Monetary Conditions of Economic Growth and the Islamic Concept of Interest: Is there a Solution to the Open Conflict between Law and Practice in the Muslim World

Sabri F. Ülgener (1911-1983), with his ability to combine eastern and western cultures in his own character, his rigorous and disciplined way of working and his ability to use different sources in his research, also has an important place in the aspect of history of economic thought of the Turkish academy of the 20th century and influenced the studies that conducted after him, is a scholar who deserves to be studied in depth. An important feature that distinguishes Ülgener from other scholars is that he focused on “lived history” rather than “documented history” in his research. Rather than archival sources, works of classical Turkish literature, moral books, works of art, newspapers published in the Ottoman period, the memories he heard and listened to from people who were born in the last period of the Ottoman Empire and were still alive in his own time, and the memories left behind by these people were the main reference sources of Ülgener. Ülgener rigorously traced the traces of the Ottoman economic mentality in all these sources. The Ottoman economic mentality, which Ülgener continued to research throughout almost his entire academic career, naturally coincides with the research field of the academic discipline today called “Islamic Economics”. In 1944, Ülgener himself wrote an article titled "Economic Policy Issues in Islamic Law and Moral Sources" and in this article, he examined the issue of price fixing [narkh] in Islam, with the effect of statism policies that had to be implemented due to the difficult conditions of the Second World War. Another work that is directly related to the subject of mentality is his article titled “The Ethics of the Craftsmen since Fourteenth Century and Some Situations of Complaints”. In this article, Ülgener examined the bad impression of the craftsmen of that period in the minds of the public and the reasons for this. It was unthinkable that Ülgener, who carried out research on the economic topics of Islamic law in the second half of the 1940s, remained indifferent to the issue of the “interest”. Here, this study, which is the subject of translation, is related to the most fundamental issue of Islamic economics, interest. Ülgener was invited to a congress held in New Delhi in December 1958 and presented the paper that is the subject of this translation at that congress. The presented paper was not published in Türkiye, but was included in the issue of Islamic Review, numbered 55/2 (February 1967), published in England, with a note called "opinion". The aforementioned paper, as understood from the Ülgener biography written by A. G. Sayar, was first written in Turkish with the old script [Ottoman] and then presented in English. Sayar names the paper "The Situation of Islam in Economic Development Against Money and Credit Issues". In this paper, Ülgener makes a distinction between the interest used in directing and calculating investments and expressing the premium paid for the use of money [Ülgener proposes to call this type of interest as “benefit”], and the interest, which represents an unrequited surplus for consumption purposes [usury, riba]. Expressing that the interest prohibited by Qoran is actually the usury, he examines the reasons behind this prohibition. Seeing the prohibition against usury for consumption purposes as justified, Ülgener says that especially Muslim countries with insufficient development level should reinterpret Islamic law in order to ensure their own economic development, make a distinction in the concept of interest, and as an extension of this thought, he states that they should permit interest as a guide at the point of placement of investments and should also include such Western-style monetary institutions in their structure. This paper, which was not included in the corpus prepared during the collective publication of Ülgener's works, is important in the aspect that it has never been published in Turkish and that it is a study in which Ülgener explains his thoughts on interest clearly and consistently.