Dr. Gordon's lecture on Judaism and Capitalism

Miscellaneous History
1

As an Orthodox Jew and a libertarian, I was looking forward to listening to this talk. I have a lot of thoughts on the topic and many questions and would love to hear someone who is a libertarian and knows Jewish sources discuss this topic. (Also, I very much enjoyed Robert Murphy’s lecture on Chritianity and libertarianism.)

With all due respect, I was severely disappointed by the talk. It should have been called “People Who Knew Very Little About Judaism Discussing Its Connection to Capitalism”. Dr. Gordon goes through three writers — Marx, Mises, and Sombart — and discusses their views on the connection between capitalism and Judaism. All three are very ignorant of Judaism (Mises very shockingly so). Marx and Sombart are antisemitic and Mises is clearly disdainful of Judaism as a religion (of course, much of his disdain comes from his appalling ignorance on the subject).

So, why is this an interesting discussion — to go through a lot of nonsense that Marx, Mises and Sombart have written? Only in Talmud alone (written by 3rd century CE) there are literally thousands of sources discussing capitalism, trade, private property, damages, coinage, contracts, etc., etc. They are discussed mostly from legal point of view, but one can derive from it very much information on how Talmudic rabbis saw property and exchange of it. Then in the last two thousand years, there is a wealth of rabbinic literature discussing these topics from legal to moral to philosophical to spiritual to mystical points of view (sadly, Mises seemed to have been unaware of their existence). There are many modern books that summarize these sources and go to great lengths discussing them (Dr. Gordon cannot be unaware of them — he even quoted from one of them very briefly).

This topic would be extremely fascinating to discuss, because in Judaism one finds a plethora of opinions, oftentimes very contradictory, on many areas of life. There is clear support for libertarianism and even anarchy, and there is clear support for regulation and strong statism — and there are many opinions in between. Of all these sources, Dr. Gordon cited only two rather vague statements from Mishna’s “Ethics of Our Fathers”.

Anyway, as I said, I remain very disappointed. I found Robert Murphy’s lecture on Christianity and Libertarianism much more interesting. It didn’t sound quite so “academic”, but it was much more relevant. Perhaps because Mr. Murphy is a practicing Christian, as opposed to Dr. Gordon.

2

Compare, for instance, to this article (one of many): “Judaism’s Religious Vision and Capitalist Ethic” (I don’t agree with everything he is saying, but then he is not a pure libertarian himself and not an economist or economic philosopher. I would like to see this sort of analysis from a libertarian who is well versed in Jewish sources.)

3

My own understanding is that Jews were instrumental in spreading a market system in the west, if only because, as far as I understand it, Judaism requires socialism within the faith (as most other religions) , and uniquely allows market transaction without.

In the west, where Jewish communities where small but evenly spread, their total ‘exposed’ perimeter was maximal. Most gentiles got to meet and trade with Jews. Thus emerged a powerful push for capitalism and the shedding of moral condemnations for this system.

In the east, Jewish communities where rather large and, to a point, self-sufficient. What would have been suicide to a few Jewish families in Paris ( to live in autarchy) was feasible for the hundreds of thousands in the ‘pale of settlement’. Hence, the Jewish-gentile transactions that where run on a capitalistic basis were few and far between.

Now, in its turn, Jews needed to settle in close clusters in the east because they were liable to attack, while the west largely tolerated them, allowing them to spread. My idea, anyways.

But note that in a passage that I cannot be bothered to track right now, Mises extols Judaism when he says, paraphrasing, that almost the whole of civilization central and eastern Europe was built by Jews.

4

Judaism requires socialism within the faith (as most other religions)

What do you mean?

5

By “east” do you mean Eastern Europe or Middle East?

I think the reason why Jews were instrumental in spreading capitalism is that they were uniquely confined to merchant and banking professions, since they were not allowed to own land. Plus, because usury was forbidden for Christians, but not for Jews, they were able to perform that function and profit from it (and, obviously, benefit the societies they lived in).

6

I do not really believe that the ‘trick’ was in denying Jews land ownership, simply because many, many other minorities have been denied land ownership, and no other minority, to my knowledge, managed to accumulate the per-capita wealth of western Jews. Minorities that did succeed, as Greeks in the Ottoman Empire, where positively encouraged, not handicapped.

