The Prozbul – Hillel’s Financial Creativity – Behar 5781

Trying to claim that the Torah supports this or that contemporary economic system or policy is like trying to fit a round peg into a square hole.

Jews have lived in many places and times and dealt with many different economic and political systems.  In all of those systems, there was economic struggle and human suffering, along with thriving and flourishing. We survived as a people due to cultural and religious adaptability.

Rather than try to awkwardly shoehorn the Torah into our modern theories, why don’t we instead look at what the Torah actually describes?

Parashat Behar, the first of this morning’s double parashah, presents a priestly vision of economic justice in ancient Israel. It offers details about land ownership, debt, poverty, and wealth. It describes indentured servitude and slavery.

By looking closely, perhaps we might learn something about the economic system that actually existed at the time.

First and foremost: there is no land ownership. It all belongs to God, who apportions the land to whom God sees fit. “The land must not be sold beyond reclaim, for the land is Mine; you are but strangers resident with Me.”  (25:23)  This is a core concept that we must understand. Nobody owns property.

The parashah begins with a description of the shemitah, the sabbatical year. Just as every seven days ends with Shabbat, every seven years ends with Shemitah.

The Israelites are permitted to work the land and collect the harvests for six years. The seventh year is a Shabbat Ladonai – A Sabbath unto the Lord. Every seventh year, the land must be allowed to rest. There can be no harvesting or planting. Everyone is entitled to eat what the land produces on it. The Torah specifies “you” – the Israelites, along with their slaves, employees, indentured servants, and animals.

Every seven shemitah years ends with the Yovel, the Jubilee year. On Yom Kippur of the Jubilee year, the shofar is sounded throughout the land. All harvesting and planting is forbidden, as in the Shemittah year. In addition, all property returns to the person whose holding it originally was, or his heirs.  All indentured servants are automatically redeemed as well, going free and returning to their ancestral lands.

The Torah then describes the cycle of misfortunes that lead a farmer into servitude. When things first start going downhill, the farmer can take out an interest free loan to buy seed. If that does not work, the farmer sells part of his land for more seed. But not the land, actually. It is the annual productive capacity of the land, multiplied by the number of years remaining until the Jubilee. This makes sense, since the farmer gets the land back on the 50th year. If he manages to do well, he can repurchase the land at any time before then, redeeming it. It is his perogative.

If that does not work out, he can sell the productive capacity of his remaining property. He then remains on the land and becomes a sharecropper.  The purchaser of the land has to supply the tenant farmer with seed, and the farmer tries to pay off his debt with the proceeds from the harvest.

If this does not work, the farmer sells himself and becomes an indentured servant. The purchaser now takes on full responsibility for his well-being, including paying him wages. If he makes enough to pay off his debt, he goes free. Otherwise, he must wait until the Jubilee year.

All of this applies to Israelites dealing with other Israelites. The Torah specifies different treatment for non-Israelites. Non-Israelite slaves are owned in perpetuity. They cannot redeem themselves and do not go free in the Jubilee year.

So what can we say about this economy? There is no land ownership. While a successful farmer can increase his holdings for a time, it gets reset every 50 years, so there cannot be any accumulation of wealth. There does not seem to be any money in this system. Everything is based on agricultural commodities. Since all land ultimately remains under the control of the original family, there is little flexibility. Newcomers cannot break in to this system. A person who does not want to be a farmer does not have many options, since wealth is concentrated in the productive capacity of the land. 

At the same time, there is a strong concern for justice, and for preventing people from falling through the cracks when things turn poorly for them. Israelites are responsible for their neighbors. Even when someone becomes impoverished, they retain their rights and must be supported by those who are better off. Plus, the ability to redeem the land is totally in their hands.  The purchaser is not allowed to refuse to sell it back.

Was this economic system ever put into practice? During the first Temple era, we do not know for sure. But the Prophet Jeremiah makes a point of redeeming his ancestral land before he goes into exile when the First Temple is destroyed. In the Book of Ruth, Boaz redeems the land owned by Ruth’s deceased husband.

