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Markets and Morals

June 7, 2016 | By: Jonathan Sacks

Friedrich Hayek, noted as one of the twentieth century’s greatest defenders of the free market, also made a case for religious traditions. In theory, the energetic, dynamic, disruptive market would seem to be at odds with the restraint, humility, and anti-materialism of revealed religion. Reflecting on Hayek’s praise for both religious order and market freedom, Rabbi Jonathan Sacks looks to Jewish law and biblical parable to see how, in combination, capitalism and commandment lead to human flourishing. As the observance of Shabbat restrains the human drive for acquisitiveness, Sacks demonstrates how the Jewish embrace of the market economy channels behavior that, unchecked, could undermine social trust and denigrate the human soul.

The great philosophical advocates of the market—Bernard Mandeville, David Hume, and Adam Smith—were struck by a phenomenon that many considered to be scandalous and amoral. This was their discovery that the market produced benefits to all through a series of actions and transactions that were essentially self-interested in their motivation. As Adam Smith bluntly put it: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” Within the system of free trade, as Smith put it most famously, the individual “intends only his own gain, and he is, in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.” This fact—that markets and their associated institutions tend to work on the basis not of altruism but of somewhat earthier motives—has always led to a high-minded disdain for everything suggested by the word “commercial.”

Not so within Judaism. Long before Mandeville and Smith, Judaism had accepted the proposition that the greatest advances are often brought about through quite unspiritual drives. “I saw,” says the author of Ecclesiastes, “that all labor and all achievement spring from man’s envy of his neighbor.” Or as the talmudic sages put it, “Were it not for the evil inclination, no one would build a house, marry a wife, have children, or engage in business.” Purity of heart was essential to the relationship between man and God. But in relations between man and man what mattered was the result, not the sentiment with which it was brought about. Jews would find it easy to agree with the remark of Sir James Frazer that “it is better for the world that men should be right from wrong motives than that they would do wrong with the best intentions.”

In general, then, the rabbis favored markets and competition because they generated wealth, lowered prices, increased choice, reduced absolute levels of poverty, and in the course of time extended humanity’s control over the environment, narrowing the extent to which we are the passive victims of circumstance and fate. Competition releases energy and creativity and serves the general good. Admittedly, Jewish law permitted protectionist policies in some cases to safeguard the local economy, especially when the outside trader did not pay taxes. There were also times when rabbinic authorities intervened to lower prices of essential commodities. But in general they favored the free market, nowhere more so than in their own professional sphere of Jewish education. An established teacher could not object to a rival setting up in competition. The reason they gave for this ruling illustrates their general approach. They said simply, “Jealousy among scholars increases wisdom.”

Read the whole thing in First Things


More about: Jewish Political Thought  • Jews and Markets  • Theology