Charging interest is essential to guiding the investment process, which cannot be sustained by charity even it were forthcoming due to the economic calculation problem. (In other words, interest rates are required to direct investments to their most productive use.) Interest-driven investment is essential to economic growth, and therefore to the very existence of industrial civilization. If charging interest were outlawed, industrial societies would quickly collapse due to the inability to efficiently allocate savings.
Loan-sharking (charging high interest rates backed up by the threat of violence) reflects the fact that the loans are being given to creditors with a high risk of default. The need for violence is due to the failure of governments to see this fact, or to adequately enforce the loan contracts (such as with overly lax bankruptcy laws), rather than any immorality inherent in moneylenders. There is no such thing as a single “just” interest rate because interest rates in a free market move towards an equilibrium determined by the time-preferences of individual debtors and lenders.
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