Capitalism and the Jews

The other day I heard a fascinating interview with Jerry Muller, author of a new book called Capitalism and the Jews. I find myself drawn to this subject for two reasons. Firstly, you have the paradoxical love-hate relationship between Jews and capitalism. There is little doubt that Jews have often done very well when they have been allowed to compete under equal conditions in capitalist economies. But they have also been its most virulent critics – Karl Marx and Leon Trotsky immediately spring to mind. We forget it now but Israel was once a darling of the left. The Kibbutz movement is the archetypal example of a collective community, based on agriculture not commerce. The other element that intrigues me is the radioactive nature of the question. The success of Jews in markets has been a blessing for them but it has also been a curse. The idea of Jewish economic power had tragic consequences in the twentieth century and these ideas still remain important even today. Just listen to the words of Bin Laden and Ahmadinejad:

“You are the nation that permits Usury, which has been forbidden by all the religions. Yet you build your economy and investments on Usury. As a result of this…the Jews have taken control of your economy…and now control all aspects of your life.” (Osama bin Laden’s Letter to America in November 2002)

The image of the Jew as an avaricious loan shark has persisted for many years, with its most famous example being Shylock in Shakespeare’s The Merchant of Venice. In The Divine Comedy Dante had moneylenders with blasphemers and sodomites in the seventh circle of hell. They were to be stranded forever on the Plain of Burning Sand where it would constantly rain great burning flakes of fire which would vanish when they hit the ground, but not when they hit the flesh of sinners.

The starting point of my analysis of Jewish economic activity has to be the middle ages and the idea of usury. Nowadays we use this word to refer to charging excessive interest, whatever that means. But in the medieval world, usury referred to lending money per se. In medieval Western Christendom, as in Islamic banking today, money lending was verboten. This was partly for biblical reasons and partly due to the influence of Aristotle. The Greek philosopher believed that money could not create productivity and that it was wrong to charge interest:

The most hated sort [of moneymaking], and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural use of it. For money was intended to be used in exchange, but not to increase at interest. And this term Usury which means the birth of money from money, is applied to the breeding of money, because the offspring resembles the parent. Wherefore of all modes of making money this is the most unnatural.

 In fact,  Jews weren’t supposed to lend money either but there was a get-out clause in Deuteronomy. They weren’t allowed to lend to other Jews bit they were permitted to lend to gentiles. So just when the European economy was starting to get on its feet, in came the Jews. They filled the void that was left by the prohibition on Christian money lending. They would play a vital role in the rise of Europe but this role did not endear them to the general population or the rulers, who found them the perfect scapegoats when there were economic problems or they didn’t feel like paying back what they owed. Thus they were often expelled (or worse).

What happened when these parasites were expelled? If the activity they were engaged in was so bad, then logically things would be much better without these bloodsuckers. The reality was very different- shortages of credit and general economic decline.

The idea that money cannot be productive and that those who engage in lending it are parasitic is so typical of many economic fallacies. There is a tendency to underestimate the value of mental activity in a successful economy. Thomas Sowell sums it up very succinctly:

Because what is immediately visible to the naked eye makes a more lasting impression than past or present factors invisible inside other people’s heads, it is easy to regard the visible factors as the sole or most important factors, even when other businesses with those same visible factors went bankrupt, while an expertly managed enterprise in the same industry flourished and grew. Nor are such misunderstandings inconsequential. Elaborate ideologies and mass movements have been based on the notion that only the workers really create wealth, while others merely skim off profits, without having contributed anything to producing the wealth in which they unjustly share.

I always find it funny when people talk about the real economy. You have to sweat and get your hands dirty. Farmers and labourers are the ones who do the real work and those who earn their money in other ways are leeches. This seems to be the central premise of Marxism. For Marx basically all economic value comes from labour. And when he discusses labour, he doesn’t seem to appreciate the creative input of entrepreneurs. So in Marx’s account, it’s those with capital, living parasitically—and he uses images of vampirism—off the sweat and blood of those who work by the sweat of their brow. And what is interesting is how often there has been a conflation of the typical anti-Jewish stereotypes with what are considered the worst excesses of capitalism. The language, leeches, bloodsuckers parasites and so on, is used to describe both Jews and capitalism.

And of course Jews have been capitalist’s harshest critics. Jesus, who had a run-in with the moneychangers outside the Temple, could be considered the first in a long line of anti-capitalist Jews. In the late nineteenth and early twentieth century many Jews were attracted to the communist movement. Well. It wasn’t just communism. In general the right were hostile to them and so they had to go somewhere. A few became communists and because of their literacy and other skills they tended to reach disproportionately high positions. So Jews could now be attacked from both sides. Hitler’s anti-Semitism is well known, but Stalin too harboured these sentiments. And Jews were a handy scapegoat when there were problems in the economy.

Capitalism has been the most important force in shaping the fate of the Jews in the modern world.  It has also had an enormous impact on them and on how they are perceived. Some people may feel uncomfortable with the subject but I think it a perfectly legitimate area of study. We cannot leave to those paranoid conspiracy theorists that have been so prevalent since the middle ages. I am not trying to argue that all anti-capitalism is anti-Semitic, but it is an interesting link. And whatever the connection, I do feel that anti-Semitism and anti-capitalism are both fundamentally wrong-headed. That is what I have tried to show in this article.


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