Capitalism and the Jews, by Jerry Z. Muller

Steven Menashi reviews Jerry Z. Muller's book Capitalism and the Jews. 

"the persecution or exclusion of Jews is a strong sign that the moral case for capitalism is under attack" (excerpt from the review which is below). But first some data:

Heritage Foundation's Index of Economic Freedom ranking for selected countries.

Israel 34
Bahrain 68
Jordan 93
Oman 95
Saudi Arabia 98
Egypt 151
Pakistan 152
Lebanon 164
Iran 169
Afghanistan Not ranked
Iraq Not ranked
Libya Not ranked
Syria Not ranked
Yemen Not ranked

"Early in the Christian era, the church fathers found themselves compelled to explain the persistence of the Jews. Continued Jewish fidelity to the Mosaic law challenged the Christian teaching that the law had been fulfilled and abolished through the Christian faith. The famous solution devised by Augustine was that the Jews had survived, in exile and abjection, as witnesses to the historical authenticity of Old Testament prophecy and the error of failing to see its fulfillment in Jesus Christ. It must therefore have embarrassed those who held this view when, in modern times, Jews came to rank among the most prosperous people in the liberal capitalist West.

It makes sense that partisans of the Augustinian teaching found it necessary to question the methods of Jewish merchants and financiers and the influence of commerce generally. At the same time, the apostles of what would come to be known as liberal capitalism had good reason to see the Jews as fulfilling a providential, one might even say a chosen, mission. Through the ingenuity of the Jews, wrote Montesquieu in 1748 in The Spirit of the Laws, “commerce was able to avoid violence and maintain itself everywhere.” Capitalism, even in its nascent form, “broke through the barbarism of Europe.”

According to Jerry Z. Muller, professor of history at Catholic University, capitalism has been the most important force in shaping the fate of the Jews in the modern world. In 2002 he published The Mind and the Market, a study of the idea of capitalism in Western thought. “Jews,” he wrote, “served as a kind of metaphorical embodiment of capitalism.” In his new book, Capitalism and the Jews, Muller focuses squarely on the relation between them in four interlocking essays that explore, respectively, Western thinking about Jews and capitalism, the Jews’ own responses to capitalism, Jewish involvement in Communist movements¹, and the rise of ethnic nationalism that came about as a response to capitalism’s relentless march in the 19th century and onward.

To be sure, capitalism has affected the course of the entire modern world, not only that of the Jews, but “Jews have had a special relationship with capitalism,” Muller explains, “for they have been particularly good at it.” Among Jews, economic success has been a source of both pride and embarrassment. Among their neighbors, it has prompted both affection and abhorrence.

_____________

Muller gives the impression of a long and deep dispute, but while anti-Semitic anticapitalists and philo-Semitic capitalists each placed a different gloss on the social values of modern capitalism, all seemed to acknowledge that the Jews carried those values wherever they went. Anti-Semites denounced Jews as rootless cosmopolitans whose commercial activities undermined traditional ways of life, while capitalists praised Jews for fostering the creative destruction and social dynamism characteristic of free markets. Anti-Semites condemned Jewish merchants for promoting self-interested egoism at the expense of Christian fellowship.

For their part, capitalists welcomed Jews for promoting liberal individualism and rights of private property against clerical establishments and state regimentation of moral norms. To the anti-Semites, Jewish commercial influence undercut the passion and vitality of human life in favor of soulless economic calculation. To the capitalists, the Jews illustrated how commerce could counteract socially destructive prejudices and passions by promoting gentle manners and civil intercourse.

German anti-Semites called Jews Luftmenschen, “people of the air,” who lacked a firm grounding in agriculture and industry and produced nothing of material value. Capitalist thinkers correspondingly credited Jews with creating financial innovations—-letters of exchange, the stock market, and the strategic use of public debt—that promoted rationalism and efficiency in economic life.

Muller insists that historical circumstance, rather than any quality inherent in Judaism, explains the capitalist inclinations of Western Jewry. Yet he later calls his own judgment into question. In his first chapter, Muller discounts the argument of Werner Sombart, the anti-Semitic German sociologist (1863-1941), that the Jewish faith inclined its adherents to capitalism because it was given to abstraction and promoted a legal-contractual conception of their relationship with God.

In his next chapter, however, Muller explains the Jews’ facility for commerce by making reference to their “religious intellectualism.” Judaism “was a religion oriented to continuous contact with texts,” writes Muller, which “cultivated the habit of finding commonalities and distinctions in arguments, and of thinking in abstractions.” He observes that Talmudic law is “replete with debates about economic matters, including contracts, torts, and prices,” and even cites a passage from the Babylonian Talmud to demonstrate that “the rabbis had an acute appreciation of the benefits of the division of labor.”

