We will examine another root of virtually all economic problems in our times which is usury aka bank interest. Usury is defined as Merriam-Webster dictionary as 1) Interest; 2) the lending of money with an interest charge for its use. 3) an unconscionable or exorbitant rate or amount of interest. The last definition is new one. Before charging interest on money become normal, usury was viewed as charging any amount of interest on money (The definition is later changed to excessive interest).
Before modern banking and concept of interest is founded which created Industrial Revolution, most people in Western World thought usury as grievous crime. Usury was viewed as tool of oppression for people who are too lazy to work or greedy enough to get money from other people’s efforts. The reason for this is obvious. When you charged interest on loan, debtors are forced to put more efforts and labor to pay for interest for money that he borrowed. So, it is a form of injustice as well as stealing.
But you may ask: Without interest, how can borrower still not incurring loss since there is inflation? But in ancient times, the value of money is static and there is hardly any inflation since they used gold and silver coins. The value of money for which they have worked will not decrease over time like paper currency in our era. I have explained this thing in my previous post.
Usury is also viewed as sin in Bible:
- Exodus 22: 25 – If you lend money to any of my people with you who is poor, you shall not be like a moneylender to him, and you shall not exact interest from him.
- Leviticus 25: 35-37 – If any of your fellow Israelites become poor and are unable to support themselves among you, help them as you would a foreigner and stranger, so they can continue to live among you. Do not take interest or any profit from them, but fear your God, so that they may continue to live among you. You must not lend them money at interest or sell them food at a profit.
- Deuteronomy 23: 19 – You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest
And not only in the Bible, but in the Quran as well:
- Surat Al-Baqarah 2: 275 – Those who charge usury are in the same position as those controlled by the devil’s influence. This is because they claim that usury is the same as commerce. However, God permits commerce, and prohibits usury. Thus, whoever heeds this commandment from his Lord, and refrains from usury, he may keep his past earnings, and his judgment rests with God. As for those who persist in usury, they incur Hell, wherein they abide forever.
- Surat Al-Imran 3: 130– O you who believe, you shall not take usury, compounded over and over. Observe God, that you may succeed.
During the Protestant Reformation in 17th century, John Calvin (one of father of Protestant Reformation) took different position on usury compared to Catholic Church and most of church fathers. In his view, borrowing money with business interest is allowed although he also said that he will not allow professional money lender (aka bankers) to enter the church. Unfortunately, his view become mainstream among modern Christians and gave rise to capitalism. That’s how usury is not viewed as sin anymore among Christians.
Let’s take a look on effects of usury. By letting some people collect usury upon their debtors, whether it is a bank or a loan shark, it will make the debtors (poor people) become slower or even impossible to overcome his poverty. It will make the rich (in this case, bankers and CEO of finance corporations) become richer and poor become poorer.
Some people that borrow the money to open business aka entrepreneurs delegate his servitude to bankers to their employees. Since entrepreneurs need to pay interest of his capital money to start his business to bankers then he need to squeeze his employees to work like crazy to be able to produce projected profit outcome, regardless whether it is realistic or not. So, usury not only produces oppression to poor people to but the workers as well.
There is an argument that this oppression can be overcome by technology. Previously, corporations used a lot of manpower and caused a lot of misery to their workers by slavery and dangerous work condition. But now, because of automation of production through technology, workers have been released from their oppression.
But even if modern employees somehow can delegate his burden to machines, the problem just moves from one to another but does not disappear. Huge number of machines will require energy which are generated by fossil fuels. Air and water pollution caused by these machines make nature become less inhabitable and harmful for living creatures. In other words, technology only transfers the burden of interest from human to nature. Usury is indirectly causing environmental problem as well.
Recently, there is a surge of Islamic fundamentalism in Arab world. While I am not the fans of its law to kill apostates that leave Islam, I view the growth of Islamic banking which forbids interest as something positive. I hope that either there will be Christian banking who also forbids usury or there will be a day where crime of usury is abolished entirely. Poor people, workers and nature can be released from financial bondage to bankers. But the question remains: Do righteous people have a will and power to enforce this to government? Can it be abolished?