For years, progressive economists such as Thomas Piketty, Paul Krugman and Joseph Stiglitz have focused on income inequality as a bellwether of economic dysfunction.
Biblical concerns over excess wealth accumulation stretch back to at least the period of the Prophets when, 900 years before the talmudic period, Isaiah condemned large-scale landlords who “join house to house and add field to field.” And Torah comes up with a remedy – expropriation of accumulated property every 50 years and the erasure of debt that triggered excess concentration of wealth. These regulatory mechanisms are announced through the vehicle of the Yovel or Jubilee year, which is recalled in this well-known quote from Deuteronomy: “Proclaim liberty throughout the land unto all the inhabitants thereof.” The quotation refers directly to release from debt and indentured servitude.
Like liberal economists, the talmudists of the third and fourth centuries supported competitive markets – but within a regulatory context that promoted access to the “necessities of life” (what the early rabbis literally called “things within which are found the life of the soul” – d’varim sheyesh bahen khayei nefesh). The sages placed constraints on hoarding, speculation, pricing and even profits on “necessities,” which in the talmudic era explicitly included foods, building materials, tools, utensils, housewares and decorative products required for a reasonably productive life, but which would obviously require a fresh look in every new economic age.
Where Piketty proposes an after-the-fact wealth tax to blunt excessive accumulation, the talmudists attempted to head off the downside of high concentrations of wealth in low-growth environments – that is, poverty among the many – by stabilizing the market price of nonluxury goods and capping profits at about 17 percent. The rabbis of the ancient period were not opposed to market competition, but wanted to regulate it in the interests of the 99 percent as part of their attempt to ensure universal access the “necessities of life.”
Of course, one route toward that end is to make sure that honest labor pays off. Economist Larry Glickman has characterized the concept of a living wage as one “that offers workers the ability to support families, to maintain self-respect, and to have both the means and the leisure to participate in the civic life of the nation.”
Well said, but Maimonides got there first. A thousand years earlier, the Rambam had confronted the question of a living wage in a commentary on how to compensate scribes and judges. He asks “How much are they paid?” and then concludes: “Ninety maneh a year. If this is not sufficient for their [needs], they are given – even against their will – an additional amount sufficient to meet their needs, those of their wives, their children, and the other members of their household.” No race-to-the-bottom in those words; rather, a living wage must be enough to take care of a socially viable household.
Talmud also takes on the issue of the minimum wage, much as several communities in the greater Washington area have recently done. In contrast to Rav Yehoshua’s view that the minimum wage is simply the lowest pay level that can be found in any town, the talmudic majority ruled that “an average must be struck” for the specific type of work. In practice, this procedure results in a steady minimum wage increase over time.
Shouldn’t Jews consider what our sources have to say about all this as we try to understand where Piketty, Krugman, Stiglitz and other noted contemporary economists are pointing?
Jonathan Brandow owns the industry research firm BizMiner and is the author of “The Just Market,” to be published July 15.