king or ruler over creation/the earth.” (Wikipedia 2024) Meeks also explores the Christian economy and imago dei or the image of God. Meeks emphasizes, “The biblical view, moreover, is that we are not only creatures sharing finitude in solidarity with all other creatures and a bent toward greed, but that we are also created in the ‘image of God’ and endowed by God with whatever is required for us to be representatives of God’s will to the rest of creation (Gen. 1:26-31).” (Meeks 2014: 5) This reminds me of the concept of khalifah in Islam, where in which mankind is on earth to serve God’s will and which also has social, financial, and economic responsibilities and outcomes. Meeks purports that, “Being human is an economic commission to join God the Creator in doing the righteousness by which the world may live.” (Meeks 2014: 5) Meeks points out that, “What separates being human beings from the rest of creation is that they are called to be God’s stewards in representing and obeying God’s will for the creation.” (Meeks 2014: 5) Again, man as steward of God’s resources and man as viceregent of God on earth are important and omnipresent concepts in Christianity (and Islam). Stewardship is emphasized again over God’s resources for all those made in God’s image, which is ALL of humanity. According to Beed and Beed, whom take a more relational approach to the image of God, “God, the trinitarian, omnipotent creator, and sustainer of the universe, is spirit who seeks a personal relationship with each human being, who, in some way, is made in the image of God.” (Beed and Beed 2006: 97). “The relational view argues that one must be in a relationship with God in order to possess the ‘image’ of God. Those who hold to the relational image agree that humankind possess the ability to reason as a substantive trait, but they argue that it is in a relationship with God that the true image is made evident.” (Wikipedia 2024) Thus, one can fulfill one’s role in the Christian economy through one’s relationship with God and each other.  

            Usury in the Bible is depicted as a tool of the wealthy to usurp the land and wealth of the people, which may lead to imminent slavery. Meeks himself says, “The central biblical problem with interest is that it leads to debt and debt leads to poverty and poverty leads to slavery.” (Meeks 2014: 17) Meeks states, “Through the inability to pay interest the borrower in debt over contracts an involuntary servitude for life.” (Meeks 2014: 17) People then might become debt-slaves or physical slaves to the landowner or to the money-lending class. Usury is not only frowned upon in the Bible, but there is also in the bible an emphasis on forgiving debts. (Matt. 6:25; Matt. 18:23-25) (Meeks 2014: 18) Usury wasn’t always condoned by the Church and accepted in Western society as a vein of capitalism as it is in modern times. Historically speaking, Harper and Smirl state that, “By the year A.D. 800, the Capitularies of Charlemagne banned even the lay people from taking interest and by A.D. 1100 convicted usurers were excommunicated from the Church. Usury was declared a form of robbery, a sin against the Seventh Commandment, which required restitution as well as excommunication (Frierson 1969:120)” (Harper and Smirl 2014: 566) Harper and Smirl elaborate, “Thus, by the twelfth century, attitudes toward usury had evolved from denunciation of taking interest on loans to the poor, through prohibition of interest on loans to all fellow Jews, of universal prohibition enforced by strict penalties.” (Harper and Smirl 2014: 566) Harper and Smirl add, “The anti-usury movement continued to gain momentum during the Early Middle Ages and reached its peak perhaps in 1311, when Pope Clement V placed an absolute ban on usury and declared all secular legislation in its favor null and void in the eyes of the Church. (Birnie 1958, cited in Visser and MacIntosh 1998)” (Harper and Smirl, 2014: 566) This amounted to a total ban on usury by the Church. However, Harper and Smirl say this changed, when “From 1400 a pro-usury movement developed as Europe entered the High Middle Ages, trade increased and commercial enterprises grew in both number and size. Europe needed interest-bearing loans for commercial purposes and the Church reconsidered its position. (Frierson 1969)” (Harper and Smirl 2014: 566).  Thus, usury moved from being banned by the Church to allowed for commercial purposes from the High Middle Ages onwards to stimulate economic growth and expansion in a Capitalist system, mainly in Europe.  

