Leviticus and the Law of Markets

by Professor Eli Schwartz

There is a stream of feeling or thought, some of it held by members of learned professions, which shares a disdain for the study of economics. The field of economics is held to be crass and materialistic, emphasizing production for profit and the accumulation of wealth in opposition to spiritual and social values. This view arises from a shallow acquaintance with economic analysis and is devoid of a deeper knowledge of the economic literature which provides the theoretical framework of the subject. For example, Alfred Marshall, the father of modern economics, made it clear that the market system operates within social units (families or social groups) and within the institutions and rules of social and religious traditions and obligations. Such institutions not only provide for those unable to fully care for themselves; they also set a framework of normalized ethical behavior which eases the frictions of the market.

When examined carefully, the larger part of the rules of ethical behavior promoted by religion and subsumed in the economic discipline, are not promulgated solely on a notion of self-sacrifice. They are subtly founded on a rational base of enlightened self interest. So the ordinance in Leviticus, Chapter 19, verse 35, “thou shall have just weights and measures,” implies the whole corpus of business and industrial law. On a very precise and important level, the rule simply means that the measure of commodities sold in the market shall not be falsified. Furthermore, it just as surely implies a whole multitude of derived laws of behavior, such as that the numbers on financial statements be truthful, that the quality of goods not be falsified, that the laborer not charge for work not done, and that full disclosure be given on the sale of a security. There is grave harm wreaked on the economy when the precepts of just weights and measures are extensively violated. An inordinate amount of time is consumed when each transaction has to be validated: both buyer and seller waste time and effort. The force of the doctrine holds for both commodity and financial markets. A prevalence of false financial reporting would make impossible the existence of a modern financial market. There could be no banks and no security markets, and it would not be possible to accumulate the amount of capital necessary for the financing of large scale efficient enterprises. A simple, short, pragmatic ordinance, carefully placed in a book devoted to rules of purity and sanctification, the precept of just weights and measures, is a basic foundation for a functioning efficient economy.