Judaism

Profits, Debts and Fresh Starts, A Jewish Take on the Entrenchment of Income Inequality

I recently read an article about an artist named Fried Potatoes, who incinerated $500,000,000 of tuition debt agreements from a corrupt University in Chile, rendering them virtually impossible to enforce.

I do not support arson, and I know that the lender here was a particularly egregious criminal, so I don’t suggest emulating these choices, but I think many can identify with the impulse, even here. As a few Americans gain ever greater wealth, while most struggle under growing debt, we must struggle with the question of what kind of society that creates, and whether that is the kind of place we want to live. If not, what might we do differently?

The best answer that I have found came to me when I was preparing to deliver a D’var Torah (sort of a Jewish homily) at congregation Kehillath Israel in Brookline Massachusetts on May 9, 2014. I was asked to speak on the portion of the Torah which was primarily contained in Leviticus Chapter 25, which was the Jewish reading for that week.

Though it would be weeks before I encountered the protest of Fried Potatoes, I was immediately struck by what I perceived to be clear moral guidance on the questions of growing income inequality in our society and of how a just society addresses the basic needs of those who have less.

In the Torah we read, starting at Leviticus 25:10,

“and you shall hallow the fiftieth year. You shall proclaim release throughout the land for all its inhabitants. It shall be a jubilee for you: each of you shall return to his holding and each of you shall return to his family.
11 That fiftieth year shall be a jubilee for you: you shall not sow, neither shall you reap the aftergrowth or harvest the untrimmed vines,
12 for it is a jubilee.” (Leviticus 25: 10-12)

This proclaims the jubilee year, which, under differing interpretations of Jewish law, is either the 49th or 50th year in a cycle. In the jubilee year, we read, all property goes back to the original divine land grants to each Israelite, if in fact it has not already been redeemed for value, which is the clear preference in the Torah. See Leviticus 25: 25-28. Note, this has the effect of turning all property sales into a 50 year maximum purchase of the yield of real property, the actual term being from date of purchase to date of jubilee.

The same chapter of Leviticus introduces the concept of the 7 year fellow cycle. In Deuteronomy’s restatement of Jewish law, we read

1 Every seventh year you shall practice remission of debts.
2 This shall be the nature of the remission: every creditor shall remit the due that he claims from his fellow; he shall not dun his fellow or kinsman, for the remission proclaimed is of the Lord. …
4 There shall be no needy among you — since the Lord your God will bless you in the land that the Lord your God is giving you as a hereditary portion
5 if only you heed the Lord your God and take care to keep all this Instruction that I enjoin upon you this day. . .
7 If, however, there is a needy person among you, one of your kinsmen in any of your settlements in the land that the Lord your God is giving you, do not harden your heart and shut your hand against your needy kinsman. . . ,
9 Beware lest you harbor the base thought, “The seventh year, the year of remission, is approaching,” so that you are mean to your needy kinsman and give him nothing. He will cry out to the Lord against you, and you will incur guilt.
10 Give to him readily and have no regrets when you do so, for in return the Lord your God will bless you in all your efforts and in all your undertakings.” Deut. 15:1-10 (excerpted)

The implications of this passage are astonishing. In the biblical world, every 7 years there was an automatic bankruptcy, a wiping clean of debt, and every 50 years, everyone reverted to their baseline stake of real property, divinely granted.

Now, this system is in no way anti-capitalist. The very fact that there is a system of redemption payments in land transfers makes clear that you can keep profits from anything that you sell. Further, the Bible exempted townhomes from reversion. The idea was not to prohibit elevating one’s status by amassing significant wealth, but rather a limit as to how far one could fall. No crushing decades of debt, and, every generation a mandatory reversion, granting each family the basic means of subsistence, a baseline from which to improve their condition.

The actual system almost certainly did not work. Even the Bible has to expressly prohibit the freezing of credit in the 7th year and, as early as Rabbi Hillel, (A Rabbi living in the first century CE), the rabbis were creating nondischargeable debts that worked around the text, and Yehuda Hanasi (the codifier of the Mishna in the 3rd century CE) created rabbinic limitations around the land rules. Certainly, both Maimonides and Nachmanides spend some time trying to work out ways that the land will not revert.

This is almost irrelevant, however. We do not live in Israel on biblical land grants, and so we would not be following many of these rules anyway.

What is important is that, notwithstanding efforts to support a functioning economic system, the rabbis never departed from the values inherent in the systems. From the Talmud, through Maimonides, well into key Jewish thinkers of the 16th and 17th centuries, notwithstanding exceptions and vehicles for legally nondischargeable debt, we learn that the presumption of automatic bankruptcy was still operational.

How does this guide us today? I think that it is extraordinarily valuable to envision a capitalism where everyone retains the basic right of subsistence, where profits are tolerated but crushing debt loads are not. Simple things like an economic safety net that works, and a bankruptcy system that retains the homestead exception while completely dispensing with the notion of nondischargeable debt. We do not have farmlands to give people, but we, like the Jews of old, can make sure that no one falls too far into destitution. Let’s find ways to avoid crushing people under the weight of debt, so that they will not be moved to theft and arson. Let’s create a just society for all.

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