Thursday, February 14, 2013

Judaism, Capitalism, and Marx

By David Gordon

"Judaism and Capitalism: Friends or Enemies?" The Lou Church Memorial Lecture in Religion and Economics, presented at the 2012 Austrian Scholars Conference

The subject “Judaism and Capitalism” needs to be addressed in two related but separate parts. In one of these, the question up for discussion is, what is the relation between Judaism, taken as a body of religious doctrine, and capitalism? In the other, the issue that confronts us is, what is the relation between Jews, taken as a particular ethnic group, and capitalism? Obviously, the two questions are related. One way of identifying at least some Jews is as those who practice the Jewish religion. Certainly, many of those ethnically Jewish are estranged from their ancestral faith; nevertheless, that there exists a connection between the two parts of our topic is clear. I propose to consider both of these parts in the remarks that follow.

I shall take the “capitalism” in our title as not requiring an extended venture in definition or analysis. By it I intend nothing controversial. I mean the economic system in place over much of the world since the Industrial Revolution, characterized for the most part by private ownership of the means of production.[1]

Theories that endeavor to connect Judaism and capitalism often, though not invariably, spring from distaste for one or both of the paired terms. This was notoriously the case in Karl Marx’s famous essay On the Jewish Question, written in 1844. In this early work, Marx said that capitalism was Jewish, in that both were egoistic. In his important book, Capitalism and the Jews, Jerry Muller says: “Were Jews egoistic, as [Bruno] Bauer had charged? Certainly, Marx answered. But in bourgeois society, everyone was egoistic.... Marx embraces all of the traditional negative characterizations of the Jew repeated by Bauer, and for good measure adds a few of his own. But he does so in order to stigmatize market activity as such. For Marx’s strategy is to endorse every negative characterization of market activity that Christians associated with Jews, but to insist that those qualities have now come to characterize society as a whole, very much including Christians.”[2]

Marx’s argument is a simple one. Capitalism is based on the pursuit of profit. Each person is supposed to act to secure his self-interest. This makes universal the trader-ethics characteristic since the Middle Ages of Jewish peddlers and moneylenders. Marx of course did not advance this view as a purely theoretical account. He deplored this sort of society; in it, human beings lived alienated both from one another and their own essence.

Marx expresses his argument in unmistakable terms. Criticizing the right of private property in the French Constitution of 1793, he says: “The right of man to private property is, therefore, the right to enjoy one’s property and to dispose of it at one’s discretion ... without regard to other men, independently of society, the right of self-interest. This individual liberty and its application form the basis of civil society. It makes everyone see in other men not the realization of his own freedom, but the barrier to it.”

It is precisely the attitude toward others described here that, according to Marx, constitutes the essence of Judaism. “What is the secular basis of Judaism?Practical need, self-interest. What is the worldly religion of the Jew? Huckstering. What is his worldly God? Money.” (Emphasis in original)[3]

How are we to evaluate Marx’s argument? It suffers from two main problems. First, Marx fails to establish a connection between selfish, egoistic behavior and the Jewish religion. Why is egoistic behavior distinctively Jewish? It is no doubt true that Judaism looks favorably on a person’s pursuit of his own interests. In the famous saying of Rabbi Hillel in the first chapter of the Ethics of our Fathers, “If I am not for myself, who will be for me?”

But an approval of self-interest by no means signifies a selfish disregard for the well-being of others. One need only recall the continuation of Hillel’s saying, “If I am only for myself, what am I?”

One could easily amass other citations on the role of regard for others and charity in Judaism, but one more must here suffice. Jewish sources often view the principal sin of Sodom, the city that God destroyed by fire and brimstone, as lack of charity. As Rabbi Meir Tamari notes in his authoritative exposition of Jewish law regarding economics, “The Mishnah [first part of the Talmud] defined one who said . . . ‘What’s yours is mine and what’s mine is mine’ as an evil man. He who says, ‘What’s yours is yours and what’s mine is yours’ is a righteous person. But ‘What’s yours is yours and what’s mine’ is mine – some say that is the mark of Sodom.”[4]

A defender of Marx might reply by recalling a distinction made earlier. At the outset, I distinguished the claim that Judaism as a body of doctrine is related to capitalism from the claim that Jews as a group are so related. Has the objection just raised to Marx’s account ignored this distinction? Perhaps Marx is not best taken as making a point about Jewish religious doctrine. Rather, is he not claiming that the behavior found in the economic activities of certain Jews, namely the traders and moneylenders, best expresses the essence of capitalism?[5]

If this is what Marx had in mind, it is no more satisfactory than the earlier version of his claim. What is supposed to be specifically Jewish about either selling or lending money? Marx nowhere informs us.

