Why does the Torah prohibit lending money with interest?
In last week's parsha (בהר) we have the prohibition of lending money to a Jew with interest. The question is why? At first glance we can ask why should money be any different then anything else? After all, I can rent out a house, car, tools, etc. Any possession I have I can rent out for money so why not my money? Interest is really rent for the usage of money.
There are a number of different approaches.
1. In בהר we have many mitzvos that are socio-economic, shemitta and yovel for example. These mitzvos come to teach us that ultimately everything belongs to Hashem and therefore for example, land goes back to it's original owners during Yovel. The prohibition of interest is coming to emphasize this point. You can't rent out your money because it is not really yours, rather it is Hashem's on loan to you. Hashem only gave it to you to use to serve him. Therefore the Torah prohibits interest.
2. R' Hirsch explains in Parshas Mishpatim that the prohibition of interest makes for a more fair society. When capital can only be used for investment or to pay for labor and cannot be used to just make more money, the gap between rich and poor becomes smaller. This also aligns the interest of the capitalist and his workers as money is used to pay the laborer. R' Hirsch is clearly coming to answer Marx's Communist Manifesto which was written in his lifetime.
3. Money is fundamentally different then other things. When I rent out my car, house, etc. the use of the object causes a loss in value. Even if the renter returns the object in perfect condition, the object devaluates simply because it was used. In addition, the price of commodities fluctuates. If I rent out my house for a year, at the end of the rental it may be worth less simply because prices dropped. Because you have the possibility of loss (the use devaluates the object and the value can go down), the Torah allows you to take payment in return to compensate.
Money however, is different. Money does not lose value through use. In fact, when you lend money the borrower generally pays you back with different money. In addition, the Torah views money as never changing it's value. Money doesn't fluctuate only commodities change values. Therefore, when I lend you money there is no risk of loss. At the end of the loan you will pay me back the same amount that I lent you. It is worth the same amount. Therefore the Torah does not allow you to charge rent for your money.
It is fascinating how due to the exigencies of life this prohibition has been basically wiped off the books. The Heter Iska although technically not interest but rather an investment, basically allows us to borrow and lend money with interest. The Heter Iska is clearly a circumvention of what the Torah wanted.