Misquoting Muhammad: The Challenge and Choices of Interpreting the Prophet's Legacy

by Jonathan A.C. Brown

The Qur’an forbade Muslims from engaging in Riba, which Muslim scholars understood as any kind of interest-bearing transaction such as loans in business. The Qur’an explicitly condemns excessive usury as exploitative to the poor, but Shah Wali Allah explained that Islamic law considered even mild interest harmful. It prevents people from focusing on agriculture and manufacture, ‘the roots of profit,’ he claimed.20 Even in the early Islamic period, however, Muslims lending money felt that charging interest was as essential a part of business activity as it is today (at the very least, it represents the opportunity cost of the lender’s money – what he could accomplish with it were it available and not with the borrower). Muslim scholars thus developed what became known as ‘the double sale,’ in which the borrower approaches a lender with an offer to buy some item from him, for example, a bolt of cloth, for some cost, such as 100 gold pieces. Since the buyer (i.e., the borrower) does not have that sum available at the time, he agrees with the seller (i.e., the lender) to pay him 125 gold pieces in a year’s time – buying the cloth on credit and paying a premium for receiving it right away (credit purchases were allowed by the Prophet and were essential in activities like farming in which revenues come only at harvest time). In theory, the borrower can keep the cloth or sell it to whomever he wants for whatever sum he wishes. But the lender ‘offers’ to simplify matters by taking...