Question 45: Asalam walkom sheikh Aslam, Is it permissible to teach subjects that involve riba.. Like teaching finance/economics at univeristy or high school level ?? Barakallhu feek.
My other question is-how can charging inflation rate on loans be harm if the money used doesn’t have a fixed value like in the prophet’s time? If I lend you $100 and you pay back that loan in 3 years time and inflation increased by 3% … If you pay me 100 you are technically paying me less than what I gave you. Barakallhu feek
Answer: Brothers ,
First Question Above:
Is it permissible to teach subjects that incolve Riba such as finance/economics at Uni or High school?
With respect to its answer, first and foremost we know that Allah forbade those things whose harm upon us outweighs the good, if any, from it. So it is a life saver for humanity to not further the spread of haraam which in reality is harm. Thus Allah said in the Quran,
ولا تعاونوا على الإثم والعدوان
“And do not collaborate (or mutually help one another) over sin and transgression.”
And Allah said in the Quran as did the Prophet (s a.w) said in hadith that we ought to prevent others from doing objectionable acts
(wa yanhawna anil-munkar). Stopping people by advise etc from doing haraam is a life saver for them and for us.
So knowing this, teaching people subjects that involve Riba will be of various types. If the lecturer / teacher merely educated the people as to what is the definition of Riba, how it is calculated, how it plays its role in banking and fincance, educates students about this WITHOUT ENCOURAGING THEM at all to deal with it, then to that extent it seems to be permissible generally, or at least pardonable in today’s difficult circumstances. Such teaching without encouraging can well be the case with a high school teacher teaching an economics subject to the Year 10s, 11s or 12s for example. It may or may not apply to a University subject lecturer, depending on the subject but the above would be the criterion to decide to teach it or not and a guideline all throughout the teaching sessions, ie to merely educate of what it is but not encourage it at all.
If on the other hand, a subject involves encouraging the student or assisting the client in a business environment to facilitate doing haraam, then finding another job that is more acceptable and pleasing to Allah seems the way to go due to the two verses mentioned above.
Allah knows best.
Detailed answer for more clarification:
This answer can be very long, so I want to be as brief as I can inshallah.
The question is that in our time today, due to monetary inflation, if a person returns a loan same as the amount they borrowed numerous years ago, that same amount money will now be worth less. So shouldn’t we be able to return the value of the money today – which will be a higher amount – instead of the same amount that was borrowed years ago? Why does Islam not allow return of the value today of the original loan and instead demand the same amount be returned even though it has lesser value, ie buying power, today?
Briefly, let us remind ourselves that monetary inflation, the economists say, its underlying cause is an abundance of money available to spend in the market. An example related to our conversation is that one example cause of inflation is due to [See diagram below] ‘rapid expansion of money and credit (ie Riba loans) from banks’ which lead to ‘Rising consumer spending financed by (Riba) loans’ which then leads to the phenomenon of ‘Demand pull inflation risk”. In other words, more and more people have money available (from Riba loans), so they are willing to buy homes and pay more and more for the houses, the house prices rise, then to keep up other goods prices increase too, then wages are increased, theoretically people are able to buy more so other goods prices thus rise too and then wages rise then other goods rise – and hence a cycle of inflation as the consumer price index shows a rise in prices of goods and services.
Where did this start? Answer: As more money came via Riba based loans. Inflation comes as more money is available. The more money was available when loans were being returned with higher amounts. Otherwise, if same amount is returned, then the lenders will NOT loan money except for those who they want to help as charity – which is what loans are meant to be: a charity and NOT a means of raising ones own wealth through Riba exploiting the poor and needy.
Thus in an economy where loans are returned the same amount – and not the value – it forces the spending and prices to remain close to constant, it avoids monetary inflation, it forces the wealthy to seek more wealth through business work/effort exerted risking profit or loss for the work put in, and it prevents exploitation of the needy by the wealthy money lenders who can no longer get an increase via Riba.
This is how Islam prevents the unnatural monetary inflation that we witness today in the world. This sustained inflation across all goods and services is NOT natural. It is a modern phenomenon due to (1) Riba/Interest/Usury and (2) immoral coercion/exploitation of the masses by the powerful. Today’s economy is NOT a ‘free market economy’ rather it is one where Riba and coercion cause unnatural exploitation of the masses by some of the few powerful figures. A true free market economy (devoid of Riba and coercive exploitation) will not have such unnatural conssitent across the board monetary inflation in rise in CPI that we witness today.
Thus we need to keep the loan returns to same amount borrowed to stop this vicious exploitative cycle of across the board monetary inflation.
Important Two Notes:
Important Note One: We saw example of a Demand Pull Inflation above of Riba and hoise prices. Even the other scenario of ‘Cost Push Inflation’ when there is scarcity of resources, increase in demand pushing an increase in prices thus inflation, even in this scarcity scenario, a sustained inflation only remains if there is abundance of money (via artificial means such as Riba), otherwise people look for alternative resources naturally than one that is scarce, thereby forcing down the prices of the scarce items to balance the supply, demand and the prices without a sustained long term inflation nor an across the board rise in Consumer Price Index (CPI). In other words, if you leave the market truly free, then the natural market economy forces and dynamics ensure that there is no sustained long term inflation – this begins by eliminating the false sense and supply of abundance of money which Riba provides. So as mentioned above, remove Riba (and coercive exploitation), and you remove across the board sustained monetary inflation.
Important Note Two:
In today’s world, we cannot stop inflation as an indovidual though tye masses or nations can. Given that we cannot stop then whatndo we do in returning our loans? Ibn Taimiyah and Ibn Qiayim mentioned long time ago about 650 years ago that of a ruler/s wrongly play around with the currency to devalue it or raise it for their own benefit, and then the currency is changed, then people are under thpse circumstances allowed to return the loans according to the present day value of the loan as opposed to the precise amount of loan borrowed long ago. This they said is what the Islamic principle of justice and preventing exploitation dictate which is the very aim of prohibition of Riba, they said. This is an opinion that is very sound and some scholars agreed with it while there remains a difference of opinion. Regardless of the differences, this is for circumstances like our times today where the powerful who rule are making the economy such that there is inflation since inflation benefits the very wealthy few due to increase sales and continual sales wjereas inflation does not benefit the ordinary masses. So in our times, Ibn Timiyah and Ibn Qaiyim opinion seems very worthy of consideration to me, Allah knows best.
Though long, I hope people do read this and follow it as it shows the tremendous wisdom of Islam prohibiting Riba and that what we think is the way a free market forces driven economy must have inflation, Riba, etc, that is is not so. The way Allah made human beings, we can have a free market economy without the pain of Riba/Usury, inflation, etc provided (1) Riba and (2) coercive exploitation was stopped.
And Allah knows best.