The Challenge of Wealth

By Dr. Meir Tamari

The drought and the famine that occupy this and the following parshah raise the whole issue of the ethical and moral treatment of basic foods and essential goods and services in any economy. The moral issue is who is to be responsible for the steps that need to be taken in order to alleviate the suffering and hardship that result from shortages or disasters. Should every person be left to his or her own choice and device in order to find protection or does society have a responsibility in this area? This question applies irrespective of whether it is natural disaster, war or economic disruption that cause damage, shortages or famine.

In all cases, it is clear that Judaism argues that in the last resort, society has an obligation to protect through coercion and education, the basic needs of those unable to provide for them-selves in this respect, irrespective of the cause. This flows primarily from the communal-national nature of Judaism but also from the wisdom that egoism and selfishness necessarily limit the power of personal philanthropy to solve questions of such magnitude. It is not surprising therefore to find halakhic rulings and communal enactments that come to do exactly that. It should be borne in mind that in such legal and communal intervention, the rabbis knowingly distort the market forces that they were familiar with and even generally accepted as efficient, essential and moral.

Generally speaking we can discern 4 forms of intervention:

Restrictions on Marketing.

"One may not earn twice on the sale of eggs" (Baba Bathra, 91a). In the ensuing discussion there emerges a difference of opinion between the two sages Rav and Shmuel as to the meaning of the word “twice”; the first referred it to 100% profit and the second to the middlemen in the chain of marketing; most authorities hold the latter opinion. Similarly, while Maimonides rules that the injunction refers specifically to eggs, the majority opinion presented in the Shulchan Arukh, sees eggs as only an example and therefore extended the injunction to all basic foods (Choshen Mishpat,section 231). “ A person may not earn a livelihood in Eretz Yisrael by trading in basic commodities… In those places, however, were oil is plentiful, it is permissible to earn one's livelihood from trade in it" (Talmud op. cit). Such restrictions by preventing middlemen should ensure that prices would not be inflated thereby. However, where extensive distribution by middlemen is to the benefit of the consumer it is quite permissible to do. We see this in the distinction made in that same Talmudic source between those who simply traded in unchanged goods and those who packaged or transported these goods and therefore made a real economic contribution that permitted them to trade in these goods.

Price control.

All the codes and rabbinic decisions maintain “that the Bet Din is obligated to announce the fixed prices [of basic goods] and to appoint inspectors for this purpose.... They only allow a profit rate of 1/6[ calculated as a percentage of the costs] and the seller shall not earn more than this.[ Furthermore, all the authorities agree that people of a city, through a majority vote of all citizens or through their representatives] "can fix the prices of goods of bread and meat as they see necessary. Anyone not complying with the ruling may be punished” (Mishneh Torah, Hilkhot Mechirah, chapter 14; See Choshen Mishpat, section 231 for a slightly different definition of basic goods). In all places should prices rise as a result of changes in demand or supply, the seller is free to charge whatever he likes until a new communally adjusted price is announced.

Since there is plenty of evidence that the Talmudic Sages, understood the effect of demand on prices, it is easy to appreciate that they took steps to affect demand. In principle such steps have their source in the following mishnah. "The price of the pigeons sacrificed by women after childbirth reached one golden dinar. Rabbi Shimon ben Gamliel announced that he would not leave the bet medrash until he reduced the excessive cost of the pigeons. He then taught that a woman could bring one set of pigeons, irrespective of the number of births. This [halakhic change in the demand] led to a decline in price that very same day to a quarter of a silver dinar [1000 of a golden dinar]” (Keritut, chapter 1, mishnah 1). This method of frustrating rises in prices and monopolies by changing religious rulings has continued to serve halakhic authorities throughout the ages. For example, the eating of fish was ruled out for Shabbat, because of the rise in their price by a cartel of fishermen (Tshuvot HaTzemach Tzedek, section 21 (16th Century). See also Mishnah Berurah, Hilkhot Shabbat, 20th Century). In the same way, in our own day the sale of Etrogim in closed boxes thereby minimizing customer competition in order to get the most perfect etrog, has been introduced under rabbinic instructions.

Encouraging supply.

"It is forbidden to export from the Land of Israel goods essential to life [motzrei chayei nefesh].... Rabbi Yehudah HaNasi permits the transfer of goods from one province to another in the land of Israel" (Baba Bathra 90b). Maimonides rules against Rabbi Yehudah since such export would cause a shortage in the province from which the goods were sent. It is interesting to note that Rabbi Ben Beteirah permitted the export of wine on the grounds that the decrease in supply would lessen the immorality that so often flows from excessive drinking. This is another example of the interplay between general moral considerations and purely economic ones that is so typical of the Jewish treatment of economic questions.

When the welfare of the average consumer was affected this took precedence over the abnormal profits due to scarcity that could be earned by entrepreneurs. So much so that a basic halakhic rule of commerce was changed. Generally speaking movable goods cannot be purchased by money alone but require an act of possession. This meant that the seller retained the responsibility for any damage to the goods sold while they were in his possession; otherwise the seller would naturally be negligent in regard to property that was no longer legally his. However, before the festivals a buyer was permitted to acquire a piece of meat merely by paying the price of that part. The butchers for their part preferred to slaughter as few animals as possible in order to benefit from the increased demanded due to the festivals. So the ruling that they had to slaughter an animal even if only one customer wanted to buy one dinar of meat from a ox that was worth 1000 dinarim" effectively curtailed rises in price (Chulin,83a)

Moral Teachings.

Any form of price control, rationing, or intervention aimed at changing patterns of demand or supply when an economy is in a state of dis-equilibrium [that causes shortages etc.] must give rise to a black market or to illegal price changes. The only protection against this is a consensus that the intervention is morally justified. When there is no such consensus, as for example during the prohibition years in United States, all intervention must be counterproductive and create moral problems that may be greater than that they came to solve.

The rabbis in all the generations clearly understood the economic wisdom of "cornering the market" at a time of excess supply and then selling when demand increases or when shortages occur. They were concerned only with the moral problem. So the Talmudic discussion on basic goods ends by saying: "those who hoard produce, those who lend money at interest, use false weights and price gougers are those referred to by Amos when he says,
‘the Lord has sworn that he will never forget their actions". They distinguished between dealers and middleman for whom speculation was forbidden and the producers themselves. The latter are under no moral obligation to sell their produce to the general public and may retain it in order to benefit from the shortage (Baba Metzia, 90b)

Copyright © 2002 by Rabbi Meir Tamari and Project Genesis, Inc.

Dr. Tamari is a renowned economist, Jewish scholar, and founder of the Center For Business Ethics (www.besr.org) in Jerusalem.