What about actual economists?
How do you think the original lender(s) got the money in the first place?
I disagree. If I lend money to someone, then I’m damn well going to look into whether or not they’re a good risk. That’s work. I’m also going to keep tabs on them and make sure they repay me according to the terms agreed. That’s work. All that for a paltry few percent (loan sharks aside). And remember, when you’ve got my money, I haven’t got it.
You seem to have confused money with currency. I think you’ve also confused labor with production. In general, I think you’re trying to make a case for Fabianism, a form of socialism in which government controls the means of production as well as the currency. You’ve completely ignored the Austrian model (Hayek, von Mises, Rothbard, etc.), which says that wealth is created when a person believes that a good or service is worth more than what he is willing to pay while the seller or server believes that that payment is worth more than what he is willing to supply. The ensuing exchange is called an “economic praxis”, and wealth is created for both parties (because both have traded up). If there is a shortage of currency, it doesn’t really matter because most wealth is outside the currency supply. Most economic transactions are book entries.
No. I gave a simple example which deliberately excluded money and products other than gold. My example would be just as valid with money, though it would be more complicated.
No.
Absolutely not. I was not trying to argue for or against any socio-economic system, but rather explaining an existing one.
Yes, I have. If you are conversant with or subscribe to that model, feel free to post your own example and analysis of the Koranic prohibition on usury.
Even a risk-free loan bears interest. OK, there’s no such thing as zero risk, but you can extract the risk-free rate by looking at loans with different risks, and the risk-free rate is nonzero. This is expected theoretically too. Actually, there are two different senses of risk here (one lowers expectation, the other introduces variance), but the point stands: you don’t need to invoke risk to explain why there’s a positive real interest rate.
In the direct sense described by the OP, I agree with you. But if there were no interest allowed, and this stricture were absolutely enforced, how would entrepreneurs borrow money? There’d be no incentive to lend it to them.
Lenders would need to be direct investors, actively participating in the true risk of the enterprise - such as shareholders / partners.
But that’s just semantics. What do you think lenders usually demand from entrepreneurs for collateral? Answer: Stock. They become stockholders. The distinction you are trying to make between true risk and non-true risk doesn’t actually exist. If you lend money to a business, and they fail and declare bankruptcy, you are (more or less) S.O.L. (except in as a much as you can liquidate the assets and claim your share).
Interest does more than just pay for the risk premium. It is a well established principle that money today is worth more than money tomorrow–even with no inflation or other confounding factors.
The simple way to understand this is to realize that money can purchase capital goods, and capital goods produce things of value that are worth money. If I have $100 today, and invest it in a factory today, and the factory produces widgets worth $10 per year, in ten years I’ve made $100. If I have to wait five years for that $100, after ten years I’ve only made $50, because I’ve only produced widgets for five years. So that $100 today is worth more than that $100 five years from now.
As for the contention that wealth is only produced by “labor”, what exactly is “labor”, and what sorts of work don’t count as labor? Do lawyers work? Do judges? Do police officers? Soldiers? Preachers? Writers? Artists? Musicians? Accountants? Publicists? Agents? Teachers? Bankers? Insurance adjusters? Politicians? Diplomats? Managers? Does the president of the United States perform labor? Do Senators? How about lobbyists? How about quality assurance analysts? Rock music critics?
My defintion of work is as follows: If your job consists of typing on a computer, talking on the telephone, and attending staff meetings, it is not work. Call it an occupation, call it a career, but don’t dishonor those who actually labor for a living by calling it work.
Does Islam make a distinction between lending between individuals, and bank lending? It seems to me to be a fundamental difference - in the former, the money already exists and has been earned (or at least somebody has made a firm pledge that corresponding wealth will be generated), whereas in the latter the bank doesn’t actually have the money it is “lending”. The money is created on the spot, by the “borrower” as much as by the bank. Right or wrong, I could sort of understand a religion taking a dim view of the bank charging a fat fee for that.
There’s always the possibility that the entity to whom you lend you money may not be able to repay you. And let’s not forget inflation.
Why such a one-sided description? You almost sound like the communists who believe that the only added value in a product comes from the people who physically touch it on the assembly line. There are those of us the use computers, attend meetings, and talk on the phone that ensure that those assembly lines are built in the first place. Hell, we add value to the assembly workers by making their jobs more efficient, which kind of makes me the owner of their value added part.
Now for middle managers, I may actually support your definition work. 
Perhaps they shouldn’t take dishonor at people simply following ordinary language conventions.
So when I go to work and sweat making sure the computer code that people buy isn’t completely ass, that ain’t work?
So only manual labor is work?
This is what I was talking about, the medieval theory of work. Anyone who doesn’t work with their hands wresting crops from the earth or fashioning goods out of raw materials is somehow a con-man.
Under your theory: Teachers don’t work. Artists don’t work. Managers don’t work. Computer programmers don’t work. Accountants don’t work. Secretaries don’t work. Tech-support guys don’t work. File clerks don’t work. Bank tellers don’t work. Shopkeepers don’t work. None of these people work, because they work in an office rather than in a factory.
So the question then becomes, if these people aren’t actually working, why exactly are they getting paid? If a manager doesn’t do anything useful, why do companies continue to hire managers? You think Bill Gates pays all those project managers and developers and testers because he’s a nice guy?
What do you call this new language that you are inventing?
Hint: It’s not English.
Yes, as I stated explicitly. That doesn’t negate the point that there would be nonzero interest even without that possibility.
I didn’t. That’s why I specifically referred to the real interest rate .
While the giant argument here is fun and all, I think some of you are missing two salient points:
While some cultures (certainly not all, and not particularly the Jewish or later Christian ones) had taboos against merchants and trade (notably China), they weren’t neccessarily lending money nor gouging poeple, and most cultures accepted their fees for moving goods around.
However, in the ancient world, moneylending was done only at arduous and cruel rates, intended not merely to earn a profit but to keep the debtor in bondage. Remember, it was only a century ago that debtor’s prison vanished. Indebted individuals could be imprisoned, sold as slaves, or forced to labor their entire lives to pay a debt which just kept getting larger. Lenders were rather callously lending money for reasonable interest, all right - just with the intention of enslaving the debtors later.