Steven Waldman makes an interesting point, quoting a hadith of the Prophet SAW,

“Do not buy fish in the sea, for it is gharar .”

and suggests that this could be applied to financial transactions like sub-prime mortgages. That’s a great tassavur (exegesis), one that I hadn’t heard before, but will certainly quote from now on.

Proper tassavur is actually essential with most aspects of Shari’a law, which is why it lends itself so readily to abuse. Economic issues in Shari’a are a great example – the fundamental ban against riba (usury) in the Qur’an (summarized nicely here), for example, is laid out in broad brush strokes, and so most of the burden of actually applying it to one’s own fiscal affairs is rests squarely on the shoulders of the individual. Even islamic authorities, be they fiqh councils or learned imams, are unable to render anything but the most general advice in these matters. The safest route of course is to shun all obvious forms of interest, but that is easier said than done – for example, social security checks are drawn upon the social security fund, which is interest-bearing, so is social security haram? Since most public companies are heavily reliant upon interest to manage their balance sheets, does owning stock from these companies (becoming an owner, essentially) haram? What about mutual funds, where you buy a share of a stock portfolio and not the stock directly itself? What about exchanging money at a bureau de change, where a standard fee is charged for the use of money? Some people take the maximal posistion against usury, and forswear all of the above, while others argue that usuary strictly only relates to “excessive” interest, and that only on personal loans. Most muslims fall somewhere in between. The variance of tassavur in this regard is extremely high.

It should be noted that the Islamic Finance industry is a burgeoning one, with “Islamic-friendly” invest funds, anks, mortgages, etc all being offered in parallel to the interets-based economy. Whether or not these vehicles are truly “safe” or whether they are really just excercises in rationalization is again a matter of individual tassavur.

We often hear, from critics of Islam and other polemicists, that the “gates of ijtihad (interpretation)” are closed for muslims. However, as with most aspects of Shari’a, the gates of ijtihad swing wide open indeed, at the level of the individual muslim.

Incidentally, with respect to the ongoing economic crisis in the financial markets, the words of the Prophet SAW and the injunctions in the Qur’an take on a particular relevance. Daniel Larison characterizes the crisis as our collective cultural obsession with credit as a way of life rather than a tool and means to an end. Larison goes on to note the social impact of this credit-centric worldview:

As virtue is the moderation or even denial of appetites, moral
integrity in society as a whole weakens as this culture gains ground. 
When limits to our consumption seem to fall away, the desire for
acquisition and domination becomes stronger and it begins to be
expressed in our relations with the rest of the world.  We begin to
define our interests to satisfy unbounded desire, and so the scope of
what we believe is rightfully ours expands until it encircles most, if
not all, of the globe, and we are then violently offended when our
claims are challenged.

And so we come full circle to Ramadan and fasting – for the purpose of the fast is to instill a discipline that moderates our appetites and preserve our moral integrity. These ideas do scale from individuals to societies. Perhaps a better concept of Islamic banking would be one which follows this principle rather than simply finding loopholes around usury in name.

Related: Forbes’ special report on Islamic finance, via Talk Islam.