Again in his first chapter, Muller condemns an anti-Semitic lecture delivered in 1930 by John Maynard Keynes in which the economist blamed the Jews for polluting capitalism by promoting deferred gratification, the focus on means over ends, which led people to discount the quality and enjoyment of life in favor of future profit. Yet in the following chapter, Muller explains that the Jews’ high valuation of educational study “reflected a long time horizon, in which the economic payoff would be deferred for years.”

Perhaps, notwithstanding the hostility with which anti-Semites formulated the Jewish connection to capitalism, their arguments cannot be so easily dismissed. For at the very least, Judaism did provide fertile ground for the cultivation of modern commercial life. As a religion of laws governing worldly conduct, Judaism does not have the innate suspicion of commercial activity that is among the originating concepts of the Christian tradition, with its Gospel account of Jesus’ rage at the money changers working on the grounds of the Temple. Theologically, Christianity has always emphasized spiritual preparation for the afterlife rather than earthly endeavors.

_____________

Yet Christianity is also a product of Judaism and echoes Judaism’s teachings even when it seeks to supplant them. In denouncing deferred gratification as the attempt “to secure a spurious and delusive immortality,” Keynes averred that “it is not an accident that the race which did the most to bring the promise of immortality into the heart and essence of our religions has also done the most for the principle of compound interest and particularly loves this most purposive of human institutions.” Keynes’s caricature notwithstanding, he was on to something. For Judaism did originate the promise of immortality—“I will make you a great nation and I will bless you,” God tells Abram in Genesis 12, guaranteeing him descendants as numerous as the stars—and that promise remains at the heart of Judaism’s daughter religions, including Christianity.

Sombart portrayed the triumph of capitalism as the replacement of a concrete, particularist Christian community with an abstract, universalistic society. But Judaism has always stood above all for the maintenance of a concrete, particularist community—the Jewish people. Christianity had to spread Jewish values as a universal faith before they could find expression in modern liberal capitalism.

Christianity did not purport to apply such values to the government of society. “My kingdom is not of this world,” Jesus tells his followers. So Christians had to borrow from Jewish law. The early church incorporated the Hebrew Scriptures into the Christian Gospels, though it was not at all obvious that the Old Testament should have been permitted to survive the New. In the early modern period, the Hebrew Bible again informed Christian views of society, as in the English jurist John Selden’s The Law of Nature and of Nations According to the Hebrews (1640). Christians also depended on Jews themselves, serving as a kind of shabbos goy in reverse, to engage in those commercial activities that were socially beneficial but religiously forbidden to them. In the 12th century, the church resolved to prevent the evil of Christian usury by allowing Jews to engage in moneylending and other financial activities—which made the Jews of Europe contemptible, but also indispensable, to Christian society.

Gradually, their skills in commerce were acquired by the surrounding Christian communities. So it may be said that capitalism, to some extent, Judaized Christian life. Karl Marx made the point most vividly in his essay “On the Question of the Jews,” which denounced the “Jewish spirit” of capitalism but also argued that capitalist society turned everyone into Jews. Under capitalism, he wrote, “money has become a world power and the practical Jewish spirit has become the practical spirit of the Christian peoples. The Jews have emancipated themselves insofar as the Christians have become Jews.”

Of course, Muller is right to argue that the Jews embraced commerce in part as a result of their treatment by the Christian West. Always under the threat of expropriation or expulsion, it made little sense for Jews to acquire land or other immovable goods; one could more easily relocate wealth gained from trade or finance. Politically dispossessed, Jews employed financial influence. As sojourners, Paul Johnson has written, “they had no share in or emotional commitment to society as a whole and so could watch its old traditions, methods and institutions being demolished without a pang.” That made them natural innovators and capitalist entrepreneurs.

_____________

By and large, Jews embraced these roles. With impressive historical detail, Muller refutes the notion, common to leftists eager to enlist the faith in the cause of collectivism, that Jews have been generally hostile to capitalism. While Jews have been prominent ideological spokesmen for socialist and Communist movements, those movements have enjoyed little support among the Jewish rank and file. The chief rabbi of Moscow in the early 20th century, Jacob Mazeh, is said to have told Leon Trotsky, né Lev Bronstein, “The Trotskys make the revolutions, and the Bronsteins pay for it.”