Islamic Economic Thought

Islamic economics has as its’ base the Qu’ran, Sunnah, Hadith, and the Shari’ah, which guides every aspect of a Muslim’s life including the commercial or economic aspect. The central concept of Islamic economics is the ban on usury.  Surrounding this concept include the concepts of profit and loss sharing, risk sharing, productive trade, charity, and caring for the needy, the poor, the widow, the wayfarer, and the orphan. According to Rodney Wilson, “Islam is not against making money, and there is no inherent conflict between the material and spiritual. However, what is important is how money is made.” (Wilson 1997: 312) In fact, the Qu’ran encourages people to spread across the earth and earn one’s bounty. Chapter 62:10 of the Qu’ran states, “Once prayer is over, disperse throughout the land and seek the bounty of Allah…” (Qu’ran, 62:10) However, there are certain modes of finance, which should be used such as Musharakah (joint-venture), Mudarabah (managed joint-venture), Murabahah (cost-plus financing), Ijarah (leasing), Tawarruq (Instrument to gain cash without interest-bearin loan), Sukuk (Islamic bond) and Takaful (Islamic insurance). Usmani states, “Man has the ‘right to property’ over the things he exploits, but this right is not absolute or arbitrary or boundless, it carries along with it certain limitations and restrictions, which have been imposed by the real owner of the ‘wealth.’ We must spend it where He has commanded it to be spent, and refrain from spending where He has forbidden.” (Usmani 2002: 16) Emphasis is placed on what is allowed and what is forbidden in economic life. Furthermore, man is a viceregent of God or Khalifah on earth here only to fulfill God’s purpose on earth and prepare for the afterlife. “…individuals are perceived to be the viceregent of God on the Earth, namely khalifah, and expected to fulfill their duties within the social, economic, financial, and other realms and to make their decisions through a moral filter. In other words, since individuals are considered to be the representatives of God on Earth, they are expected to fulfill such roles and responsibilities.” (Asutay 2012: 96)

One of the components of Islamic economics is profit and loss sharing. One should share in the profit and loss of a business venture and not depend on an interest-bearing loan, where with a fixed rate of return, the creditor may receive an unjust amount and the debtor may bear the risk of loss.  In the Islamic system, Usmani points out, “Every person who contributes capital (in the form of money) to a commercial enterprise assumes the risk of loss, therefore is entitled to a proportionate share in the actual profit. In this manner, ‘capital’ has an intrinsic element of ‘entrepreneurship’, so far as the risk of the business is concerned.  Therefore, instead of a fixed return as interest, it derives profit. The more the profit of the business, the higher the return on capital. In this way the profits generated by the commercial activities in the society are equitably distributed to all those persons who have contributed capital to the enterprise, however, little it may be.” (Usmani 2022: 22) Every person should therefore be a business owner and entrepreneur in the Islamic economic system.

Risk sharing is key to Islamic economics. Habib Ahmed states, “Two key principles governing Islamic financial transactions link return to risks.” (Ahmed 2011: 41) Ahmed states, “The first is the legal maxim of ‘the detriment is as a return for the benefit (al-ghurm bi al-ghunm) (Majallah 2001, Article 87) This maxim links ‘entitlement to gain’ to the ‘responsibility of loss (Kahf and Khan 1988: 30) It is usually used to propose the preference for profit-loss sharing instruments.” (Ahmed 2011:41) Ahmed elaborates, “The second principle arises from the Prophetic saying al-kharaj bi al-daman, which developed into a legal maxim ‘the benefit of a thing is a return for the liability for loss from that thing’ (Majallah 2001, Article 85) The Prophetic saying means that the Party enjoying the full benefit of an asset or object should bear the risks of ownership (Vogel and Hayes 1998). In other words, returns of an asset should be associated with the risks of its possession.” (Ahmed 2011: 41)

Islamic finance is also based on real assets as opposed to debt or interest financing. This in turn makes the economy more stable and reduces inflation. According to Taqi Usmani, “every financing in an Islamic system creates real assets.” (Usmani 2022, 21) “It is known, on the other hand, that interest-based financing does not necessarily create real assets, therefore, the supply of money through the loans advanced by financial institutions do not normally match with the real goods and services produced in the society, because the loans create artificial money through which the amount of money supply is increased, and sometimes multiplied without creating real assets in the same quantity. This gap between the supply of money and production of real assets creates or fuels inflation. Since financing in an Islamic system is backed by assets, it is always matched with corresponding goods and services.” (Usmani 2022: 22) What is also useful and prized in the Islamic economy is to have money in the form of gold and silver or fiat money backed by gold and silver.

Ahmed also explains the prohibition of the sale of debt in Islamic economics. Ahmed says, “An implication of riba is the prohibition of the sale of debt.” (Ahmed 2011: 33) Ahmed says, “As monetary debt takes the form of receivables, sale of debt at a discount would involve exchange of unequal amounts of money. An extension of the ruling on sale of debt relates to sale of debt for debt. Sale of debt for debt can take various forms and the majority of scholars prohibit these sales (Obaidullah 1999).” (Ahmed 2011:33) Ahmed purports, “As both counter-values of contemporary derivatives (Forwards, futures, swaps, etc.) are postponed in the future, they would fall under the sale of debt for debt, and as such, are not allowed.” (Ahmed 2011: 33) Again, in Islamic economics, the focus is on what is allowed and what is forbidden.