Biblical scholars argue about the extent to which these laws were observed. But the fact that the Torah can construct such an elaborate system of wealth redistribution implies that it is reacting to some situation on the ground. Behar represents the priestly vision for a just redistribution of wealth.

During the Second Temple era, however, the shemittah and Yovel laws were definitely being observed. Nehemiah makes reference to it in the fifth century. Philo and Josephus, in their histories, describe its practice during the late Second Temple period.

But the economic situation that Jews are living under is nothing like what existed centuries earlier. Let’s fast forward to the late Second Temple period, after the biblical era has ended. The Romans are in charge. The economy has changed drastically. Property ownership exists.

There is now money, which allows for a much more complex, growth-oriented economy. Think about what money is for a moment. The Emperor issues an order to make coins. The coins have limited intrinsic value, based on what kind of metal they are made of. But the government sets a value for those coins, a value that holds to the extent that people are willing to use it.

To expand the economy, the government encourages the issuing of credit, either by banks or by wealthy individuals. They make interest-bearing loans, which increases the money supply, allows businesses to grow, and allows trade to take place over vast distances.

A wealthy class emerges. Rich people need somewhere to park their money, so they do the obvious thing. They invest in real estate. Gradually, smaller farmers become squeezed out and are forced to sell their lands to wealthy absentee landowners, who typically dwell in the cities.

Jews, of course, are living under Roman rule, and they have to adjust to this system. Those Jews living in the land of Israel are also bound by the Torah’s agricultural laws, including those of the Shemittah and Yovel.

According to Deuteronomy, debts are cancelled every seven years, during the Shemittah. That is a problem. Why would anyone make a loan, especially an interest-free loan, if it is subject to cancellation at the end of each seven year cycle?

The result are as expected: credit dries up for those who are most in need. The poor remain poor, and the wealthy refuse to step in.

This situation led Hillel HaZaken, Hillel the Elder, to take action. Mishnah Tractate Shevii details the laws of the Shemittah year. The tenth chapter introduces an economic innovation that Hillel introduced. It is called a prozbul. The word most likely comes from the Greek pros boule, which means “before the council.”

The prozbul was a contract in which a creditor appears before a Beit Din, a Jewish court, and declares, “I turn over to you, so-and-so, judges of such and such a place, that any debt that I may have outstanding, I shall collect it whenever I desire.”  (Mishnah Sheviit 10:4) In other words, the debt, which by law should be cancelled, is transferred over to the court. The court is not a person, and therefore has no obligation to cancel the debt. After the Shemittah year is over, the creditor reclaims the debt from the Beit Din.

Why did Hillel issue this decree, which so clearly goes against the spirit, if not the letter, of the Torah? The Mishnah answers that question.

When he observed people refraining from lending to one another, and thus transgressing what is written in the Torah, “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].” Hillel enacted the prozbul.

Mishnah Sheviit 10:3

According to the Mishnah, those with means behaved exactly as we would have expected them to. They stopped making loans. That is why Hillel made this dramatic change. To put it into modern terms, “he eased up on banking regulations in order to get the economy moving again.”

The prozbul is one early example of how Judaism evolved to deal with a new economic reality. Over the past two thousand years, there have been many more developments. The best ones recognized, as Hillel the Elder did, the Torah’s underlying concern. “Beware, lest you harbor the base thought so that you are mean to your needy kinsman and give him nothing.”

Whatever the economic system, whether it be barter, feudalism, mercantilism, capitalism, socialism, whatever’ism, we are supposed to take care of each other. There will always be some who do well while others struggle. We have seen this very clearly during the pandemic.

Food Banks around the country have distributed food in record numbers. We have been warned lately that the numbers of homeless Americans will rise dramatically when national and state eviction moratoriums end in the near future. I am not going to suggest that there is an obvious or simple solution to these problems. We live in a vastly complex global economy that defies simple solutions. 

But we would do well to remember the values expressed by the Torah laws: to be compassionate and generous with our neighbors, to not encumber them with unpayable debt, to support them when they stumble, and to give them opportunities to redeem themselves.