A more deep-seated failing besets Marx’s account of Judaism and capitalism. Marx characterizes both capitalism and Judaism as based on self-interest, practical need, selling, and money. Surely it would be difficult to find throughout recorded history many large-scale and complex societies in which these features did not play a prominent role. Contrary to Marx, neither self-interest nor the pursuit of money is distinctively either capitalist or Jewish.

In seeking to exorcise self-interest as a feature of the human condition Marx is beguiled by a fantasy in which human beings abandon all antagonisms. Murray Rothbard has aptly noted the influence of this fantasy: “To Marx, any differences between men, and, therefore, any specialization in the division of labor, is a ‘contradiction,’ and the communist goal is to replace that contradiction with harmony among all. This means that to the Marxist any individual differences, any diversity among men, are contradictions to be stamped out and replaced by the uniformity of the anthill.”[6]

Jerry Muller has insightfully drawn attention to the importance of Marx’s essay; but in one respect he goes too far. Muller says, “For ‘On the Question of the Jews’ contains, in embryo, most of the subsequent themes of Marx’s critique of capitalism.... If Marx had one big idea, it was that capitalism was the rule of money – itself the expression of greed. The rule of capital was fundamentally immoral because it deprived the vast majority in a capitalist society of their humanity, requiring labor that enriched a few capitalists while impoverishing the workers physically and spiritually.”[7]

Muller here fundamentally misconceives Marxism. Marx in Das Kapital had principally in mind a scientific critique of capitalism, based primarily on the labor theory of value. The book contains fierce moral invective directed against capitalism, some of which make references to Jewish themes; this is rhetoric rather than the core of the book. (One such reference to a Jewish theme, incidentally, occurs in the famous passage of Chapter 24 of Das Kapital, “Accumulate, accumulate, that is Moses and the prophets.” The Jewish reference here is not only the obvious one, i.e., the mention of Moses. The entire expression “Moses and the prophets” refers to two of the three divisions in the Jewish arrangement of the books of the Bible: Marx is saying that for the capitalists, accumulation is the Bible.) The crucial point that Marx intended his project as science rather than ethics was made long ago by Werner Sombart, whom we shall be discussing later.[8]
Before turning from Marx on capitalism and the Jews, I allow myself one conjecture. Marx said that the essence of capitalism was egoism. Could awareness of this claim have influenced the young Ayn Rand, who after all grew up in Soviet Russia, where the writings of Marx were abundantly available in Russian translation? I ask because she of course also thought that capitalism was in essence egoism, though she embraced exactly what repelled Marx and ignored his identification of Judaism with capitalism.

What lesson should we draw from the failure of Marx’s attempt to link Judaism with capitalism? Should we abandon altogether all inquiries along the same lines as fundamentally misguided? Such a course was urged by Ludwig von Mises. He remarks in Socialism, “Today the Islamic and Jewish religions are dead. They offer their adherents nothing more than a ritual. They know how to prescribe prayers and fasts, certain foods, circumcision and the rest; but that is all. They offer nothing to the mind. Completely despiritualized, all they teach and preach are legal forms and external rule. They lock their follower into a cage of traditional usages, in which he is often hardly able to breathe; but for his inner soul they have no message. They suppress the soul, instead of elevating it and saving it. For many centuries in Islam, for nearly two thousand years in Jewry, there have been no new religious movements. Today the religion of the Jews is just as it was when the Talmud was drawn up.”

I do not think that Mises’s remarks by themselves settle the questions at issue, even if one accepts Mises’s highly dubious characterization of Judaism as pure ritual, devoid of appeal to the mind. Mises’s comments do not exclude the possibility that legal regulations of the kind Mises describes in such unflattering terms influenced the development of capitalism, either by their content or by the qualities of mind and character that people who adhered to the rituals tended to develop. But these are no more than possibilities: whether these regulations in fact had such effects is another question ...

Let us turn then to another attempt to connect Judaism and capitalism, and this one the most significant of all, Werner Sombart’s The Jews and Modern Capitalism, which appeared in 1911. Sombart conforms to the pattern mentioned earlier that those who ascribe to the Jews primary responsibility to capitalism tend to be hostile to both Judaism and capitalism.

