Riba and the Trap of Capital Accumulation: A Critical Analysis of Economic Inequality from an Islamic Economic Perspective

Abstract

Persistent inequality in wealth distribution has become a structural issue in the contemporary economic system, both at national and global levels. This study aims to analyze the systemic relationship between riba within interest-based financial systems, the phenomenon of capital hoarding (kanzul al-māl), and economic inequality from the perspective of Islamic economics. This research employs a qualitative method using a literature review approach and critical analysis of relevant academic sources. The findings indicate that interest-based systems function not only as financial instruments but also as mechanisms that facilitate unequal wealth transfer from the real sector to the financial sector. This condition contributes to the accumulation of capital in less productive financial assets, which in Islamic economics is conceptualized as kanzul al-māl. Such a phenomenon hinders the circulation of capital within the real sector and reinforces economic inequality over time. The study concludes that economic inequality is an inherent consequence of interest-based financial mechanisms. As an alternative, Islamic economics offers a framework grounded in distributive justice and profit-and-loss sharing systems, which promote a more inclusive and sustainable circulation of wealth.