The Shemitah Ideal: Forego Profit and Renounce Ownership – Parashat Behar 5776

Parashat Behar presents the laws of shemitah, the sabbatical year.  The Israelites are allowed to plant and sow, prune and gather for six years.  Then, on the seventh year, the land is to be given a sabbath of complete rest.  No cultivation can take place, but people are allowed to consume whatever happens to grow on its own.  The Torah explains that when the laws of shemitah are followed, the sixth year will produce such abundant crops that there will be plenty of food to go around for the next two years.

Another aspect of shemitah required indentured servants to be set free during the seventh year.  There were elements of the shemitah system in effect during years one through six as well.  Landowners had to give ma’aser oni, 10% of their crops to the poor every 3rd and 6th year.  They had to allow the poor to come on to their fields to harvest the corners and gleanings every year.

Maimonides identifies two separate mitzvot, commandments, pertaining to shemitah (Hilchot Shemitah v’Yovel 1:1, 4:24).  1.  It is a positive commandment to suspend work on the land and cultivation of trees.  2.  It is a positive commandment to release all agricultural produce.  In other words, farmers are not allowed to put up barriers around their fields, vineyards, and orchards.  Their property must be open to the public.  Furthermore, Maimonides adds, farmers are not allowed to gather in excess produce into their homes.  Small quantities can be brought in.  But for the most part, everyone is supposed to have equal access to the produce that happens to grow during the shemitah year.

In his Guide for the Perplexed, Maimonides suggests two reasons for the shemitah requirements.  The first is that these laws promote sympathy for our fellow human beings.  The second is that by letting the land lie fallow on the seventh year, it will result in greater overall production.

Regarding the second reason, Maimonides is wrong.  Farmers have practiced crop rotation since ancient times.  Without going into specifics, simply letting land remain uncultivated once every seven years is not crop rotation.  Many other commentators specifically repudiate Maimonides for suggesting this.

Most agree with Maimonides, however, regarding his first explanation.  Sixteenth century Italian Rabbi Abraham Porto writes, for example:

This law was given in order that we may show sympathy for our fellow men who have neither land nor vineyards, and that they may be happy in the Shemitah year, as the rich are happy every year.  (Minchah Belulah)

Another commentator explains that

the suspension of work in every seventh year causes us to realize that our mission on earth is not to be slaves to the soil but a much higher and nobler one.  Work should only serve the purpose of providing food and other needs, while our task is to attain to the supreme end…  (Akedat Yitzchak)

Think about what it would be like to be an Israelite landowner in a society that observes Shemitah.  I have to stop all work on the land.  I cannot even allow my non-Israelite workers to do anything.  I have to take down any fences or barriers around my fields.  As for produce that happens to grow naturally, I am not allowed to harvest it.  Instead, it remains in the ground, on the tree, or on the vine.

When I need food, I can go out to my field.  But I will be joining everyone else from my community when I do so.  The poor, the strangers, the property-less Levites.  All of us have equal access to the lands that I once thought of us as mine.

For one year, all social and economic differences are set aside.  The wealthy stand side by side with their servants, the poor, and the strangers among them.  Just think about the impact on social interactions if our society followed an institution like shemitah – to forego profit and renounce ownership.

Perhaps this is a utopian socialist ideal – but remember that it is only once every seven years.  The Torah recognizes the inherent competitive nature of humanity.  Rather than try to suppress it, it asks us instead to harness it.

We desperately need this ethic here in California, where we are living the opposite of the shemitah ideal.

There is an unprecedented housing crisis in our state.  The cause of this housing crisis is not a secret: income inequality.

This week, the Mercury News reported the following statistics:  Home ownership rates statewide are at the lowest level since the 1940’s.  The median price of a home in Santa Clara County is $1,070,000.  To qualify for a mortgage for such a home, a homebuyer would need an annual income of $219,870.  Assuming the homebuyer made a down payment of 20%, the resulting payment on a 30-year fixed rate loan would be $5,500 per month.

So many people struggle to meet even their basic housing needs; the idea of taking off a year to pursue more spiritual matters is a pipe dream.

Our society is structured in such a way that people of different economic levels are separated from one another.  There is not a whole lot of social interaction taking place between blue collar and white collar workers.

