The Limits of the Free Market

Market economies

As I was writing this essay a newspaper headline caught my eye. It read:

“The UK's richest people have defied the double-dip recession to become even richer over the past year.”

Despite the fact that most people have become poorer, or at least seen their real income stay static, since the financial crisis of 2008. As the saying goes, “There’s nothing surer: the rich get rich and the poor get poorer.” It is to this phenomenon that the social legislation of Behar is addressed.

Leviticus 25 sets out a number of laws whose aim is to correct the tendency toward radical and ever-increasing inequality that result from the unfettered play of free market economics. So we have the sabbatical year in which debts were released, Hebrew slaves set free, the land lay fallow and its produce, not to be harvested, belonged to everyone. There was the Jubilee year in which, with some exceptions, ancestral land returned to its original owners. There was the command to help the needy

“If any of your fellow Israelites become poor and are unable to support themselves among you, help them as you would a foreigner and stranger, so they can continue to live among you.”

Lev. 25:35

And there was the obligation to treat slaves not slavishly but as

“hired workers or temporary residents”

Lev. 25:40

As Heinrich Heine pointed out,

“Moses did not want to abolish ownership of property; he wished, on the contrary, that everyone should possess something, so that no man might, because of poverty, be a slave with a slavish mind. Liberty was forever the ultimate thought of this great emancipator, and it still breathes and flames in all his laws which concern pauperism.”

Israel Tabak, Judaic Lore in Heine, Johns Hopkins University Press reprints, 1979, 32.

Despite the sheer antiquity of these laws, time and again they have inspired those wrestling with issues of liberty, equity and justice. The verse about the Jubilee Year,

"Proclaim Liberty throughout all the land unto all the inhabitants thereof"

Lev. 25:10

is inscribed on the Liberty Bell in Philadelphia. The international movement that began in the late 1990s and involved more than 40 nations, campaigning for cancellation of Third World debt was called Jubilee 2000 and was directly inspired by our parsha.

The approach of the Torah to economic policy is unusual. Clearly we can make no direct inference from laws given more than three thousand years ago, in an agricultural age and to a society consciously under the sovereignty of God, to the circumstances of the twenty-first century with its global economy and international corporations. Between ancient texts and contemporary application comes the whole careful process of tradition and interpretation (Torah shebe’al peh).

Nonetheless, there do seem to be some important parameters. Work – making a living, earning your daily bread – has dignity. A Psalm (128: 2) states

“When you eat of the labour of your hands, you are happy and it shall be well with you.”

Psalms. 128:2

We say this every Saturday night at the start of the working week. Unlike aristocratic cultures such as that of ancient Greece, Judaism was never dismissive of work or the productive economy. It did not favour the creation of a leisured class.

“Torah study without an occupation will in the end fail and lead to sin”

Avot 2:2

Next, unless there are compelling reasons otherwise, one has a right to the fruits of one’s labours. Judaism distrusts large government as an infringement of liberty. That is the core of the prophet Samuel’s warning about monarchy: A king, he says,

“will take the best of your fields and vineyards and olive groves and give them to his attendants ... He will take a tenth of your flocks, and you yourselves will become his slaves”

1 Sam. 8

Judaism is the religion of a people born in slavery and longing for redemption; and the great assault of slavery against human dignity is that it deprives me of the ownership of the wealth I create. At the heart of the Hebrew Bible is the God who seeks the free worship of free human beings, and one of the most powerful defences of freedom is private property as the basis of economic independence. The ideal society envisaged by the prophets is one in which each person is able to sit

“underneath his own vine and fig tree”

Micah 4:4

The free economy uses the fuel of competition to sustain the fire of invention. Long before Adam Smith, Judaism had accepted the proposition that the greatest advances are often brought about through quite unspiritual drives. “I saw,” says the author of Ecclesiastes, “that all labour and all achievement spring from man’s envy of his neighbour”. Or as the talmudic Sages put it, “Were it not for the evil inclination, no one would build a house, marry a wife, have children, or engage in business.” The rabbis even favoured the free market in their own sphere of Jewish education. An established teacher, they said, could not object to a rival setting up in competition. The reason they gave was, simply: “Jealousy among scholars increases wisdom.”

The market economy is the best system we know for alleviating poverty through economic growth. In a single generation in recent years it has lifted 100 million Indians and 400 million Chinese from poverty, and the Sages saw poverty as an assault on human dignity. Poverty is not a blessed or divinely ordained condition. It is, the rabbis said, ‘a kind of death’ and ‘worse than fifty plagues’. They said, ‘Nothing is harder to bear than poverty, because he who is crushed by poverty is like one to whom all the troubles of the world cling and upon whom all the curses of Deuteronomy have descended. If all other troubles were placed one side and poverty on the other, poverty would outweigh them all.’

However, the market economy is better at producing wealth than at distributing it equitably. The concentration of wealth in a few hands gives disproportion power to some at the cost of others. Today in Britain it is not unusual for top CEOs to earn at least 400 times as much as their employees. This has not produced economic growth or financial stability but the opposite. As I write these words, one of Margaret Thatcher’s advisors, Ferdinand Mount, has just published a critique of the financial deregulation she introduced: The New Few. Equally impressive is the recent book by the South Korean economist Ha-Joon Chang, 23 Things they don’t tell you about Capitalism. This is not a critique of market economics, which he believes is still the best system there is. But, in his words, “it needs careful regulation and steering.”

That is what the legislation contained in Behar represents. It tells us that an economic system must exist within a moral framework. It need not aim at economic equality but it must respect human dignity. No one should become permanently imprisoned in the chains of debt. No one should be deprived of a stake in the commonwealth, which in biblical times meant a share in the land. No one should be a slave to his or her employer. Everyone has the right – one day in seven, one year in seven – to respite from the endless pressures of work. None of this means dismantling the market economy, but it may involve periodic redistribution.

At the heart of these laws is a profoundly humane vision of society. “No man is an island.” We are responsible for one another and implicated in one another’s fate. Those who are blessed by God with more than they need should share some of that surfeit with those who have less than they need. This, in Judaism, is not a matter of charity but of justice – that is what the word tzedakah means. We need some of this spirit in advanced economies today if we are not to see human misery and social unrest.

No one said it better than Isaiah in the first chapter of the book that bears his name:

Seek justice, encourage the oppressed,
Defend the cause of the fatherless,
Plead the case of the widow ...

Is. 1:17

Mankind was not created to serve markets. Markets were made to serve the image of God that is humankind.

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With thanks to the Wohl Legacy for their generous sponsorship of Covenant & Conversation.
Maurice was a visionary philanthropist. Vivienne was a woman of the deepest humility.
Together, they were a unique partnership of dedication and grace, for whom living was giving.

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