In Sombart’s case this is hardly surprising. Sombart began his academic career as a convinced Marxist. Though he veered to the right, he remained a socialist to the end, albeit of a peculiar kind. Like Marx, he stressed Jewish involvement in trade as the essence of capitalism: The Jews with their trader-ethic had succeeded in transforming the more static values of the Middle Ages. The broad outlines of this theory will already be familiar from our discussion of Marx’s essay; but Sombart developed the position with enormously greater learning in the Jewish sources and in Jewish history. Sombart himself says that Marx, in his essay, “looked deep into the Jewish soul”. After mentioning two other writers, he says, “What has been said about the Jewish spirit since these men (all Jews!) wrote is either a repetition of what they said or a distortion of the truth.” [9]

His favorable reference to Marx’s essay should be sufficient to suggest that Sombart was an unfriendly critic of Judaism, but Milton Friedman dissents. He writes, “Sombart’s book. . . has had in general a highly unfavorable reception. . .and, indeed, something of an aura of anti-Semitism has come to be attributed to it. . .there is nothing in the book itself to justify any charge of anti-Semitism though there certainly is in Sombart’s writing and behavior several decades later, indeed, if anything I interpret the book as philo-Semitic” [10] Friedman has I suggest been deceived by his own strong approval for the behavior and attitudes that Sombart depicts. Sombart was not praising the Jews, e.g., when he ascribed to them the trader’s mentality.

The great strength of his book is that he goes beyond the generalities to be found in Marx’s essay and offers specific evidence from Jewish religious sources and history. He points out, e.g., that though a Jew is forbidden to lend money at interest to another Jew, he is permitted, and according to some opinions required, to do so to non-Jews. Jewish law sees nothing intrinsically wrong with lending at interest: the ban on taking interest from fellow Jews stems from the bonds that ought to link fellow believers. The prohibition on taking interest from a fellow Jew is more than a negative requirement. It is a positive duty to lend money without interest to Jews in need, and free loan societies have long been part of the Jewish community.

Sombart expresses the point about taking interest from non-Jews in typically colorful language:
Now think of the position in which the pious Jew and the pious Christian respectively found themselves in the period in which money-lending first became a need in Europe, and which eventually gave birth to capitalism. The good Christian who had been addicted to usury was filled with remorse as he lay a-dying, ready at the eleventh-hour to cast from him the ill-gotten gains which scorched his soul. And the good Jew? In the evening of his days, he gazed upon his well-filled caskets and coffers, overflowing with sequins of which he had relieved the miserable Christians or Mohammedans. It was a sight which warmed his heart, for every penny was like a sacrifice which he had brought to his Heavenly Father. [11]
Sombart does not see the law regarding interest as standing alone. To the contrary, he maintains that Judaism is a religion of calculative rationality, peculiarly suited to success under capitalism:
The kinship between Judaism and capitalism is further illustrated by the legally regulated relationship – I had almost said the business-like connection, except that the term has a disagreeable connotation – between God and Israel. . .The contract usually sets forth that man is rewarded for duties performed and punished for duties neglected. . .Two consequences must of necessity follow: first, a constant weighing up of the loss and gain which any action needs must bring, and secondly, a complicated scheme of bookkeeping, as it were, for each individual person. [12]
Sombart makes clear his evaluation of Judaism and capitalism, in a passage that evidently escaped Milton Friedman’s attention:
In all its reasoning it [the Jewish religion] appeals to us as a creation of the intellect, a thing of thought and purpose projected into the world of organisms. . .destined to destroy and to conquer Nature’s realm and to reign itself in her stead. Just so does capitalism appear on the scene; like the Jewish religion, an alien element in the midst of the natural, created world; like it, too, something schemed and planned in the midst of teeming life.[13]
What is one to make of all this? The main problem with Sombart’s thesis is obvious. Though he is right that calculative rationality is integral to capitalism, this disposition is by no means peculiar to Jews. If so, capitalism cannot be considered Jewish in essence, though Sombart may well be right that certain traits of mind equipped Jews to prosper under capitalism. Sombart could hardly ignore this point; only a few years before his own book, Max Weber had issued his famousThe Protestant Ethic and the Spirit of Capitalism. In that book, Weber ascribed some of the same traits that Sombart thought especially Jewish to the Puritans.

