Profits and Prophets

Market Economics and Jewish Social Ethics

Nancy Ruth Fox

• Publisher: Palgrave Pivot
• Year: 2020
• Print ISBN:
  9783030405557
• eBook ISBN:
  9783030405564
• Topic: Economics
• Subtopic: Economic Policy
• Index: Economics

This book is a study of potential, perceived, and real conflicts and similarities between market economics and Jewish social justice. The book's ultimate focus is on public policy issues. In the first two chapters, the author presents the conceptual and theoretical foundations of market economics and Jewish social justice.  Subsequent chapters analyze minimum wage, immigration, climate change, and usury from both market economics and Jewish social justice perspectives, discussing conflicts, and, if they exist, similarities.   

© The Author(s) 2020

N. R. FoxProfits and Prophetshttps://doi.org/10.1007/978-3-030-40556-4_1

Begin Abstract

1. Profits and Prophets: Market Economics and Jewish Social Ethics

Nancy Ruth Fox¹

(1)

Department of Economics, Saint Joseph’s University, Philadelphia, PA, USA

Nancy Ruth Fox

Email: [email protected]

Abstract

This chapter provides an analysis of the conceptual foundations of market economics and Jewish social justice. Both are about decision making—economics is descriptive, and Jewish social justice is prescriptive. Economics emphasizes the individual, while Jewish social justice emphasizes the community and each person’s responsibility to others. There is, however, considerable practical economics in the Jewish tradition. Prosbul (a work around to the remission of debts), profit ceilings, and the definition of need are examples discussed in this chapter.

The Talmud teaches, “But for the evil desire, no man would build a house or take a wife and have children or buy and sell in business.” Substitute “self-interest” for “evil desire,” and it sounds a lot like the role of incentive in decision making.

Keywords

Market economicsJusticeDecision making

End Abstract

Introduction

One of Hillel’s¹ most famous teachings illustrates an important contrast between market economics and Jewish social ethics. In Pirke Avot, Ethics of our Fathers (1:14) Hillel taught, “If I am not for myself, who will be for me?” The answer might be a fellow Jew because community and concern for others are core Jewish values. It might also be a defensive explanation of self-interest, for fear others will do the same.

The second part of that teaching says, “if I am only for myself, what am I?” The answer might be “homo economicus,” the “economic man” described by a market economist. The rational decision maker that economists observe and study takes only his/her own well-being into account, without regard to how it affects others and without any regard for anyone else’s well-being.

Essentially, both market economics and Jewish social ethics are about decision making. Economics is about how people do make decisions, and Jewish ethics is about how they ought to make decisions. Economics, a social science, is descriptive—it describes people’s behavior; economists look at what is and predict outcomes. Judaism, a faith and ethical tradition, is prescriptive—it looks at what is and its outcomes and advises what should be. Jewish ethics instructs people how they should live.

But why do we need prescriptions, rules about how to live? It must be the case that people would behave differently—and presumably in an unacceptable way—without them. In this way, in fact, both economics and Jewish ethics seem to view people’s natural instincts in the same way—self-interested. If not, there would be no need to provide ethical guidelines for living.

Economics is about the first-person singular; it’s about “me.” And while it may seem at times that I do take others into account when I make a decision (like volunteering, for example), I make that decision because it makes me feel good; that’s my motivation. When asked why they volunteer at places like homeless shelters or soup kitchens, most respond it is because they “feel good” helping the less fortunate. The motivation comes from the effect of their action on themselves, not on others.

On the other hand, much of Judaism is about first-person plural; it is about “us,” even for something as basic to Judaism as prayer. For many prayers, Jews are required to pray as a community; a minimum of ten is required for a minyan .² Although not universally so, numerous prayers are in the plural. Baruch atah adonai, elohenu melach haolam, asher kiddshanu … Blessed are you, Lord our God, ruler of the universe, who command us … (Rabbinical Assembly, Sim Shalom 1998, p. 301). Even on Yom Kippur, the holiest day of the year, when Jews recite the Ashamnu and Al Het prayers , the confession of sins, they too are in the plural. We have sinned (ashamnu—we are blameworthy; bagadnu—we have betrayed our ideals; Al Het—for our sins committed through hardness of heart and for our sins committed by betraying others) (Greenberg and Levine 2001, pp. 434–441).

The Market Perspective

Most succinctly, economics is the study of how individuals and societies make decisions in the context of unlimited wants and limited resources. It is based on the premise that individuals respond to incentives and make rational decisions to maximize their own, personal, satisfaction. Firms make rational decisions to maximize their profit. The goal of an economic system is efficiency—producing as much as possible of what people want, with limited resources, at the lowest cost.

The combination of the primacy of the individual and the satisfaction of preferences necessarily precludes any judgment concerning the intrinsic merit of the goods that are produced. The market “does not regard any one individual’s preferences as less worthy [or less legitimate] than anyone else’s, as long as one can pay for one’s own satisfactions … [the market reduces preference] to mere matters of taste, about which it is pointless to dispute” (Anderson 1990, p. 183). The justification “because I want it” is sufficient. The possible result that Worldwide Wrestling is more profitable than opera, because of individual preferences, is of no concern to the market. As Michael Sandel puts it, “market reasoning also empties public life of moral argument. Part of the appeal of markets is that they don’t pass judgment on the preferences they satisfy. … They don’t discriminate between admirable preferences and base ones” (Sandel 2012, p. 14).

Satisfying consumer preferences is desirable only if one regards the individual as the fundamental unit of society, as the market does. The efficiency of the market is consistent with the primacy of the individual and the liberty and freedom associated with it. Those who reject the individual as the fundamental unit of society will necessarily object to the market results. Those who believe that the common good, however defined, takes precedence over the wants of the individual will not endorse the market system.

Firms succeed when they satisfy consumer preferences. The market responds to consumers’ wants, not their needs. Peoples’ preferences “count” in the marketplace only if they have income to pay for them. This effectively eliminates those without income from the market. Insofar as it is desirable for all consumers to “count,” this is a type of market failure. “[W]illingness to pay for a good does not show who values it most highly. This is because market prices reflect the ability to pay as well as the willingness to pay” (Sandel 2012, p. 31).

The market perception of the individual and the concept of the dignity of the individual are two conflicting views. One would correctly conclude that the market does not respond to or reflect individual human dignity. To do so would require a response to need rather than to want. The market, therefore, cannot directly promote a goal that incorporates notions of human dignity and an option for the poor.

The way we measure how well the economy is functioning reveals the dichotomy between market economics and Jewish economic justice, efficiency and equity, individual preference, and common good. When we measure economic well-being, we look at GDP, gross domestic product—the dollar value of goods and services a nation produces. As of July 2019, GDP in the United States was about $21 trillion.³

It does not matter what is produced—schools, books, guns, roads, pet rocks, or beer. Strong growth in GDP is considered desirable; slow or negative growth is cause for concern. Note the irony—if everyone gave up smoking, fewer cigarettes would be sold, employees at Philip Morris would lose their jobs, and doctors who treat lung cancer would have fewer patients. All else equal, that would tend to decrease GDP, even though most people would probably agree that we are better off when people quit smoking. Economists have ta...

Table of contents

• Cover
• Front Matter
• 1. Profits and Prophets: Market Economics and Jewish Social Ethics
• 2. What’s So Good About the Market?
• 3. Minimum Wage/Living Wage
• 4. Immigration
• 5. Climate
• 6. Usury
• 7. Conclusion
• Back Matter