if Riba is not usury, what Riba can be ?
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Well, excess is excess, economically or uneconomically. A excess is something too much. The rent thing is nonsense, excess can be committed in rental as in any other thing in this world and if you want to keep it out of economics, well it is up to you, but certainly exccesses are susceptible to be committed in eocnomics and very very much. Going by your rental thing, it is al right to rent something but it is not the same to rent a small apartment to three people and charge what is fair for it and renting it to fourteen people and charge each of them as if your rented the apartment to only three people.
I think I made clear the excess when I said this
"Obtain gains in excess of the value given in exchange would be it?"
It is not the fact of renting, it is the excessess committed when doing it, in renting or in anything. The point is the excess, not any particular dealing, but the excess in any dealing at all.
As to the roots, yes we know, similar letters in a root many times give near meanings of them, but it is not the same. They are not exchangeable.
Salaam
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I think I made clear the excess when I said this
"Obtain gains in excess of the value given in exchange would be it?"
Salamun Alaikum.
While I am fully supportive of understanding RIBA as an "(unfair) excess", I would suggest some refinement of the specification of what this excess is about. Since the word "value" has several different meanings in the economic literature saying RIBA is anything excess the value could be a bit misleading (I'll explain shortly) - rather we should say it is the excess over the "fair price". One may ask what is a "fair price" then? My answer would be fair price is the price at which two parties would exchange a good or service with "Mutual consent and satisfaction". This "mutual consent and satisfaction" has an Arabic term for it - tar (ض. We see use of this term in Qur'an in a couple of places including the below
429 O! Those who have believed ? do not consume your wealth among yourselves with deceit except that there happens to be a trade on mutual consent and satisfaction and do not kill your souls. Indeed Allah happens to be Kind to you.
(My personal translation, Cross checking recommended.)
Going back to the question of value - yes, if we understand the "value" of a good to be synonymous to be "Fair price" as above then of course the understanding is correct. But in economic literature value is often used with the meaning of utility. the same good can have different value to different person. For example, Mr. A has 2 shirts. to him the value of his first shirt is $12, and second shirt is $8 (according to law of diminishing marginal utility). Mr. B doesn't have any shirt - to him the value of a first shirt is $10. In this situation there is a potential trade between A and B. A can sale his second shirt to B at any price between $8 and $10 depending on their negotiation and market data. Say, they mutually agree to a price of $8.75 then A would be selling the shirt above $0.75 of its value to him and B would be buying it $1.25 below its value to him. Both of them are gaining from the transaction and hence there is a valid trade (BAI-A) between them with mutual consent and satisfaction. So, there is no unfair excess (RIBA).
But let?s assume the second shirt is torn in one corner which A knows but he hides it. If B knew this fact the "mutually agreed with satisfaction" price or fair price of the shirts would have been $5. If A intentionally hides the fact to sell the shirt at $8.75 then he is taking $3.75 excess over the fair price. This excess, in my opinion, is RIBA.
2278 O! Those who have believed - be conscious of Allah, and leave what remained of RIBA if you happen to be believers!
2279 Then if you don?t - so be called for a war from Allah and His messenger; but if you repent then the capital is for you. Do not wrong and you will not be wronged.
(My personal translation, Cross checking recommended. Emphasis added.)
If A realizes his offence later he must return the RIBA amount (i.e. $3.75) to B, but he can keep the capital amount (raas-al-maal) of $5.00. If he does not wrong - he will not be wronged.
Please note that the term capital amount (raas-al-maal) has led many to believe RIBA is only some form of interest. But as the example above shows there can be a capital amount in any type of transaction - it does not necessarily has to be a loan.
Let's apply this understanding of "Excess over fair price" to a number of cases
- Mr. A is lending to a Mr. B in financial difficulty at a very nominal interest rate. He knows B has no choice but to accept his offer as he is starving. He also knows with the borrowed money B will buy food for him and his family and will have no money to repay the loan. A's target is to capture the man's piece of land which he takes as mortgage.
In the above situation the interest is an unfair excess because had Mr. B not been under any financial difficulty he would not have borrowed the money with interest. So he is not taking the loan with mutual satisfaction, rather he is taking the loan under compulsion. In this situation any interest charged to the man would be RIBA. The best action for A is to help the man with SADAKAH, or even if he lends at least wait till the financial condition of the man normalizes before he charges any interest - so that the man has the option of paying it back.
2280 And if it happens to be one in difficulty then postponement until ease. But that you (perform) charity, it is better for you ? if you happen to know.
(My personal translation, Cross checking recommended.)
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A lends a poor man at market-determined fair interest rate to buy a goat so that the man can sell the milk of the goat to repay his loan and then keep the goat for him. The mortgage of the loan is the goat itself. In case of a default A would have no claim other than over the goat.
In this situation the poor man is under no compulsion to accept the trade. It is purely his choice whether he would accept the offer or not. So if they agree with mutual consent and satisfaction on a given interest rate - it would not be RIBA. But they should have the transaction documented and take adequate witness per Al Qur'an 2282. -
Creating a monopoly by restricting competition to overcharge the customers involves RIBA because the monopolist is charging prices above the ?Fair Market Price? which would have prevailed if he did not hinder competition. The buyers are not buying from him at high price with mutual satisfaction rather they are buying because they do not have an alternative for that product.
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Say a businessmen hoards an essential commodity in his warehouse to such an extent that there is an artificial crisis in the market and the price of the good goes up. He then sells the good from his storage to make excess gain. This excess would be RIBA, because the consumers of the market are not buying at the high price under "mutual consent and satisfaction", rather they are buying under compulsive situation.
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Trading shares in the market with material insider information also should be considered RIBA. Say a share is trading in market at $10. I have insider information that the company is soon going to receive a merger offer which will boost its share price at least by $2. I buy a huge amount of share from the market at $10 to make a windfall gain. In this case, the sellers of the share are only selling to me at $10 because they are unaware of the merger offer (as it has not become public information yet). So, although they may appear to be trading on mutual consent ? had all information been available to all, they would not have agreed to the price of $10, they would demand $12. So, if I but at $10, I am making the excess unfair gain of $2 ? which is RIBA. In this example the sellers of the share are person in difficulty - in terms of information - so the appropriate action for me would be to wait for the information to become public.
Thus no matter how sophisticated transactions we talk about, there is always a framework to understand what is a fair price, and what is an excess. With the simplest possible instruction of leaving the excess our Master has provided us a broad framework to establish equitable justice in any kind of financial transactions. I hope my analysis above would give some framework to define what sort of excess is RIBA.
May Allah guide us all to the straight route.
Regards,
Arman -
This fair price and what iI said abour value might be comprised in the very common expression in the Qur'an "bil ma3ruf"?
This expression usually indicate fairness and mutual advantage, from the basic meaning of ma3ruf, I would say what is generally known to be fair and most advantageous of any situation, that is try to please and suit everybody.
Salaam
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Some say riba means interest so bank interest is prohibited and we must avoid getting loans from banks that have interests for loans.
If all banks in the whole world abolish interests, then all banks have got bankrupted.