It cannot be said that Sombart’s way of coping with this objection is entirely satisfactory. He writes, “I [Sombart] have already mentioned that Max Weber’s study of the importance of Protestantism for the capitalistic system was the impetus that sent me to consider the importance of the Jew. . .Puritanism is Judaism.” [14]

Sombart rightly stressed the importance for capitalism of lending money at interest, but allowing this practice is hardly peculiar to Judaism. In his great An Austrian Perspective on the History of Economic Thought, Rothbard remarks: “Calvin’s main contribution to the usury question was in having the courage to dump the prohibition altogether. . . To Calvin, then, usury is perfectly licit, provided it is not charged in loans to the poor, who would be hurt by such payment.” Rothbard continues about a later Calvinist, “The honor of putting the final boot to the usury prohibition belongs to. . . Claudius Salmasius,. . .who finished off this embarrassing remnant of the mountainous errors of the past. In short, Salmasius pointed out that money-lending was a business like any other, and like other businesses was entitled to charge a market price. . .Salmasius also had the courage to point out that there were no valid arguments against usury, either by divine or natural law.” [15] No doubt Sombart would respond by declaring Calvin and Salmasius to be Jews.
We have so far considered, and found largely wanting, attempts to connect Judaism with capitalism. But we have also to examine the views of those who find a Jewish impetus behind opposition to capitalism. Especially at the beginning of the twentieth century, a common view held that the Bolshevik Revolution was largely a Jewish enterprise.

Winston Churchill wrote in 1920, “There is no need to exaggerate the part played in the creation of Bolshevism and the actual bringing about of the Russian Revolution by these international and for the most part atheistical Jews. It is certainly a great one; it probably outweighs all others. With the notable exception of Lenin, the majority of the leading figures are Jews. Moreover, the principal inspiration and driving power comes from the Jewish leaders.”

Churchill by no means thought that all Jews were Bolsheviks. To the contrary, he contrasted the internationalist Jews behind world revolution with nationalist Jews, e.g., Zionists. “The struggle which is now beginning between the Zionist and the Bolshevik Jews is little less than a struggle for the soul of the Jewish people.” [16]

Churchill was but one of many writers of his time with similar views. As he notes in his article, he had read Nesta Webster, a once famous popular historian who studied conspiracy theories of revolution in, among other books, The French Revolution: A Study in Democracy; World Revolutionand Secret Societies and Subversive Movements. (Contrary to general belief, incidentally, she did not endorse the authenticity of the Protocols of the Learned Elders of Zion.) She was probably the foremost source for the view that communism was Jewish.

Backers of the theory, like Churchill, appealed to the fact that Jews occupied a high number of positions in the Bolshevik government. The Irish priest Father Denis Fahey published a pamphlet, The Rulers of Russia, containing long lists of Bolsheviks with Jewish-sounding names. In Germany, the Nazi writer Alfred Rosenberg sometimes read out such lists over the radio, leading to the joke that he thought that everybody named “Rosenberg” was Jewish except him. In recent years, the German writer Johannes Rogalla von Bieberstein has devoted a long book to the topic, Jewish Bolshevism: Myth and Reality [Der juedische Bolshewismus: Mythos und Realit├Ąt] [17]

Before we turn to evaluate this theory, it should be noted that it is possible, however unlikely it may seem, for someone to hold this view together with the position we have earlier examined. That is, it is possible to hold Jews responsible both for capitalism and communism, its foremost antagonist. This is more than a bare possibility: Hitler, for one, believed precisely this.

The main failing of the view that connects Judaism and communism is a simple one. It confuses two questions: why, looking at the historical circumstances that led to the Russian Revolution, were many Jews attracted to revolution; and, is there anything intrinsic to Judaism that leads to support of communism?

The first question is readily answered when one recalls the long history of anti-Jewish measures taken by the Tsarist Russian government in the nineteenth and early twentieth centuries. A similar appeal to particular circumstances would I think explain such other instances of Jewish support for socialist revolutionary groups as the historical record discloses. Absent the existence of special circumstances, there is no marked Jewish support for the overthrow of capitalism. Jerry Muller is right when he says: “Milton Friedman’s contention that Jews vilified capitalism while profiting from it is highly distorted. To the extent that Jews identified themselves with socialism, it was largely a phenomenon of eastern European Jews and their immediate descendents in the years from the late nineteenth century through the 1930s.” [18] And even if one is inclined to think the association between Jews and communism greater than Muller allows, it is clear that any such affinity has its limits. Even during the period when Jewish radicalism was at its height, most Jews were not communists, and most communists were not Jews. It would be difficult to consider the Chinese communist movement an instance of Jewish Bolshevism.