Recommendations for Christian Economics

            After examining the principles of Christian and Islamic economic thought, it is clear that there are many similarities including on the concepts of usury, loving thy ‘neighbor’, stewardship of God’s resources and egalitarian distribution of God’s resources, caring for the needy and assisting the poor, challenging oppression, and more. Therefore, I recommend to the Christian community to collaborate closely with their Muslim brothers and sisters on these points and on the concepts of profit and loss sharing and risk -sharing to formulate a distinctly unique Christian economic system, building on the foundations of Biblical principles and drawing from Islamic economics and finance. This might be in the form of mentorship, conferences, retreats, webinars, certificate programs, inter-faith gatherings of all sorts etc. Furthermore, Chia suggests scriptural reasoning and comparative theology, which might be useful in the context of collaboration between Christian and Islamic economics. “Scriptural reasoning is an exercise in interfaith dialogue, where, methodologically, its focus is solely on the scriptural texts of the respective dialogue partners…the actual engagement in the practice of reading and studying religious texts together in an interfaith setting is essential for scriptural reasoning.” (Chia 2018: 193) The topic of the scriptural reasoning session could be the collaboration between Christian and Islamic Economics.  Then, during the session, members of both faiths would reflect and share with one another “their understandings of what is taught by their respective scriptures as well as the scriptures of their fellow participants…Each scriptural reasoner reads, interprets, and questions what the different religious texts are saying and are open to listening and learning from how other participants understand and explain them.” (Chia 2018: 193) Another inter-faith tool, which might be utilized by Christians and Muslims in this economic dialogue might include Comparative Theology. Chia explains that Francis Clooney said that Comparative Theology, “marks acts of faith seeking understanding, which are rooted in a particular faith tradition, but which, from that foundation, venture into learning from one or more other faith traditions. This learning is sought for the sake of fresh theological insights that are indebted to the newly encountered tradition/s as well as the home tradition.” (Chia 2018: 199) Participants delve into other theologies, while keeping a firm grasp on their own religion. Chia says, “The theologians remain committed to the faith perspective of their home tradition.” (Chia 2018: 199) Chia states, “Comparative Theology is premised on the belief that God’s revelation to the Christian can also be found outside the church and can be discerned by exploring the faith of our religious neighbors.” (Chia 2018: 200) In fact, according to comparative theology, we must examine the religions of others as all religions seek similar answers and all the answers cannot be found within our own religion. Chia emphasizes, “…then comparative theologians believe that their intellectual search for God in faith cannot be rationally limited to the boundaries of their traditions alone. This is because the quest for who or what God is or how God relates to the world and the many other questions of ultimate concern is not the purview of Christians alone.” (Chia 2018: 200) Chia emphasizes, “All other religious traditions engage in the same search, and it is this that inspires comparative theologians to reach out in order to learn from them.” (Chia 2018: 200)

 I think it is an opportune time and moment in history for such inter-faith economic collaboration and one might not only think of building a distinct Christian and Islamic finance, but also a combined system of Holy Book Finance, which would include Christian, Muslim, and Jewish economic thought. Especially in these times of war and financial crises, unity is more important than ever.

Conclusion

            The new ecumenical agenda of the Christian faith includes inter-religious dialogue and I can think of no better topic than Christian and Islamic economics. As mentioned above, through inter-faith collaboration, Christians and Muslims can move towards a better understanding of each other and of the economic principles in each other’s sacred texts and laws. This movement can also include the Jewish faith as Jewish texts and laws do contain quite a bit of information regarding economics and economic practices.

            Again, concepts such as usury, profit and loss sharing, risk-sharing, stewardship, loving thy neighbor, service to God, being made in God’s image, and acting as God’s representative here on earth may strike resonance across all of the Abrahamic faiths and more. These similarities can constitute the building blocks to a pan-Abrahamic movement to develop faith-based economics and even Holy Book Finance.

            The time is now to extend one’s hand to members of other faiths in a sincere and concerted effort to find similarities in economic principles and practices, which can be used to develop one’s own faith-based economic system and a pan-Abrahamic system in itself. God never intended His messages, which were brought down through a chain of different messengers at different times in history in different places and in different languages to divide the believing people. Now is the time to promote unity through economics.

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