The moral financial lesson from Islamic Finance.

In the field of Islamic Finance there are two unlawful or ‘haram’ activities, both are in the area of ‘Riba‘ – which is often translated as ‘interest’ but is better thought of as ‘excess’.

These two are Riba al fadl, and Riba al naseeyah.

Riba al fadl is the easy one to remember, it is the charging of interest, in Christendom we call it ‘usury’, something that was once forbidden under Christian doctrine (hence the pushing of Jews into becoming the earliest bankers – they could engage in this forbidden activity for Christians who wanted to borrow – borrowing was OK, but lending was not).

Riba al naseeyah is the second tenet, and perhaps the most important, because it is an early adaptation of understanding that economic rent is a problem. This isn’t an argument for socialism or anything else, but it is an acknowledgement that Riba al naseeyah [which means ‘excess compensation] can be both a financial, societal and economic problem.

Price gouging is one aspect of riba al naseeyah, another would be deriving income …

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