These kinds of inequalities are precisely what Shemitah addresses.  The walls between us, quite literally, come down.  The pursuit of wealth is put on hold.  Rich and poor, executives and janitors, stand shoulder to shoulder as they pick food for themselves and their families.  And everyone uses their time to pursue spiritual matters: the study of Torah, the development of relationships, the cultivation of compassion.

Rav Kook, the early religious Zionist in the early twentieth century, wrote a book about shemitah called Shabbat HaAretz. – the Sabbath of the Land.  You can hear the idealism in his beautiful words as he imagines Jews living in harmony in with each other and the land.

It is a year of equality and rest, in which the soul reaches out towards divine justice, towards God Who sustains the living creatures with loving kindness.  There is no private property and no punctilious privilege but the peace of God reigns over all in which there is the breath of life…  Sanctity is not profaned by the exercise of private acquisitiveness over all this year’s produce, and the covetousness of wealth stirred up by commerce is forgotten.

Bibliography

Nehama Leibowitz, New Studies in Vayikra, pp. 509-522

 

Income Inequality – Behar 5771

As you know, economists have officially declared the recession over.  That may be true on paper, but there are still millions who have lost their jobs, and their homes, and are struggling to get by.  Despite the immensity of the recession, it has not impacted everyone the same. Some have come through just fine, and even prospered.  One of the recent critiques we have heard is that the national unemployment rate is still well over 8 percent while some of the largest American corporations are making record profits and sitting on billions of dollars.  There are vast differences between the economic experiences of Americans.  I don’t think there is much disagreement that there is something broken in the socio-economics of this country.  There is a lot of disagreement about what is broken and how to fix it.

As a Diaspora people, Jews have lived in many different societies.  But wherever we have lived, we have taken our Torah, and our teachings with us, and we have applied their lessons to the situations we face.  This morning’s Torah portion has a lot to say to us about the relationship between the rich and the poor in society.

Most of Parshat Behar, is a presentation of the laws of land ownership in ancient Israel.  It describes an economic system that is vastly different from what we have today.  It is agriculturally based.  There is no money.  And land is apportioned to tribes, clans, and families.  As in some other societies in the Ancient World, land could not really be sold.  Great value was placed on keeping ancestral land within the family.  The Torah adds an innovative, and powerful moral concept with far-reaching implications.  God instructs the people, “But the land must not be sold beyond reclaim, for the land is Mine; you are but strangers resident with Me.”  (Lev. 25:23)

The Israelites get this reminder every seven years, when they observe shemitah, and let the land lie fallow.  Every fifty years, they observe the yovel, the Jubilee.  In that year, all land reverts back to its original owner.  Any Israelite who had to indenture himself into servitude regains his freedom, and his land.  All debts are cancelled.

This economic model, if fully implemented, would have some pretty significant effects.  Families would not fall into multi-generational poverty, since there would effectively be an economic reset every fifty years.

Also, it would be impossible for anyone to accumulate huge amounts of property, since any land or debt that a successful business person acquired would revert on the Jubilee year.  There is not even such a thing as selling land, just leasing it for a period of time up until the fiftieth year.

The result would be a flattening of economic disparities.  You can imagine that the gap between the richest and the poorest in society would never get that huge if everything reset itself every half century.

What I especially appreciate about the system that the Torah dscribes is that it is not a pie in the sky utopia.  It does not say that everyone will be equal.  This is not “From each according to his abilities, to each according to his needs.”  This system understands that some people are going to be wealthier, better educated, shrewder, and luckier, than others.

Remember, the underlying moral value is that the land ultimately is owned by God, and not us.  While prosperity is important, there are values that are more important to pursue than the accumulation of wealth.

In his commentary on the Book of Leviticus, Jacob Milgrom describes these laws as trying to stop the loss of land by debtors to the rich, as well as reduce “the ever widening gap between the rich and the poor.”  The Biblical Prophets condemned the mistreatment of the poor in their particular prophetic style.  They harangued a society for ignoring the light of the poor, the stranger, the widow, and the orphan.  Here in the Book of Leviticus, Israel’s priests are trying to fix the immorality of economic inequality, not through moral pronouncements, but through law.

