The concept of borrowing and lending in Islam is simple. You pay back the exact amount you borrow. The lender should not expect a return. Interest is exploitative and unfair because it guarantees the lender a profit without having to do the work or bear any of the risk.
The problem is people are already accustomed to the practice that they should be rewarded for waiting (i.e. interest) but that is not the true fundamental for borrowing and lending. It is to assist those in need by mobilising funds from those who are in possession of excess funds which they do not need to use at that specific moment.
It is a relationship based on social betterment.
However, it's funny how there are innumerable psychological variables and elements in Economics yet altruism is always dismissed. This is what differs from Islam. Instead of "husnuzon" or thinking the best in others, they'd rather subscribe to assuming the worst in people.
This is evidenced by how "Wealth of Nations" got a more prominent recognition, when "Theory of Moral Sentiments" was really more descriptive/accurate in explaining the economic mechanisms of society.
-Of borrowing and lending, ainulryakova, 15th November 2011
The problem is people are already accustomed to the practice that they should be rewarded for waiting (i.e. interest) but that is not the true fundamental for borrowing and lending. It is to assist those in need by mobilising funds from those who are in possession of excess funds which they do not need to use at that specific moment.
It is a relationship based on social betterment.
However, it's funny how there are innumerable psychological variables and elements in Economics yet altruism is always dismissed. This is what differs from Islam. Instead of "husnuzon" or thinking the best in others, they'd rather subscribe to assuming the worst in people.
This is evidenced by how "Wealth of Nations" got a more prominent recognition, when "Theory of Moral Sentiments" was really more descriptive/accurate in explaining the economic mechanisms of society.
-Of borrowing and lending, ainulryakova, 15th November 2011
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