The Islamic-finance industry is lacking in the uncertainty that is generated when scholars contradict each other, or cannot comprehend the more complex tools of the advancement in the sector,
says a 31 August 2009 column “The Sharia Principle”  by Naser on the Kuwaiti website Charts & Numbers. (1)

If we cannot understand the more complex tools of the advancement in the financial sector, perhaps we should return to the basics.

I understand that “finance” is, in one way or another, ultimately related to “money”.

The Holy Koran says in Verse 161 of Surah An Nisaa’:
“That they took usury, though they were forbidden; and that they devoured men’s substance wrongfully;- we have prepared for those among them who reject faith a grievous punishment.”

This blogger asks:
When one party gives something of value
and the other party pays him with something,
in this case paper, of no value,
and when one party’s wealth is created out of thin air,
while the other party has to slave and earn to pay off the ill-gotten credit or loan,
is this not devouring of other people’s wealth?

This means that money in Islam must have intrinsic value.
If not, the buyer is devouring the seller’s wealth.

There is moreover a Hadith of Prophet Muhammed in the Sahih Muslim which teaches:
“Abu Said Al Khudri reported Allah’s messenger as saying:
“gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt. (When a transaction is) like for like, payment being made on the spot, then, if anyone gives more or asks more, he has dealt in riba, the receiver and the giver being equally guilty.”

This Hadith of Prophet Muhammed establishes two things:
ONE ‘money’ in Islam is either precious metals such as gold and silver, or commodities such as wheat, barley, dates and salt.
TWO when gold, silver, wheat, barley, dates and salt were used as money, their value was ‘inside’ and not ‘outside’ the money. Hence, it is established that ‘money’ in Islam must possess intrinsic value. (2)

Before contradicting each other, scholars should return especially to Verse 161 of Surah An Nisaa’ of the Holy Koran.

Once the principle that money in Islam must have intrinsic value will be agreed upon,
many disagreements will disappear,
in the sense that one of the parties to the disagreement will have to admit that its standpoint is wrong (on religious grounds).

Or is Islamic finance only about Islamic business and not about Islam?

Ivo Cerckel
honestmoney@maktoob.com
http://twitter.com/ivocerckel/

NOTES

(1)
The Sharia Principle
August 31, 2009 by Naser   
http://chartsandnumbers.com/2009/08/31/the-sharia-principle/

(2)
Imran N. Hosein, “Explaining the Disappearance of Money with Intrinsic Value”, paper delivered at the International Conference on the Gold Dinar Economy, held in Kuala Lumpur on 24 and 25 July 2007, p. 1