I still think that the ’trick’ rested in Judaism’s dualism: you can be ‘mean’ to gentiles, but not to fellow Jews. A christen can be mean to no one, and neither can a muslim. Now, if we see that by ‘mean’ all religions meant ‘to trade freely’, than it becomes clear that Judaism alone morally allowed for capitalist transitions, at least with outsiders. If it was, until the late Reformation, immoral (if allowed) for Christians to lend money, and sell at market prices, Jews where allowed to with outsiders. They where, of course, forbidden with insiders.

By ‘east’ I mean eastern Europe, though the argument would probably work in the middle east to.

7

Judaism allowed every kind of trade except usury with gentiles as much as with Jews. The reason why usury was not allowed for Jews is that it was considered to be immoral to charge interest from one’s family. The same goes for forgiving debts every 50 years. At one point, Jewish rabbis recognized that charging for time preference (and holding on to debts) were necessary for successful business relations, and they designed legal mechanisms that would allow to go around these restrictions. Also, Jews are allowed to sell at market prices to other Jews.

I would suggest that what differentiated Jews from other minorities is that Judaism places importance on work and acquisition of posessions – a Jew is required to serve Creator with everything he has, both physical and spiritual, but serving with material is considered to be more holy (that’s why most commandments are involving material objects), since the material a priori is less “revealing” of G-d. As a result, we don’t find in Judaism any kind of disdain to work or business, except on Sabbath and Holidays. (In fact, until a certain point in history, many famous rabbinic authorities were merchants of some sort.)

So, in Judaism, there is no intrinsic disdain for work or commerce, there is no emphasis at the spiritual being holy, but physical not; nor are usury or competition considered to be intrinsically bad; there are limitations placed on competition with one’s extended family. Such distinction exists, by the way, not just in terms of Jews vs. non-Jews. When selling a field, one must first offer the sale to his neighbor who might want to expand his own field (one is not required to sell to him if the conditions are not favorable). When giving charity, one is first required to give to his family, then to the poor of his town, then to those of neighboring towns, etc. (This is why state-forced charity is actually against Judaism, since it does not allow individuals to discriminate whom to give charity to.)

I don’t really think there is much difference between the situation of Jews in Western Europe and in Eastern, except in Eastern Europe, the conditions in the 17th-19th centuries were similar to the conditions of Jews in medieval Western Europe. Jews were very involved in economic transactions where they were allowed to do so. Also, in medieval Europe, Jews also formed communes (ghettos), which were oftentimes self-governing. But this difference was proportional to Russian Empire lagging a few centuries in economic and social development behind Western Europe.

8

In the overview you proved I manage to see clues of what I suspected: Judaism still held some norms that impeded a fully free market, norms that didn’t apply to relations with gentiles. Anyway, my understanding of Judaism is not that deep, and I may well be in the wrong. Still, I think that historical experience fist too well with the theory described for us to completely throw it overboard.

EDIT: as further clue that Judaism cannot, in itself, have been pro-market, note that no orthodox Jewish community has even bee ‘rich’, even in relative terms, while many individual jews coming from dispersed families have been. Thus, it must be something about the Jewish-Gentile relation that promotes a free market, not something in Judaism itself.

9

I haven’t seen the lecture (I was busy when it was broadcast and might watch it later). That said, what specifically did you find shocking about MIses’ views on Judaism- he was Jewish, no?

Jewish texts certainly have a strong emphasis on the protection of private property; these are exerpts from Exodus, Leviticus, and Deuteronomy (Torah):

You shall not steal. E20: 15

You shall not oppress your neighbor, nor rob him. L19:13

Do not move your neighbor’s boundary stone, fixed by the men of former times D19: 14

You shall not pervert justice in measurement of length, weight, or quantity. You shall have true scales, true weights, true measures dry and liquid. L19:35-36.

Whoever strikes a beast and kills it shall make restitution, life for life. L24:18

When a man steals an ox or a sheep and slaughters or sells it, he shall repay five beasts for the ox and four sheep for the sheep. He shall pay in full; if he has no means, he shall be sold to pay for the theft. But if the animal is found alive in his possession, be it ox, ass, or sheep, he shall repay two. E22: 1-3

When a man removes the cover of a well or digs a well and leaves it uncovered, then if an ox or an ass falls into it, the owner of the well shall make good the loss. He shall repay the owner of the beast in silver, and the dead beast shall be his. E21: 33-34

When one man’s ox butts another’s and kills it, they shall sell the live ox, share the price and also share the dead beast. But if it is known that the ox has for some time past been vicious and the owner has not kept it under control, he shall make good the loss, ox for ox, but the dead beast is his. E21: 35-36

