a stranger is asking you to risk $100k on his half-baked plan in exchange for nothing, and you say "sure go ahead take my money!"? no. it doesn't work like that in the islamic world.
as a borrower who's not allowed to compensate for your lenders' risk monetarily, your access to loans is severely restricted. Essentially you have to rely on your extended family. and instead of paying for the risk with interest payments, you have to pay with loyalty and subservience.
it restricts social mobility far more than the western model. it incentivizes clan structures. which incentivize cousin marriage.
power concentrates in the patriarchs of a million little family kingdoms. which causes all kinds of economic inefficiencies.
in the US, even if you're born without any family connections, as a healthy 20 year old you can find a job (hard work) that allows you to save $70k per year and invest it. when you're 30 you have $1M and a good credit history, you can easily leverage that to get a $2M loan at low interest rates, which allows you to start any kind of productive venture you want.
and you can do all this without owing your clan's patriarch access to e.g. your most profitable clients, or your daughters hand in marriage to his retarded son, or anything else he wants in exchange for his generosity.
All interest is usury in Islamic Law (and the laws before it such as Christianity and Judaism). There are ways to to put free cash into productive use without exploitation.
That's not true. Islamic finance forbids indefinitely growing interest. Sharia finance agreements involve fixed fees or equity shares. Late penalties can be collected but must be donated, not profit. In all cases, the borrower never owes to the lender for the lender to keep more an a fixed amount determined at the strat.
Shares and Goodwill. You loan money for good well or share of an enterprise which comes with benefits and risks.
Usury is so delicious to many that it’s unfathomable to consider any other incentive comparing to it
What is unfathomable is how you have a functioning economy without easy access to loans at reasonable interest rates.
Try reading Graeber/Wengrow
The same way Stock Market works. Really, Debt benefits a tiny fraction of people involved in the market.
Isn't it just the same thing? You loan the company money and in return they give you a note that says you get a portion of the company and dividends?
Different mechanics, but stripping everything away, roughly the same.
So equity instead of debt.
a stranger is asking you to risk $100k on his half-baked plan in exchange for nothing, and you say "sure go ahead take my money!"? no. it doesn't work like that in the islamic world.
as a borrower who's not allowed to compensate for your lenders' risk monetarily, your access to loans is severely restricted. Essentially you have to rely on your extended family. and instead of paying for the risk with interest payments, you have to pay with loyalty and subservience.
it restricts social mobility far more than the western model. it incentivizes clan structures. which incentivize cousin marriage.
power concentrates in the patriarchs of a million little family kingdoms. which causes all kinds of economic inefficiencies.
in the US, even if you're born without any family connections, as a healthy 20 year old you can find a job (hard work) that allows you to save $70k per year and invest it. when you're 30 you have $1M and a good credit history, you can easily leverage that to get a $2M loan at low interest rates, which allows you to start any kind of productive venture you want.
and you can do all this without owing your clan's patriarch access to e.g. your most profitable clients, or your daughters hand in marriage to his retarded son, or anything else he wants in exchange for his generosity.
Loaning money as per Islamic Law is a charitable act, not one of exploitation.
Nice to get a callback to previously acquired knowledge with what I assume is an arabizi (sp?) handle.
Islamic trade is certainly one of the best models out there but I think in many cases in practice it is still applied subversively.
It is not enough to ban mechanisms like usury, designed and intended to exploit.
One has to go after the very subversion of legitimate practices for illegitimate goals.
reasonable interest rates aren't exploitation. Business Loans serve a critical role in economic activity by putting free cash to more productive use.
All interest is usury in Islamic Law (and the laws before it such as Christianity and Judaism). There are ways to to put free cash into productive use without exploitation.
That's not true. Islamic finance forbids indefinitely growing interest. Sharia finance agreements involve fixed fees or equity shares. Late penalties can be collected but must be donated, not profit. In all cases, the borrower never owes to the lender for the lender to keep more an a fixed amount determined at the strat.