Nevertheless, the historical evidence suggests that the Jubilee year as presented in the Torah was never actually practiced.  What are we to make of its appearance here?  It is a presentation of values.  An ancient reader would see in this theoretical economic system a critique of what was probably a less just society in which those with less money, and less power, did not have many opportunities.  A society in which bankruptcy risked dooming a family to poverty for generations.

We seem to have some of the same issues today.

As you no doubt are aware, the last several decades have seen a significant rise in income inequality around the world.

Of all developed countries, the income gap between the rich and the poor is greatest in the United States.  In 2008, the top earning 20 percent of Americans, who earn at least $100,000 per year, received 49.4 percent of all income generated in the country  The bottom 20 percent received  just 3.4 percent of all income.  The relative gap is the widest that it has been since the U.S. Census Bureau started collecting data in 1968.

We are not going to get into what causes income disparities, or how to reduce them.  But I do want to talk about the effects.

There has been a lot of study over the last few decades about the impact that large gaps between the rich and the poor has on society.

Robert Putnam, the professor of political science at Harvard University, conducted a study on the relationship between social capital, or the connections between members of a society, and economic inequality.  He found that throughout the twentieth century, social connectedness and civic engagement moved “in tandem” with economic equality.  The flatter the gap between the rich and the poor, the more society was interconnected.  The high point in social capital, according to Putnam, occurred during the 1950’s and 1960’s, which was also the most economically egalitarian period in the twentieth century.  “Conversely,” he writes, “the last third of the twentieth century was a time of growing inequality and eroding social capital… The timing of the two trends is striking: somewhere around 1965-70 America reversed course and started becoming both less just economically and less well connected socially and politically.”

In other words, when the rich-poor gap is smaller, society functions better.  There are more interactions between people.  Communities are tighter-knit.  Individuals are more engaged politically, meaning that they are more involved in shaping the course of society.

There are many other social factors that have been also statistically correlated to income inequality.  To the extant that the income gap is reduced, societies in the developed world experience lower homicide rates, fewer mental health problems and less teen-age pregnancy.  But the gap is expanding.

It was not always like this.  In 1831, in his book Democracy in America, Alexis de Tocqueville talked about how wonderful the economic equality was that he witnessed.  He writes:

Among the new objects that attracted my attention during my stay in the United States, none struck me with greater force than the equality of conditions.  I easily perceived the enormous influence that this primary fact exercises on the workings of society.  It gives a particular direction to the public mind, a particular turn to the laws, new maxims to those who govern, and particular habits to the governed…  It creates opinions, gives rise to sentiments, inspires customs, and modifies everything it does not produce…  I kept finding that fact before me again and again as a central point to which all of my observations were leading.

De Tocqueville was describing an engaged, inspired population.  I don’t think de Tocqueville would be able to make those comment today.

Today, with the widest gap between the wealthy and the poor this country has seen since the 1920’s, it seems that there is a tremendous  despair among individuals about our ability to affect society.  With corporations now defined as people, and large PACs with unknown sources of funding able to influence politics with huge amounts of money, that despair seems justified.

The point I want to make this morning is that our Jewish tradition has always understood large gaps between the rich and the poor to be highly problematic.  Such disparities are harmful to a cohesive society, and are antithetical to the Jewish notion of justice.  To be clear, our tradition encourages us to be involved in the material world around us.  We pray for God to bless us with prosperity.  Wealth and prosperity are things to pursue.  But not as ends in and of themselves.  Only as means to do the more important work of serving God by creating a just world.

It is said that you can always cherry pick a text that will support your position.  I don’t think that can be said about this issue.  I have never heard or read any Jewish thinker, speaking from within the tradition, defend the idea that the rich should be free to acquire as much as they can without regard to the consequences on the rest of society.  As Jews, we have a moral and a legal obligation to create opportunities for the people at the bottom to succeed.  We can argue about strategy – raise taxes, lower taxes, expand social services, cut medicaid – but from a Jewish perspective, something has to be done about income inequality.