When a man burns off a field or a vineyard and lets the fire spread so that it burns another man’s field, he shall make restitution from his own field according to the yield expected; and if the whole field is laid waste, he shall make restitution from the best part of his own field or vineyard. E22: 5

When a fire starts and spreads to a heap of brushwood, so that sheaves, or standing corn, or a whole field is destroyed, he who started the fire shall make full restitution. E22: 6

When one man gives another silver or chattels for safe keeping, and they are stolen from that man’s house, the thief, if he is found, shall restore twofold. But if the thief is not found, the owner of the house shall . . . make a declaration that he has not touched his neighbour’s property. In every case of law-breaking involving an ox, an ass, or a sheep, a cloak, or any lost property which may be claimed, each party shall bring his case before God; he whom God declares to be in the wrong shall restore twofold to his neighbour. E22: 7-9

When a man gives an ass, an ox, a sheep or any beast into his neighbour’s keeping, and it dies or is injured or is carried off, there being no witness, the neighbour shall swear by YHWH that he has not touched the man’s property. The owner shall accept this, and no restitution shall be made. If it has been stolen from him, he shall make restitution to the owner. If it has been mauled by a wild beast, he shall bring it in as evidence; he shall not make restitution for what has been mauled. E22: 10-13

When a man borrows a beast from his neighbour and it is injured or dies while its owner is not with it, the borrower shall make full restitution; but if the owner is with it, the borrower shall not make restitution. If it was hired, only the hire shall be due. E22: 14-15

Good stuff.

10

Mises basically said that Judaism has no spiritual or philosophical component, and all that Judaism is nowadays is just a bunch of rituals. He adds that there was basically no change in Judaism in the last 2000 years.

All of those statements are shockingly false. Especially the last one. (By the way, he says the same about Islam.)

Mises was a Jew in a number of senses (e.g., he belonged culturally to a Jewish community, he was a Jew “by blood” whatever that means, he was a descendant of Jews), but not in a religious sense. To give a Christian example, he was more of an Italian than a Catholic. The same goes for many assimilated Jews. I am not judging here in any way; I am just saying that it is understandable why Mises did not have a good idea of what Judaism is – for him Judaism was (using modern American examples) “Seinfield, menora, latkes, star of David”.

All the examples you cite are very famous and well known, but Bible is just a very small part of Judaism. There is very rich Talmudic and post-Talmudic literature that discusses everything mentioned in Bible in excruciating detail. Every single detail of one’s everyday life is discussed in some way. Every possible business transaction is looked at from different points of view through the eyes of hundreds authorities throughout centuries.

11

Oh, ok. I’m sure the examples would go on, I just meant to provide some excerpts from the Tanakh (being most familiar with the Torah).

12

If you read through Mises’ works you probably will not find much in appraisal of religion, he was an atheist, and it appears one who saw religion as merely mysticism and hand tricks. I don’t know much about Marx’s views on Jews, except if I’m correct he compared Judaism to capitalism, finding parallels, which might have lead to possible anti-Semitic views or possible contexts in his writings. I don’t know much about Sombart, of if he was Jewish, but Marx and Mises were both Jews ethnically.

13

Sorry, I think that is completely not true. You can find many very rich Jewish communities historically. Alexandria (Egypt), Babylonia, Anatolia (Turkey), Italy, Spain, France, Germany, England, Poland. Nowadays, there are plenty rich Jewish communities – in US, France, Brazil, UK, Canada, etc.

In fact, I am hard-pressed to think of a Jewish community that was not rich. Only Russian Jews come to mind, and they were very poor because the Eastern-Polish/Ukrainian community was decimated by Bogdan Chmel’nitzky uprising (so many people were killed that that fact alone accounts for the higher incidence of Tay Sacs and other genetic diseases amongst Ashkenazic Jews) and later Tzar-sponsored pogroms and economic oppression.

Now, many communities were eventually expelled from their native countries, their property confiscated. But when they were allowed to live in peace, they reached great prosperity.

I am not saying this is evidence that Judaism is particularly good for free markets, or anything else. I tend to stay away from such arguments (there are plenty religious Jews who claim that Jewish financial success has been due to business ethics present in Jewish law). I think it’s always a combination of things.

