The Destructive Logic of Interest: The Fallacy of Perpetual Growth
With a Discussion of Reformist Action by Islamic Banks
This paper seeks to discuss the historical narrative of interest, tracing how its societal legalization led to a shift that paved the foundations for our modern day financial architecture. With modern money being institutionalized as interest bearing debt, it posits that the destructive logic of perpetual growth leads to, amongst other things, the ‘transmutation’ of Western Europe, its Colonialist impulse, Globalization and the Privatisation of the Commons. Associated with these factors are the myriad crises facing the modern age, all connected to the financial system, such as resource depletion, distortion of fair trade, displacement of rural populations, global poverty, deforestation and the eradication of local ecosystems. The paper proposes that any serious reformation of the financial system has to start with removing what lies at the heart of its growth imperative, namely: interest.