Riba Threat in al-Quran and Economic Crises

Every threat said by Allah in the Holy Al-Quran is definitive and could not be denied by human’s logical think and their limited effort. The threat that clearly stated in verse 279 Surah al-Baqarah to those riba practitioner, should bring its own interpretations and meanings that were justified by scholars and modern experts This paper relies on secondary sources from several books of tafsir, explainations of related contemporary Islamic scholars and also views from economic experts pertinent to riba practice implications that hit world economy so far, in effort to establish a linkage between them with the word of ‘harb’ as revealed in the verse. Hence, this paper finds that riba as practices widely in modern conventional banking system had brought negative impacts on economic sectors where it simultaneously effected on human activities. The term of inflation, deflation, recession and crisis always been heard and said since the early of 20th century until today


A. Introduction
Riba was prohibited by all devine religions includes Jews and others human-innovation religions such as Buddhism for the reason of cruelty and oppression. This verse was revealed and directed to Abbas bin Abdul Mutallib and Uthman bin 'Affan who practiced riba in their dates business. On the promised date of dates delivery, their customer had asked for postponement by promising the additional quantity of dates will be delivered in future, and it was agreed by them. After this event had been informed to the Prophet (PBUH) he disagreed with the action and followed by the revealation of the verses. Consequently, they obeyed the command from the Prophet (PBUH) and took only the capital from the customer. 3 Al-Tabari had recorded in this famous tafsir where Ibnu 'Abbas interpreted the verse by saying: Whoever currently still practicing riba, are prevented from any seize action but must be advised by the ruler for him to repent from the practice otherwise he could be punished. 4 Narrataed by Ibnu 'Abbas also :On the judgement day, it will be said to riba practitioner, prepare yourselves with your weapon and let's have a war. 5 Meanwhile, Hassan al-Basti and Ibnu Sirin had reported: By Allah's name, they are a people who involve in money exchnges by doing riba, they are people who will have a battle with Allah and His messenger. They should be asked to repent by ruler, if not, war is allowed on them. Al-Samarqandi (n.d) clarified that the war mentioned in the verse is a destructive curse from Allah, whereas it also perceived as an enmity from Allah and His Messenger (Al-Mawardi, t.t). Some interpreted the word 'war' is an excessive word in describing the massive impacts brought by the practice. There were also scholars who explained that the war mentioned by Allah is very destructive that only knew by Allah SWT.
The famous reformist Egyption scholar, Syeikh Rashid Redha who died on 1935 had experienced the effects of riba in his era. Therefore, the explaination given by him regarding the verses could be seemed as different from previous scholars' comment. He continued that the permission of war expressed by Allah could be viewed in different shapes. Among them are rich man getting poorer after involved in riba and also and people who always been overwhelmed by curious due to the burden of provoding new jobs in accommodating capital provider who practices. 6 Syeikh Muhamamd Mutwalli al-Sya'rawi explained that the word 'harb' means war on riba practitioner could not be described as Allah says in another verse in Surah al-Mudathir verse 31 that means: as no one knows the forms of Allah's soldiers. Besides, the declarion of war in the verse indicates the strength of the impacts could not been accepted and defended due to the massiveness. Even it brings negative connotation when it understood as disaster, it definitely aims to purify the life of believer people from the sin of riba. 7 It also could be viewed from the perspective of its effects on socio economic impacts when surplus unit in ecosystem might try to avoid any risk in loan agreement. 8  Riba practice is categorized as 'bloodsucker' action upon needy people whereas Islam promotes rahmah values in every single commandment, curses people from depression and exploitation others' weaknesses for the interest of wealth expansion.
Moreover, Islam encourages giving loan without any interest under the name of cooperation or donation or qard hasan without any profit will be taken from it. However, making profit from loan is a major crime that could not be accepted and compromised until war shold be directed towards them. 9 There are three groups of Muslim scholars or scholars who differ. Prophet Muhammad (PBUH) was reported to say: The meaning: Riba have seventy-three ways, the easiest one is to have adultery with his own mother and the heaviest is to tarnish the dignity of other muslim.
The analogy given from hadith above is to describe the awfulness of riba that worse than adultery with own mother because adultery is an agreed action while riba is to seize other's wealth in coercion without their consent. 11 In the other hadith, Prophet said: The meaning: One dirham produced from riba ate by a man while he knows that is worse that thirty -six adulterers.
Riba that spreaded and practiced by ancient Arabs was through loan using dinar and dirham for a certain period, and paid back with additional amount from what had they agreed upon the contract, had been nullified and prohibited by Allah. 12 The most famous riba items are gold and silver that represented by dinar and dirham. The creation of fiat money as a replacemwent for gold and silver at initial was printed backed by gold's price. After the Bretton Woods 1968-1973, money was not printed and backed anymore by gold's price, that makes money lost its intrinsic value and allows many ways or manipulation on its functions that played by gold and silver before. 13 Today, we are using fiat money which plays roles of gold and silver as measurement value in accommodating transactions, originated from the practice of keeping jewelleries at the goldsmiths. It had been recorded that the goldsmiths had issued receipts with fake amounts that did not commensureated with the value of jewelleries under his custody. Consequently, it led to fraudulent and faking in money issuances. After sometimes, it was adopted gradually and seemed as common practice in fractional reserve banking system as implemented in our modern banking system. Eventually, money issued today is only a piece of printed paper without carries any derived values. 14

