Government in the Marketplace

by Dr. Meir Tamari

Earlier in this century, Judaism was presented as a predecessor of socialism or communalism. However, already in the Reagan-Thatcherite years, voices arose which linked Judaism to an unfettered free market. More recently Judaism is now being portrayed as denying economic regulation, government in the marketplace and public sector responsibility for solving social issues. Unfortunately, none of these claims, neither of right nor of left to Judaism, seems to be substantiated by either any review of our written sources or by actual historical fact.

It is true that there is halakhic recognition of private property, the profit motive and the individual retention of the wealth created. Furthermore these are seen as so basic to the human condition that any denial thereof is understood to be impossible, and Torah never demands of us that which humans are unable to achieve. The sages saw one who said “what’s mine is yours and what’s yours is mine” as an ignoramus. Any attempt to destroy human nature or to deny legitimate desires has always led to distortion and corruption. So, too, the last 70 years have provided ample evidence of how denial of private property and the substitution of centralized planned economies for the decision process of the market, leads ultimately to an immorality and injustice as great as that which they came to solve. So Torah cannot be regarded as synonymous with socialism or economic policies which deny private property and individual striving for wealth.

At the same time, there is nothing unlimited in Judaism, so there cannot be unlimited private property, nor can efficiency in wealth creation be regarded as the aim of human existence. What is legitimate is only so if it is limited by the Divinely ordained demands of justice and charity. The yetzer harah, evil inclination, for wealth, while being essential for human progress and development, is still just that –a yetzer harah.

As all other urges of mankind, this yetzer can be educated and trained towards holiness. However, in Judaism this education is never left only to the desires and judgment of the individual. It is coerced through a network of legislation enforceable by human agency, yet tempered by spiritual education. This network gives to society the right to restrict and use individual wealth both in order to protect the rights of others and to meet society’s obligation to the weak, the old, the sick, the inefficient and even the lazy.

One may not use one’s property or person to harm another’s property or health, privacy or aesthetical pleasure. So zoning laws which prevent pollution and damage to private or public property have been part of Jewish law since its inception. Since one may not endanger one’s own health or life, let alone another’s, industries which are health hazards beyond a normal risk may not be allowed to operate even with the consent of the employees. Even society does not have the unlimited right to waste or pollute natural resources to achieve growth. Man is given the care of this world but his guardianship requires consideration of the needs of future generations. One is not allowed to destroy property, even that which legally belongs to oneself, since this is a denial of the Divine origin of wealth. Torah provides legislation to prevent this. Even where one cannot be prosecuted, many actions which are damaging and polluting are forbidden to the Jews.

As this guardianship incurs cost, we point out that not only personal charity is enjoined on the Jew, but society has the moral right to taxation in order to meet the social and religious needs. Indeed, until the Napoleonic Wars, the autonomous Jewish communities, which were in effect ministates, maintained a ramified fiscal system which did exactly that. While the distinction between deserving and undeserving poor is a Christian concept, the Jewish fiscal system was obligated to assist even those who had become poor through their own laziness, stupidity or even addiction. So one who uses his money to smoke cigarettes needs to be kept alive despite his addiction. Even one who is jailed for fraud needs to be redeemed from prison using communal funds. Tzedakah, philanthropy and tzedakah, are twin strands in Jewish thought and law. One may force payment of taxes for the weak, the poor and the sick even on the eve of Shabbat.

However, the public sector intervention goes beyond prevention of damage or enhancement of the environment and the provision of social protection. Subsidies, rent control, price control, prevention of monopolies and the promotion of the public good at the expense of the individual entrepreneur, are features of the whole halakhic system. Since giving a person a job or enabling people to create their own businesses are recognized as the highest form of charity, public sector intervention such as full employment policies to translate these into reality, would be legitimate.

Judaism protects all the parties to a transaction and sees as a fraudulent sale anything in which defects are hidden and full disclosure is not made. Contrary to the concept of let the buyer beware, Jewish law enjoins society to supervise and regulate full disclosure.

Bearing in mind the limiting nature of Judaism it is not surprising to find that this public sector intervention in all its forms is as limited as is the free market. The economic welfare of society, as distinct from individuals, may bring about a relaxation of environmental laws where these do not protect health or do not substantially harm individual property. The right of eminent domain and of taxation is limited to the needs of society, and may not be used for personal benefit of the governors, nor may it be wasted. Taxation may not be confiscatory; arbitrary or discriminatory. There does not seem to be any basis for taxation as a means of redistributing income.

Charity as philanthropy and as taxation, rather than welfare, is the Jewish model, so that the assistance society is obliged to give is not an entitlement for the recipient but rather an obligation of the giver. There is a shame attached to receiving charity, which prevents abuse. Means tests, except in life and death circumstances, are permissible to prevent fraud and waste. We are commanded to keep the poor, addicted and the weak, alive but not to enrich them. User fees are a legitimate way of funding public services, except where a danger to life exists or where these services are mandatory by Jewish law. Both the egoism of the free market and the corrupting nature of public sector intervention need to and can be avoided by Judaism’s balance between justice and mercy.
Dr. Tamari is the former chief economist of the Office of the Governor at the Bank of Israel, and the founder of the JCT Center for Business Ethics and Social Responsibility.