To show a close intellectual connection between Judaism and communism would require some derivation of communist ideas from Jewish religious doctrines, and that is not in the offing. True enough, radicals have appealed to Jewish texts to support their views. Michael Walzer has traced the role of the Exodusnarrative on revolutionary thought: “I [Walzer] have found the Exodus almost everywhere, often in unexpected places. It is central to the communist theology or antitheology of Ernst Bloch. . . It is the subject of a book, called Moses in Redby Lincoln Steffens, published in 1926; a detailed account of Israel’s political struggles in the wilderness and a defense of Leninist politics.” [19]Others have found in the Jewish prophets an inspiration for socialist schemes for reform of the world. A once famous book of the 1920s, A Religion of Truth, Justice, and Peace, by Isidor Singer, the editor of the Jewish Encyclopedia, argued that “the world leadership of the social justice movement [is] offered to the Jew.” [20]Singer based his argument on an appeal to the words of Amos, Isaiah, Micah, and other prophets. [21]

Walzer and Singer to the contrary notwithstanding, the claim that Judaism teaches socialism or communism as a general political program cannot succeed. The basic reason such an attempt must fail is the same one that dooms the theories that link Judaism and capitalism. The religious precepts of Judaism are meant to apply only to Jews: they do not constitute an ethical system that prescribes a best social order for all of humanity.

As Meir Tamari says, “For centuries, Jews enjoyed autonomy in many countries and maintained rabbinic codes of law which regulated and governed their economic activity, thereby preserving its specifically Jewish characteristics. The Bible and the homiletical literature established an ethical and moral framework within which Jewish communities operated. . .” I conclude, then, that although Mises radically underrated the intellectual merits of the Jewish sources, he was not far from the truth in thinking that are no direct connections to be drawn between Judaism and capitalism. [22]
The author thanks Paul Gottfried, Gary Chartier, and Lloyd Gerson for helpful comments.
[1] Contemporary “left libertarians” often use “capitalism” to designate a partnership between government and big business. They contrast this system with a genuinely free market. This is not my usage here.
[2] Jerry Z. Muller, Capitalism and the Jews (Princeton University Press, 2010), pp. 36, 39.
[3] All quotations from Marx are from Karl Marx, On the Jewish Question. One of these quotations is also given by Muller, p.38, in his own translation.
[4] Meir Tamari, With All Your Possessions: Jewish Ethics and Economic Life (The Free Press, 1987), p.51.
[5] I confine to a note a difficulty with both readings of Marx. If Judaism is capitalism, how can it be at the same time true that Judaism gave rise to capitalism? Obviously, Marx does not use “is” here to denote strict identity.
[6] Murray Rothbard, Egalitarianism as a Revolt Against Nature and Other Essays (Ludwig von Mises Institute, 2000), p.256.
[7] Muller, pp.41-2.
[8] For a good analysis of the place of morality in Marx’s thought, see Allan W. Wood, Karl Marx (Routledge, 2004). Part III, “Marxism and Morality”, pp.125-161. See also Steven Lukes, Marxism and Morality (Oxford, 1987).
[9] Werner Sombart, Judaism and Capitalism (Batoche Books, 2001[1911]), p.283.
[10] Milton Freidman, “Capitalism and the Jews”, The Freeman (October 1988).
[11] Sombart, pp.170-71.
[12] Sombart, p.146.
[13] Sombart, p.144.
[14] Sombart, p.174.
[15] Murray N. Rothbard, An Austrian Perspective on the History of Economic ThoughtEconomic Thought Before Adam Smith, Volume 1 (Edward Elgar, 1995), pp.140, 144
[16] Illustrated Sunday Herald, February 8, 1920, p.5, accessed here:
[17] For a brief account of the book, see Paul Gottfried, “Odious Germans.”
[18] Muller, p.124.
[19] Michael Walzer, Exodus and Revolution ( Basic Books, 1985), p.4.
[20] Isidor Singer, A Religion of Truth, Justice, and Peace (Amos Society, 1924), p.4. The book included an Introductory Essay by Edward Filene and an Epilogue by Israel Zangwill.
[21] For a critical discussion of political appeals to the Jewish prophets, see Lewis Feuer, Ideology and the Ideologists (Transaction, 2010).
[22] Tamari, p.3. To anticipate an objection, the Jewish sources do not prescribe a socialist order for the Jewish community either.

David Gordon is a senior fellow at the Ludwig von Mises Institute and a columnist for LRC. He is, most recently, the author of The Essential Rothbard and editor of Strictly Confidential: the Private Volker Fund Memos of Murray N. Rothbard. See his Books on Liberty. See also his Books on War.

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