Riba in Human Civilisation
Riba or interest as used in banking system had been discovered to be practiced in the ancient ages or prehistoric centuries. For instance., Sumerian (3000 b.c) had their own comprehensive system in imposing charges or interest on loan as a guideline in structuring loan contract. Wheat was used as a medium in quantitative loan while iron used as a benchmark for scaling items. 15 All revealed religions were recorded to blame riba practice in loan contract even for a cost had incurred. 16  For Jewish, riba is only prohibited among them and allowed to be taken from others, or. 18 Great Greek philosopher, Aristotle had criticized harshly riba or interest and called it as immoral act through loan or item exchange. He referred to the idea 'uninvested money could not produce another amoung or value of money. 19 There are two types of usury or interest used in financial system, first, known as legal usury that charged on borrower. As example, if only 2 percent is allowed for loan interest, imposing more than 2 percent considered as legal usury. Second, moral usury defined as interest taking from borrower without consent and acknowledgement from them. 20 Therefore, any interest imposed on loan is perohibtied in Islam but 17  accepted in by western people, otherwise it could not be charged over the limit allowed.
Abovementioned concept shows their wrong understanding towards money's functions. Money is perceived as productive economic tool and every interest derived form it must be appreciated. Hence, the imposement of interest on loan is acceptable justified as a rental cost for money usage (Luigi Miraglia, 1912).
Simon Yannick dan Fouda Ekobena (n.d) prove that the increment of interest is always associated with the rise of poverty level in their research done in USA. They also explain that monetary policy taken by some countries would be the determinant factors on rise and fallen of the poverty level in their countries.

Interest in Modern Financial System
Interest rates was introduced by Cambridge economists and been developed further with the emerges of several theories, namely, Kaynes demand theory that elucidated the basis of money demand are speculations, business and precautions. Then, theory of Baumol (1952) that stipulated cost and profit on money, also Tobin theory (1956) that determined risk and store value as an income on it (Anuar Saaban dan Sanep Ahmad, 2013).
Latterly, interest theory had been evolved by Edward L. Whalen (1966) that put money as a precautionary asset. According to Whalen, three determinant factors to his theory are liquidity cost, opportunity cost resulted from precaution and holding cash and average demand and money usage (Whalen, 1966). From the view of public demand, Friedman's theory (1956) and Bernett's (1980) were used widely in financial system.
Marwini supports the arguments with numbers of theories that are backboning the system until today such as abstinence theory, money rental with interest theory, productive-consumtibe theory, inflation theory and others.
In brief, the theories aforementioned are directed towards money demand where they are related in negative with interest rates and positively with real income (Anuar Saaban dan Sanep Ahmad, 2013). These events had made interest rates are moving like flesh and blood in modern financial system stimulated and backed by banking system all over the world.
The convention of prominent scholars at Academy of Islamic Research organized by Al-Azhar University in 1965 were collectively agreed on interest prohibition as been practiced in conventional bank and considered as riba. 21 Accordingly, it is clear for us that interest charged on banking customer is a prohibited riba, as explained and elucidated by many contemporary scholars based on Quranic teaching.

