Is the Torah Capitalistic or Socialistic?

B’OR HA’TORAH 8 (1993)
Is the Torah Capitalistic or Socialistic?
by Professor Yehudah Levi
T ranslated from Prof . Levi's forthcoming Hebrew book , Judaism Faces Current Issues.
We are currently witnessing the collapse of communism. For 70 years communism in
the former Soviet Union subjugated the lives of millions who stood in its way and
conquered the hearts of hundreds of thousands of others, who from afar saw it as the
redemption of humanity, leading to the end of days when "the wolf shall live with the lamb
and the tiger shall lie down with the kid" (Isaiah 11:6) . Ostensibly based on pure
brotherhood, communism wreaked havoc upon entire populations until it was finally
proven false. Now, while the "socialist experiment" is being dismantled, is a good time to
look at the Torah's approach to economics, is it capitalist or socialist?
First of all, we shall analyze the major approaches found in the developed nations
today. We consider here only the fundamental principles , regardless of whether such
economic systems exist in practice in their pristine form. True , there is today no purely
capitalistic regime. This , however , does not prevent us from discussing separately the
principle of capitalism as well as the socialistic elements with which it has been alloyed.
Apparatus and Ideology
There exist mainly two national approaches to economics: capitalism which protects
the right of the individual to his property , and socialism , which controls the property of the
entire society , especially the major means of production . (In its most extreme form, called
communism, socialism denies the right of the individual to acquire property entirely.)
These are the apparatuses of the two systems . In addition to its apparatus , each system
has its inherent spirit and ideology. Capitalism believes in private initiative and
encourages competition as the healthy basis needed for economic success. Private
initiative and competition, together with the right to private property, are the cornerstones
of capitalism. Socialism, on the other hand, believes that it is the duty of society to look
after the needs of each individual; love of fellowman is to drive the economy.
From the sociological point of view, pure capitalism leads to the subjugation and
exploitation of the weak by those stronger and more clever. In capitalist soc iety, a large
poor class serves a small wealthy class. And although the capitalist ic nations have learned
to moderate their system and make it more humane, its basic selfishness remains.
114 Torah - Capitalistic or Socialistic?
Trying to correct the inequity of capitalism, socialism denied the individual his
right to acquire and possess property. Instead, the entire society controls all the
property and means of production. From
the point of view of physical possessions,
this makes everyone equal. Ostensibly,
no one can be exploited. In theory, everyone contributes to society according to
his ability and receives from it according
to his needs . Socialism is built on lofty
ideals, on ethics and brotherhood, whereas capitalism is based on egoism and rivalry.
Moreover, in a capitalist economy
everyone works and produces as he wishes. Often, one person's efforts conflict with
those of another, and the one cancels out
the other. This is in addition to the chaos
of wasteful duplication. On the other hand,
a socialist economy is planned according
to the priorities of the entire society and coordinated to prevent conflicts and duplication.
What system does the Torah advocate? When we examine halacha (Jewish
law), we find mainly a capitalistic approach. The halacha protects the rights of
the individual to own and control his own
property. True, there are socialistic elements* within the halacha, limiting the individual's control over his property - and
we shall discuss them at the end of this
article. From a purely economic point of
view, however, they seem marginal. If so,
how can we understand that the Torah the epitome of morality, which teaches us
that refraining from doing that which is
hateful to others is all the Torah in its en• When we refer here to 'socialistic elements in the
Torah," we obviously do not mean that these elements were taken from socialism. We are simply using this term according to its current meaning.
B'Or Ha'Torah
tirety 1 - espouses capitalist rather than
socialist economics?
Socialism in Action
In order to understand this, let us leave
the theory aside for a moment and look at
the results of the experiments in the field.
About 70 years ago, an enormous "socialist laboratory" was established in Russia.
Since then, "subsidiary laboratories" were
set up in a number of other countries. All
of them failed exactly in the two areas
which socialism wanted to correct - in the
areas of ethics and efficiency. When the
East German government erected the Berlin Wall in 1961, its purpose was to prevent
its own citizens from escaping, not to stop
Westerners from enjoying the socialist paradise. The communist denial of human
rights has become proverbial, and as to
economic efficiency - how fortunate it is
for the world that industrial and technological failure thwarted communist imperialism.
Why is there such a blatant contradiction between the theory and reality of socialism? The answer is simple. Whereas
the Torah was written by the Creator and
is suited entirely to this world, socialism is
the product of human beings, of whom
even the wisest are limited in their wisdom.
In analyzing the failure of socialism, we
shall deepen our understanding and appreciation of the Torah's system.