For one thing, Jews have always been rather educated – and that stems from the peculiarity of their religion. In Judaism, more than in any other religion, there is an enormous emphasis on daily study and analysis of texts (for example, it takes seven years to go through Talmud if you study it daily; and besides Talmud, there is an enormous number of commentaries). That explains why, once Jews stopped being religious in a particular geographic area, they went into politics, literature, sciences, etc.

So, tendency to be more well-read and educated (and constant intellectual stimulation through study and analysis of legal and philosophical texts) can explain why Jews fared better economically than many other minorities.

Anyway, this has more to do with Jews and less with Judaism…

14

I don’t have a problem with Mises being an atheist or thinking of religion as a bunch of hocus-pocus. I have a problem with straw-man arguments (I mean, I don’t really have a problem with them; I just think they are somewhat non-interesting). One would hope that if he criticized socialism, for example, he criticized the real thing, not an over-simplified caricature of it. And I assume that is clearly evident from his writings. Actually, in the lecture, Dr. Gordon calls Mises’s analysis dubious.

Both Marx and Mises were “ethnically” Jewish, but they were not practicing Jews. The thing is: unless one is practicing, it’s very difficult to have very deep knowledge of what Judaism is, unless one has a good reason to read through all the legal texts. I find that even college professors of Judaism who themselves are non-Orthodox have very poor knowledge of Judaism. I know I sound biased, but I had discovered this before I became religious myself and wanted to learn more about Judaism.

So, in fact, most American Jews today have very caricaturesque knowledge of what Judaism is.

So, basically, going at length to describe Marx’s views of Judaism vs. capitalism is as interesting as going at length to describe what Paul Krugman’s views of ABCT are (in fact, even worse).

15

Well, to some degree you’re right, but there is another way to look at it: Judaism is basically pro–free market, but when one has dealing with your family (which, for a Jew, includes all Jews), there are additional considerations. For instance, even among many libertarians, one would consider it strange to charge interest when giving a loan to your parents or siblings. If your brother owns a field next to yours, and you’re selling your field, it makes sense to say that it’s nice to offer it to your brother first (considering he is willing to pay the market price), so that he can expand his field. Etc.

It still means that one has to be fair in business dealings with non-Jews (one cannot commit theft, fraud, one has to pay for damages, etc.), but one does not have to go above and beyond free-market relations.

But to a large degree, this discussion is academic. At a certain point, rabbis recognized necessity of banking. They created a legal loophole called heter iska that allowed Jews to lend money to other Jews for interest. They also created a mechanism that allowed debts to continue to be binding even after the Jubilee year. Etc.

So, while it is still forbidden for me to charge interest from my mom for borrowing $100, if I really wanted to lend someone a significant amount of money (or borrow it) with interest, we could go to a rabbi and fill out this form in front of witnesses.

16
17

That’s highly unlikely. Regardless of how many were killed there were stil far more Ashkenazis in Poland/Ukraine than anywhere else. If you’re looking for tiny and isolated communities which therefore have low genetic diversity they are sooner found in ghettos in West Europe.

18

In Eastern European communities, Jews did not intermarry with non-Jews like in Western Europe. If you mean that an Eastern European Jew could always marry someone from a village far away, that simply did not happen. People married within their village and oftentimes within their specific communities. Even nowadays, it is said that there are only seven Chassidic families in all of Crown Heights, NY (discounting the newcomers — i.e., by the time of immigration of this Chassidic group to Crown Heights, there were about seven families; my rabbi from New Orleans, for example, is related to almost all of Crown Heights).

Anyway, I heard this during a talk by a Harvard geneticist studying Tay Sacs.

19

Jews begun to marry non-Jews in West Europe sooner than in East Europe, but on the whole intermarriage was an option for a very short period of time Jews spent in Europe in either case.

20

Ah, you see, we may find some common ground. This ‘you do not trade freely within the tribe’ thing is very, very widespread in every culture, because it is genetically imprinted. Those communities that managed to find a loophole where those that prospered, all else being equal. This is why I see Judaism as crucial in planting the seed of a free society in the west. That seed was later taken on by some protestant sects, and even Judaism itself - from what you say - further extended the ‘zone of free trade’ later on.

Nowadays one is indeed looked down if he charges interest to friends and family, but this modern circle is very circumspect, and no one will say anything if you charge interest to unknown guys (though we seem to be relapsing back into tribalism with modern socialist ideologies). So, now we’re out from that ‘community trap’, but there was a time when only Judaism managed to find loopholes to it. Therein lies its great merit.