Riba and Economy Conflicts
World had experienced many series of economic crisis that effect globally is one of the massive negative impact of riba in this century. Economic crisis which normally defined as significant contraction and recession hit any country or group of countries was proven by the failure of banks and financial institutions in playing their roles in supplying liquidity in market that had resulted the craches of securities and money markets .Among other effects from riba is an inequality in wealth distribution that contributed to poverty, destitution and related economic problems, where it might imbalance in socio economic of community that may threat human relationship in long run. 22 Great depression is a good example for larger scale of economic crisis hit USA in the early of 20 th centuries. Madhusudhanan S. (2014)  resulted from the standardization of gold price on that time. Second, bank panic among depositors that withdrawn all of their saving money from banks. Third, cash money in public hands where they preferred to hold it rather than saving in banks. Fourth, failure in investment activities and lastly, injustice wealth distribution. At a glance, many said factors are caused by riba activities that been used in loan and investment, that leads to economic crises which were rooted from sin of riba in our economy system. 23 Financil crisis 2008 was caused by sub-prime mortgage that provides easy or loose financial policy in money lending for home-buyer even to risky clients with weak financial positions, expecting profits through home auction if the clients fail to meet their obligation on loan given from banks. This crisis began when non-quality asset buying securities could not been paid back by clients whereas dragged service provider on that chain such as banks and insurance companies failed to collect payments for bondholders. 25 The news above supported by the report issued by The Financial Crisis Inquiry Commission by noting the management failure was the main factor of the crisis in America before it spreaded to Europe countries. In 1995, when Mexican Peso countered by price crisis, Argentine at that time developed 6.7 percent yearly started from 1991 had dropped significantly affected by mexican's currency crisis (Perry dan Serven, 2004 According to statistics, drastic negative change to -3.2 points was an obvious event compared to its highest point between 1999 to 2001, when the recovery process was ongoing. This significant impact on human's life most likely will conduct their actions related to economic activities.
Survey had been done after financial crisis in USA, which knonwly had disturbed investments and job sectors in local markets, and found where 90 percent accused the failure of mortgage companies was the main cause of the crisis while 88 percent believed money lenders and banks were the players behind it. 30 The impacts of financial crisis 2008 were not only striking at financial or industrial sectors, family institutions also had been affected following the rise of basic needs' prices and jobless family leaders. For instance, in Nicaragua when it was hitted by financial crisis on 1991, even median household income could not effort to buy basic needs for them Sakiko Fukuda-Parr (2008).
Jobless is confirmedly expected to bring deficient in human life due to insufficient economic sources indeed 30 Maurice E.Stucke, Lesson From The Financial Crisis, Antitrust Law Journal. Vol. 77. No.1 (2010), 313-341. to basic necesseties for human health. Ahmad faramarzia et al. (2018) confirm the significant correlation between unemployment and the utilization of healthy products. They explain when there is 1 percent increment in unployment rate, it may reduce the utilization of healthy products that amounted to USD 138 per capita. It is a strong indicator that shows the weakening of health quality of the community owing to jobless resulted from financial crisis. In spiritual aspect, riba practice normally leads human to greediness, hatred, egoism and oppress the needies whereby it might weaken human relationship between society members. Hence, the scenario might enlarge the gap between lower and upper class people bigger and eventually encourage the rise of poverty issues in community. 33 Baeck reports that Al-Maqrizi had been reported to say that financial manipulation is just an injustice act, that could only happen in a problematic and morally damaged society. 34  may encouraged to deceive their documents due to greediness in fabricating their financial standing in fake. 35 This might be realised with assistance from banks which are targeting to increase their sale of financial products with high return.
Ali Abdul Karim (n.d) describes how riba in conventional loan that practised by financial institutions in western countries is the main factors for the crisis. Collateralized loan is a scheme where its interest rates always been revised and increase every year that brings more profit to banks and mortgageg companies. Then, it really depress lower class people in paying their loan to banks since the amount is keep on changing. In other way, the accumulated loans in this system had multiplied the debts before it was gathered under single asset class where it only represents illusionary of wealth like CDO just for immediate risky profit. 36 Al-Maqrizi, a prominent Islamic historian scholar, reported that there was a drought and disaster hit Egypt

Negative Impacts of Economic Conflicts on Humanity
Riba might not onluy affect the microeconomic level, but also brings harms to macroeconomic. It could be illustrated as follows: 1.
Price increases from the merchants and traders as a response to increment of interest rates charged on their business loans.

2.
Paying interest loans to banks is like paying statuory tax where the burden always on customer's load even they possess a buying power, moreover, if the buying power weakening after sometimes, loans' burden still remains the same that contribute to the increase in prices.

3.
When sales drop while the loan commitment is still needed to pay, traders normally will choose to cut the cost where labor cost which consisted of salaries and wages, is the most favourite to be choosed in cost reduction. It will cause job lost that might entail economic problem as a consequence. 4. In other way, traders will search another alternatives in marketing their products by opening factories

The proposal
The emergence of Islamic banks in early eightees had changed significantly the landscape of world financial.
Tremendeous growth besides the resilient of Islamic bank in recession period in 2008, had opened and attracted many economist to response on the industries that known with the prohibitions of riba, gharar and gambling elements.
Umar Chapra (1986) supported that the lost and profit sharing system -as applied in some of Islamic banking products-must adhere to the technical requirements then the positive changes might be realized by socio economic growth. It might assist in alleviating poverty, justice wealth distribution and balance job oppurtunities (Joni Tamkin, 2001).

Conclusion
As discussed above, riba -in conventional financial system-was proven promoting harms and creating conflicts on economic view. Threats that said by Allah to whom involved in riba were visualized by numbers of moral and social disasters that happened gradually as impacts of the greediness of human. Notwithstanding, interpretations made by traditional scholars also must be reflected since they were in consensus in concluding the meaning of 'harb' in the verse is really war between Allah and His servants on the judgement day. It describes to us how severe the punishment of Allah on riba practitioners who destroy the balance of human's life and make money as a stepping stone to suck other's blood and sweat.