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 2 Sefer Ha 'Chinuch, Commandment 16. 3 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 4 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 Breuer. 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 5 Midrash Bereshith Raba 44 : 1; Midrash Tanchuma, Shemini 7:8. 6 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 7 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 Talmud 10A. Baba Metsia “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). 9 10 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 installment.