Indeed, the fate of the Jews has long been tied to the fate of capitalism. Jews of the early-modern period pleaded for political toleration on the grounds of the economic benefit it would bring—and thus the case for accepting the Jews was often mixed with the case for embracing commerce. In 1655 the Dutch rabbi Menasseh Ben Israel appealed to Oliver Cromwell, Lord Protector of the newly formed English Commonwealth, to readmit the Jews to England. England stood to profit, he argued. “It is a thing confirmed, that merchandizing is, as it were, the proper profession of the Nation of the Jews,” wrote Ben Israel. “They do abundantly enrich the lands and countries of strangers, where they live, not only with what is requisite and necessary for the life of man; but also what may serve for ornament to his civil condition.” A century later, the Jewish philosopher Moses Mendelssohn argued that Jews should enjoy civil equality in Germany because the merchant “is a real benefactor to the state” and helps “to render the comforts of life more known, and more generally serviceable.” Another century on, Theodor Herzl predicted that Arabs would welcome Jewish settlement in Palestine because when the Jews brought “their intelligence, their financial acumen, and their means of enterprise to the country, no one can doubt that the well-being of the entire country would be the happy result.”

_____________

But the result has not always been so happy. Not every society wants commerce. Capitalism represents certain moral choices about the good life—-choices that more aristocratic, theocratic, nationalistic, or agrarian societies resolve differently. At the birth of modern capitalism, the Jews came to symbolize a moral system that actually did threaten the traditional social order.

In his last chapter, Muller tries to explain why the triumph of capitalism did not end anti-Jewish hatred but in fact intensified it. Whereas Jews once performed economic functions Gentiles would not, in the modern era they became competitors with Gentiles. Given their already formidable economic training, Jews were bound to outperform other groups and to provoke new resentments. Moreover, Muller suggests, the capitalist state weakened traditional ties and fostered new forms of identification with the political community of the nation, which excluded other ethnics such as Jews.

Again, this explanation seems at odds with an earlier part of the book, in which Muller observes that the Jews were most accepted where capitalism was most firmly established. “Both in Europe and America, a fundamentally positive view of commerce within the larger society tended to lead to a favorable or at least neutral disposition toward the Jews,” he writes. “Here we find the greatest difference between continental European societies, on the one hand, and British and American society on the other.”

Muller points to the influence of Lockean liberalism in the U.S. Anglo-American society inherited a natural-rights tradition according to which capitalism produces not only a rich but also a good society. In this view, capitalism complements religious teaching; it shows due respect to the rights of liberty and property with which individuals “are endowed by their Creator”; and it calls forth distinctive virtues such as honesty, diligence, sobriety, and thrift. Capitalism thus understood forms a political community in which all are welcome who play by the rules. Continental Europe, by contrast, developed a more nationalist tradition in which the law expresses the spirit of a people. Capitalism, it follows, may be a useful means of organizing economic affairs, but it must express, and be constrained by, the national ethos. It is no surprise that ethnic and religious minorities present greater difficulties for such a society.

In this way, then, the fate of Western Jewry has been bound up with the moral case for capitalism and the bourgeois society. The case is a strong one: modern capitalism has produced greater individual liberty, peaceful coexistence, social mobility, and material prosperity than history had previously known. But because capitalism has so thoroughly eclipsed its alternatives, the moral argument on which it rests is often invisible. Muller quotes the Nobel laureate Simon Kuznets as saying, “Given the kind of human capital that the Jews represent, the majority in any country, if it wished to maximize long-term economic returns, should have not only permitted the Jewish minority the utmost freedom, but in fact should have subsidized any improvement in the economic and social performance of promising individual Jews.” Yet not every society is interested in maximizing long-term economic returns. Indeed, the persecution or exclusion of Jews is a strong sign that the moral case for capitalism is under attack.

Capitalism and the Jews have enjoyed a mutually beneficial relationship, albeit a rocky one. “In the long run,” writes Muller, “capitalism was good for the Jews. And the Jews were good for capitalism.” It was a relationship largely thrust upon them; as agents of modernity, the Jews were a chosen—not a choosing—people. As in society at large, there was a cost to embracing capitalism because it treats religion as a private matter, divorced from nationality and political rule.

In a sense, then, capitalism also Christianized Judaism. It did so by severing religious belief and worship from the national identity of the Jews and from the laws that are intended to govern their social conduct. Peaceful trading for profit falls somewhat short of the prophetic vision of a restored Jerusalem under divine sovereignty. “In that day,” the book of Zechariah tells us, “there shall be no more traders in the House of the Lord.” Of course, the House of the Lord has yet to be rebuilt, and until it is, Jews must still reside among the nations."