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Jewish Theology and Economic Theory

This article has been excerpted from the upcoming monograph, Judaism, Markets, and Capitalism: Separating Myths from Reality.

There has been very little work by orthodox Jewish scholars on the relationship among socialism, capitalism, and Judaism. Careful reading of the relevant literature, however, suggests that it is possible to posit five basic axioms of Jewish economic theory from which many economic policy implications can be deduced. Although not exhaustive, our five axioms represent, to the best of our knowledge, the first attempt to formulate a parsimonious list of basic principles that help systematize the foundations of what we are calling Jewish economic theory.

Participation in the Creative Process

The first axiom of Jewish economic theory that we posit is: “Man is created in God's image.” In Judaism, this statement is interpreted as meaning that God is the creator of the world, and man is the creator in the world. Man was given a divine essence in order to be a partner with God in the act of creation (Babylonian Talmud Shabbat 10a). The Midrash says, “All that was created during the six days that God created the world still requires work” (Genesis Rabba 11:6). God gave man an incomplete world, and man is supposed to help perfect it through domination of material resources, work, and innovation.

Along these lines [from Genesis], the Midrash recalls the story of Rabbi Akiva, who placed grain and bread before a general and asked him which one he would prefer to eat (Tanhuma Tazriah 19). In Judaism, work, creative activity, and innovation are the avenues through which the divine image is expressed.

Protection of Private Property

The second axiom of Jewish economic theory is that private property rights are essential and must be protected. Man was given the potential to create, but the Jewish sages clearly recognized that man will only dominate the material world and will work and innovate if there is the ability to appropriate the fruits of one's labor. To motivate man to fulfill the commandment to participate in the act of creation, the granting and uncompromising protection of private property was recognized to be essential.

Note that two of the Ten Commandments directly relate to the safeguarding of private property: “you shall not steal” and “you shall not covet anything that belongs to your neighbor.” The prohibition against stealing includes outright robbery, but also various forms of theft by deception and unethical business practices, such as the use of false weights in a transaction. The second prohibition goes further and prohibits Jews from coveting the possessions of others, even if there is no unlawful acquisition of property. The punishment for violation of the commandments is quite harsh, demonstrating the overriding importance of private property in the Jewish tradition. In fact, the flood in the time of

Noah is understood by the Rabbis as a punishment for sins against private property.

The Accumulation of Wealth

The third axiom of Jewish economic theory is that the accumulation of wealth is a virtue not a vice. Man is obligated to participate in the creative process, should not be demotivated by inadequate protection of private property, and is blessed when the outcome of honest labor is the accumulation of wealth.

The Talmud teaches, “One who benefits from his own labor is greater than one who fears heaven” (Berachot 8a, Avot 4:1). In the Torah, productive and virtuous workers are repeatedly rewarded with great wealth. The Torah describes in great detail the riches of the patriarchs, Abraham, Isaac, and Jacob. Wealth, accumulated honestly, is a signal of great effort, skill, and success in partnering with God in the creative process. The wealthy individual has been unusually successful in elevating the material world and in expressing the divine image.

The Talmud sages regard the refusal to attempt to benefit from one's labor and accumulate wealth as dangerous behavior that can lead to madness. A particularly strong statement against idleness can be found in the writings of Maimonides. Maimonides claims that “whomsoever has in his heart that he shall indulge in the study of Torah and do no work but rather be sustained from charity, defames the Lord's name, cheapens the Torah, extinguishes the light of faith, causes himself ill and removes himself from the world to come” (Mishneh Torah Laws of Oaths and Vow 8:13). Maimonides' statement is aimed at individuals who choose religious learning over working. Considering that learning Torah is itself a religious obligation, one can easily infer how much stronger his words would be for someone who chooses only leisure, whether that individual be rich or poor.

The praiseworthiness of wealth accumulation in no way implies that Judaism is not interested in the plight of the poor. All individuals are required to help the poorest members of society through charitable gifts. However, the gift-giving obligation, called Tzedakah, is more subtle than, and should not be confused with, income redistribution. Income redistribution aims at reducing income inequalities because income disparities are seen as unfair or immoral—this is not the Jewish view.

Caring for the Needy

The fourth axiom of Jewish economic theory that we posit is the obligation to care for the needy through charitable giving. Meir Tamari's study of Jewish economic thought makes it clear that a compassionate concern for the poor is a powerful Jewish theme as it was not for the pre-Christian Greeks and Romans. The Torah mentions the commandment to give charity (Tzedakah, literally justice) in parashat Re'eh: “You should not harden your heart or shut your hand from your needy brother” (Deut. 15:7—8). The role of Man in the world is not only to work, create, innovate, accumulate wealth, and elevate the material world but also to care for those in need. As Maimonides explains in The Guide for the Perplexed, “we do perform an act of Tzedakah when we fulfill those duties towards our fellow men which our moral conscience imposes upon us; for example, when we heal the wounds of the sufferer.”

To understand the Jewish view of charity, it is useful to recognize that behavior is regulated by two kinds of commandments in Judaism. First, there are the commandments that fall under the heading of man to God. Second, there are the commandments that fall under the heading of man to man. Dietary restrictions are commandments in the man to God category. These are moral principles. Regulations on proper business transactions are examples of commandments in the man to man category. These are considered to be legal principles. Charity belongs to the first category of commandments, making it a moral principle rather than a legal one.

Limited Government

The fifth axiom of Jewish economic theory that we posit is the inefficiency of government and the dangers of concentrated power. The Torah repeatedly warns about the evil nature of government and bureaucracy. The main warning is issued in the first book of Samuel when the Israelites request a king:

“These will be the rights of the king who is to reign over you. He will take your sons and assign them to his chariotry and cavalry, and they will run in front of his chariot. He will use them as leaders of a thousand and leaders of fifty; he will make them plough his ploughland and harvest his harvest and make his weapons of war and the gear for his chariots. He will also take your daughters as perfumers, cooks, and bakers. He will take the best of your fields, of your vineyards and olive groves and give them to his officials. He will tithe your crops and vineyards to provide for his eunuchs and his officials. He will take the best of your manservants and maidservants, of your cattle and your donkeys, and make them work for him. He will tithe your flocks, and you yourselves will become his slaves. When that day comes, you will cry out on account of the king you have chosen for yourselves, but on that day God will not answer you”

(1 Sam. 8:11—18). Rabbi Sacks has compared these words to Friedrich Hayek's warning in The Road to Serfdom. Simply stated, when governments play an important role in allocating resources in society and/or map out a detailed plan for the workings of an economy, we risk the prospect of ever-increasing degrees of oppression in order to meet the plan's goals.