Your lifestyle must be pretty ascetic then? A society that only contains business bootstrapped by independently wealthy owners is pretty small. Almost everything we have required somebody else's capital to build. There was a reason unemployment spiked when lending stopped in 2008.
Lock up all capital with a small group of individuals and you will then need to acquire that capital in order to create large projects, that's pretty truistic.
A system where you instead has to convince a "capital" assignment group (really a work+resources assignment)- who would only profit if your project benefitted society - could also work.
You'd get different assignment of resources too as ability to extract maximum value from the system and lodge it with a small group of capital holders wouldn't be the principle aim.
This only works with systems where everyone is on board and there are no greedy people, ...
It may come as a surprise to people, but there have been societies which banned interest/usury, yet got things done just fine (e.g. Islam bans usury, but the Islamic Golden Age speaks for itself). Even until relatively recently, when Western colonialists forced their usurious banking system onto Islamic nations post WWII, things were done interest-free.
Coming from a jewish background (Judaism also "bans interest/usury"), I advise you to take these rules with a grain of salt. In the case of Judaism, there were (sometimes still are) many tricks to the system, for example: you could lend with interest to non-jews, you could have and trade slaves, etc.
I'd assume Islam, being similar to Judaism, uses the same kind of tricks. For example, after a quick search, I found this:
"The common view of riba (usury) among classical jurists of Islamic law and economics during the Islamic
Golden Age was that it is only riba and therefore unlawful to apply interest to money exnatura sua—
exclusively gold and silver currencies—but that it is not riba and is therefore acceptable to apply interest to
fiat money—currencies made up of other materials such as paper or base metals—to an extent."
Thank you for chiming in. I'm aware that Judaism bans interest, but you're also correct that thier Rabbis made loopholes such that only Jews don't lend money with interest to other Jews, but they're allowed to lend money with interest to non-Jews. Christianity bans it as well, but people don't practice what they preach so to speak.
With Islam, there are no such tricks, because it explicitly calls out tricks like what you're mentioning and warns people who engage in them. Of course, it doesn't prevent some people from claiming certain things, but you'd have to look at the overall consensus. If you ask scholars today, they will tell you that you cannot deal with interest with fiat money, the consensus is that you cannot take an interest-based loan or mortgage from a bank.
I can't find the author of the book you cited, but it seems he's misguided and conflating two things. There was no paper money back during the Islamic Golden Age, so I'm not sure why he mentions it. Secondly, he seems to be conflating Riba that applies to certain materials (explicitly mentioned in [0][1]) with Riba due to loans. The Islamic notion of Riba encomposses more than simply usury and interest. For example, exchanging 5gm of 22 karat gold for 8gm of 18 karat gold falls under Riba, and is prohibited.
What is permissible is to have exchanges of different types, as mentioned in those Hadiths. For a modern manifestation of this: I can exchange a certain amount of USD to a different amount of Euros. However, I cannot lend out $100 and ask them to be returned $105.
Yes, and if you look up the opinion of present-day scholars, you'll find that many of them call said banks out on it (if it walks like a duck and quacks like a duck). While I'm not a scholar, I completely agree that it's jumping around the issue and it is almost certainly interest. It doesn't mean Islam allows it. This in my opinion, is a manifestation of what I mentioned how the West pushed their usurious banking system onto Islamic nations, and because many of those governments were installed by Western nations, now the people are having a difficult time breaking out of it.
There are other ways of bootstrapping businesses: people pitch in money in exchange for owning a percentage of said business. That's exactly using someone else's capital to build, but without the parasitic and immoral practice of lending with usury (aka interest).
That's not bootstrapping, just investment funding. We have that, though many still prefer debt financing instead for whatever reason. For example you can often get money "cheaper" via debt versus giving up too much ownership.
Preferring something doesn't automatically make it good or acceptable. Just like how some people prefer to smoke or prefer to gamble or prefer to drink.
Regarding your point, debt today is only cheaper because it is available and widely pushed by the government through banks. If lending money on interest were hypothetically banned, then everything would have to change, and we'd have a fair equilibrium.
What exactly is the moral framework that makes equity financing okay but debt financing not? The financier is still getting a consideration in exchange for his capital.