There are two reasons for the inefficiency of socialism. A very large apparatus
is needed to organize an entire economy
according to a general plan, and then to
execute, supervise, and enforce it. When
1 Talmud Shabbat 31. See Sefer Mitsvot Gadol, Positive Commandment 9 (on loving one's fellow Jew) .
B'Or Ha'Torah
the majority of the population is engaged
in this clumsy apparatus rather than in production, we need not wonder where did
economic efficiency go. This is also the origin of the infamous socialist bureaucracy,
which not only wastes enormous quantities
of manpower , but leads to inefficient operation because the average bureaucrat has
no special reason to serve the public efficiently. The power of the bureaucrat's position quickly becomes an end in itself,
from which everyone suffers . Corruption
and bribery are not rare by-products of bureaucracy.
Granted, the pure capitalist system also
needs legislation and supervision, but on a
far more limited scale and principally to protect the rights of the individual. In contrast,
socialism controls production and marketing, education and health, religion, culture,
and entertainment, in addition to protecting
the rights of the individual. In a capitalist
system, government intervention in these
realms is minimal, whereas in the communist system, government intervention is
very broad and deep . Such intervention not
only affects efficiency but also tempts the
ruling group to control the spirit and opinion
of the people. The pretext for doing this is
that the people (i.e., the regime) must educate the individual. This power is easily exploited by a selfish dictatorship, which is
why communism has become almost synonymous with dictatorship.
The second reason for the inefficiency
of socialism is inherent in human nature.
Man is born an entirely egoistic creature ,
"for the impulse of man's heart is evil from
his youth" (Genesis 8:21). Although he can
be educated, this is work of a lifetime , and
in the end - maybe he'll come close to true
brotherly love. A sociological system
should take this into account. Thus, it is
not reasonable to expect a person to de-
Torah- Capitalistic or Socialistic? 115
vote himself to a public mission with the
same commitment and enthusiasm as he
would to a personal initiative supporting
his family. As socialism turns every economic activity into a public mission, it is
bound to suffer from lack of zeal and care.
Not only does it thwart economic efficiency, but , in addition, habit becomes nature,
and eventually socialism fosters laziness
and waste.
Socialism leads not only to inefficiency,
but also to bad character traits. A dangerous deterioration of character occurs
through the socialist discouragement of
precisely the traits needed to improve society. Paradoxically, socialism exempts the
individual from all responsibility toward
others and society. The state takes from
the individual all responsibility except his
regular work, which, too , tends to become
slovenly under that system. A person who
has no money cannot give charity to the
poor; rather, the state does this. A person
not capable of initiating activity for the public good will very quickly stop worrying
about the public good, and gradually lose
interest in helping to improve society because "man is formed by his actions .”2
How Torah Economics Work
The Giver of the Torah knew all this
and therefore chose a capitalistic apparatus for His people Israel and humanity in
general. (The prohibition against theft, protecting the right of the individual to his
property, is one of the Seven Laws of
Noah.3) Moreover, when we study it closely , we discover that indeed the Torah
Sefer Ha 'Chinuch, Commandment 16.
Talmud Sanhedrin 56A.
116 Torah - Capitalistic or Socialistic?
adopts the capitalist apparatus, but negates in principle the capitalist ideal of encouraging competition. Thus, the Torah
succeeds in preventing the negative influences found in capitalism. It educates us
to develop brotherly love and good character traits. Whereas the motor pushing the
capitalist economy is competition, the ideal
of the Torah economy is brotherly love. In
as far as this Torah ideal is achieved, the
problems of capitalism are corrected. In
other words, the economic system of the
Torah is based on a capitalist apparatus
and socialist ideology.
This is not to say that Judaism forbids
competition. Rather, Judaism limits it,
doesn't see it as an ideal, and even educates the individual to constantly moderate
it. We can illustrate this by the talmudic
teaching: "The verse 'When you come into
your friend's vineyard, you may eat your fill
of grapes' refers to the laborer."4 As long
as the laborer and the vineyard owner see
each other as friends, most of the problems of capitalism have already disappeared.
How does the Torah achieve this? Actually, it seems that all of the Torah, including
the halacha, is directed at this. Our Sages
said: "What does G-d care if someone
slaughters from the throat or from the back
of the neck? He gave the mitsvot only to
refine mankind."8 This is simply what we
Talmud Baba Metsia 878, based on Deuteronomy
23 :25. The Torah says this in a general way, as if
anyone is allowed to pluck the produce in the field thus are we to see every Jew as a brother. But as
this is difficult to achieve , and few people attain this
moral level, the Torah limited the permission to the
laborer, to whom the owner has a special responsibility. This is the interpretation of Rabbi Raphael
B'Or Ha'Torah
said previously, that brotherly love is in tact
"all the Torah in its entirety," that is, all the
Torah and all the Commandments. And although the mitsvot are meant to teach us
sanctity and fear of Heaven, these are also
steps in developing brotherly love, based
upon the Divine image in which man was
created. And indeed all the mitsvot are a
chain in our education toward love of humanity. But there are mitsvot in which this
intention is especially evident, and among
them are the "socialist Commandments"
through which the Torah limits the right of
the individual to his property in order to
benefit the needy. Let us look at some of
these "socialistic mitsvot."
