‘Umar Vadillo - The End of Economics: An Islamic critique of Economics

The End of Economics

An Islamic critique of Economics

by

Umar Vadillo

MADINAH PRESS

MURABITUN

Murabitun World Movement

GRANADA

To my Master

Shaykh Abdalqadir Al-Murabit, with gratitude and love.

In the Name of Allah,

The Merciful, The Compassionate.

PREFACE

The European Muslims

At the hand of a great Teacher, Shaykh Abdalqadir Al-Murabit, the founder of the first community of European Muslims since the expulsion of the Muslims from the Iberian peninsula, we, a new generation of Europeans with a desire to see further than the obscure perspectives offered us by the decadent Christianity and the devastating atheism of our time, have encountered in the Islam of the first Muslim community of Madina a source of inspiration and guidance which enables us to face the realities of today. In the figure of Goethe, the European and Muslim, we have a precursor and model of the new European who opposed the events of the newly born French Revolution and who saw beneath the sheep's clothing to the perverse spirit of those who inspired and engendered this revolution. Goethe saw that beneath the slogan of "equality, liberty and fraternity" lay hidden the legitimization of usury, the putting into circulation of worthless paper-money. After two centuries of usury and statism which resulted in the demise of Christian Europe, the Muslims now propose to re-establish a Europe both free and authentic by means of a new light, the light of Islam.

INTRODUCTION

The Question of Usury

The position of Islam is very clear. Usury has been prohibited by Allah. This prohibition was transmitted by Allah to the Prophet Moses, may Peace be upon him, and then also to the Prophet Jesus, may peace be upon him, and to the Prophet Muhammad, may peace and blessings be upon him. The phenomenon of usury is well known, having been condemned by men such as Plato (The Laws, c 742) who considered it inimical to the well-being of society since it set up a class of rich, usurious creditors against a class of poor debtors; as Aristotle (Politics, 1258 b 1, 2-8); Aristophanes (the Clouds, 1283 ff); and Plutarch ("Morality" On money lending, 829); as for the Romans there were men such as Seneca ("De Beneficiis", VII,X7) or Cicero ("De Oficiis", II, XXV, Concerning Cato) who compared usury to assassination, even though Roman Law (after several unsuccessful attempts to prohibit it) tolerated it within certain limits. As for the early Fathers of the Christian Church, there were men such as Gregorius Nysennas (P.G. 46,434), Juan Chrisostomos (PG 53,376:57, 61 bis), Augustinus (PL 33,664), Thomas Aquinas ("Summa" II-II, question lxxvii, "De Malo" question xiii, 1.2a.14) who compared the usurer to someone who was trying to sell the wine itself and the use of the wine as two separate transactions; or Duns Scotus (in IV Sentent", d.15, question 2,nn 17-20 and 26); likewise the majority of the Christian Popes and Councils held up to 1830 - the year when they began to legalize small amounts of interest on loans - see for example Pope Benedicto XVI (Encyclical of the Italian bishops of 1745). Likewise the Christian kings such as Alfonso the Wise (Partidas 1, Ttulo XIII, Law IX), or Alfonso XI (Ordenamiento de Alcal, Ttulo XXIII); likewise all the Muslim Caliphs for as long as they ruled; likewise modern authors such as Goethe ("Faust" part I, act I, scene 2) who ridiculed the newly-created paper-money, or Wagner who risked his life in combatting usury and the state (See his lecture delivered in the revolutionary city of Dresden on 14th June 1848 in Houston Stewart Chamberlain's book "Richard Wagner"), or J.P. Proudhon who considered usury the first reason for the paralysis of commercial and industrial activities (What is Property? 1841), or Ezra Pound who in attacking usury saw himself accused of being a traitor in his own country ("Cantos", XLV, XVI). The enormous and disgraceful historical (and current) exception to this rule is that of the Jews who persisted in the perverse Talmudic interpretation of the mosaic laws, which permitted them to lend with usury to non-Jews as a means of gaining power - a historical fact perfectly demonstrated by Werner Sombart in his book "The Jews and Economic Life".

The transition from the prohibition to the legitimisation of usury did not happen overnight, but rather it happened in conjunction with the distorting of man's world view. If we go back to Aristotle we can see just how cutting his condemnation of usury was - he considered that, with respect to exchange of goods, the value of the things should be identical and that one had to accept that value could not be left to man alone (since when this happens, things which are very important often assume little worth, like water, while things of little importance like diamonds, assume great worth), that is to say, the value of a commodity should be the same as the mean market value of that commodity and that it is not a subjective reflection but rather a vital act relating to experience and connected to all things and all persons involved in the domain of the market. This same opinion was brought to the west by the Muslims, among whom was the Qadi Abu Bakr, one of the most famous jurists of Andalusia who maintained that "Usury is any unjustified increase between the value of the goods received and the price of the goods handed over in return". Unjustified increase is that which is due to some change in the free-market, like for example: the existence of monopoly or monopsony, the enforced laying down of minimum or maximum prices or the enforced use of one particular commodity as money; or which is due to a change in the equity of the contract of exchange, for example: the imbalance which occurs when money or other commodities meant for consumption and not for rent are rented, the uncertainty in the contract, lotteries or gambling, etc.

During the period of European scholasticism this same vision of value held good - as is proved by Thomas Aquinas who demanded that there be equality between the value of the goods transacted, and who distinguished between merchandise which may be hired or rented and merchandise which may not (like money for example). The practice of usury which had destroyed Rome (see "The Greatness and Decay of Rome" by Ferrero), had never ceased, but Christian prohibitions prevented the phenomenon from developing and in effect it became the exclusive domain of the Jews. From the 11th to the 15th century, Venice, with its disproportionate number of Jews, developed into the most important centre of usury in Europe.

It was here that the first banking institutions based on deposit and credit were established - which became the models for the future European bankers. The Christian reformers, both Luther and Zwingli, condemned usury, but the reformer Jean Calvin was the first to raise his voice in favour of usury; one century later his disciple Claude Saumairc, in his book "Concering Usury" (1638) argued that the taking of interest was necessary to achieve salvation.

It was during this age that man's theocentric world of being was transformed into the Pauline humanism which was to affect all things. The humanistic influence meant that value was no longer identified with the market price of the transaction but rather translated into an idealized figure within the typical rationalist framework of the subject/object. As long as the canonical law held sway usury was forbidden - even though it was permitted up to 5% from at least the 16th century in Germany. The great change came with the French Revolution with two crucial, though rarely mentioned events, in the same year as the revolution in the name of Liberty, namely, the official circulation for the first time in Europe of paper-money, state promissory notes (fr: `Assignats') and the abrogation of the prohibition of interest on loans for the first time in France in the decree of the 2nd and 3rd of October, 1789.