Prohibition on Interest
There is nothing morally wrong in taking interest. If I am permitted to demand
rent payment for my house, then why can't
I have the right to receive payment when I
"rent" out my money? There is nothing
wrong in taking interest - but within the
family one does not take interest. That is
why Nachmanides wrote: "Interest is forbidden only because of brotherhood and
loving-kindness, as it is commanded, 'Love
your neighbor as yourself… lovingkindness and mercy he will do to his brothers when he lends them [money] at no
interest.' "6 (This refers to someone who
borrows out of personal need. There are
also people who borrow for business initiatives. In this case, the lender has the full
right to demand his part of the profit from
the business, if he is willing to share the
risk with the borrower.) In addition, perhaps the prohibition against interest is also
among the mitsvot intended to limit our
Midrash Bereshith Raba 44 : 1; Midrash Tanchuma,
Shemini 7:8.
Nachmanides on Deuteronomy 23:20.
B'Or Ha'Torah
rights to our property and remind us that
G-d owns Heaven and Earth.7
Giving to the Poor
The Commandments for farmers to
leave fallen produce, forgotten sheaves,
and a corner of the field for the poor have
a socialist nature, but they are not economically significant because they have no
minimum defined by original Torah law.
Thus these mitsvot cannot be viewed as
being commanded principally for economic
reasons. Even the tithe to the poor, where
the exact amount is specified by halacha,
allows the owner to choose which pauper
to give to, thereby diminishing the socialist
character of this act.
"Land Sabbatical" (Jubilee) and "Money
Sabbatical "
The Torah requires that the sale of all
real estate (except houses in walled cities)
be in the form of a leasing arrangement ; all
such property returns to the original owner
in the fiftieth - Jubilee - year (Leviticus
25 :8ff). This is called the "land sabbatical."
In addition, the Torah commands that we
cancel, at the end of each seventh year, all
outstanding debts which were due before
then (Deuteronomy 15:1-3). This is called
the "money sabbatical."
These sabbaticals are limits which the
Torah imposes upon our right to property
in order to benefit the needy. The land
sabbatical protected the people of Israel
from deteriorating into a majority of tenant
farmers working land owned by a small
elite. Such inequity was widespread in the
Rabbi Samson Raphael Hirsch on Exodus 22 :24.
Torah- Capitalistic or Socialistic? 117
ancient world and still afflicts many countries today . Its curse lies not only in the
poverty it causes , but also in its effect on
the personalities of sharecroppers living in
servitude . Such enslavement conflicts with
G-d's Will for us to be His servants - and
not the "servants of servants ."a Our service to G-d is complete according to the
perfection of our spiritual, material , and economic strength .9
The above mitsvot are intended to
teach us that we control our property not
by our own right, but by v irtue of its true
owner : "For the whole earth is Mine" (Leviticus 25 :23) and "The silver is Mine and
the gold is Mine, says the L-rd of hosts"
(Haggai 2 :8). Rabbi Yonata n Eybshitz expressed this idea explicitly on the money
sabbatical : "This mitsva causes Israel not
to get excess ively involved in trading and
negotiating business deals... one needs to
borrow from one' s brother to do this ...
which is not possible to do while keeping
this mitsva."10
Rabbi Eybshitz adds, "We are obligated
to be f rugal." Frugality negates capitalism ,
which thrives on over-consumption .
The above mitsvot are not primarily intended to solve specific social problems ,
but rather to solve all problems in general
by educating us to realize that we are not
truly the owners of our property . We must
use property as its Owner wants us to with concern for our fellow man, our partner in serving G-d. Through their educa8
“Four [types of people] are considered as dead:
the poor, the leper , the blind, and the childless "
(Talmud Nedarim 648). One who does not have
any land can- not bring first offerings to the
Temple (Mishna Bikurim 1:2).
Rabbi Yonatan Eybshitz, Urim V’Tumim on
Yoreh De'ah 67:1.
118 Torah - Capitalistic or Socialistic?
tional impact on our personality, these
mitsvot solve social problems in a general
and fundamental manner. The economic
apparatus of the Torah is capitalistic, but
its spirit is socialistic.
Other questions that need to be answered are: How should the tax burden be
divided among the population? What is the
Torah attitude to economic institutions such
as ministries of welfare, which nation-
B'Or Ha'Torah
alize charity and kindness; social security,
which is a form of forced insurance; workers' social benefits protected by law; rent
control laws; and legislation against cartels? None of these institutions and laws
existed in the far past, but today they are
accepted also by capitalist regimes. What
does the Torah say about these developments? These must be treated in the next
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