Halachic Markets

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by R. Gidon Rothstein

I’m feeling my oats, a bit, because we are going to study an issue She’iltot raises for Parshat Va-Yigash that is not a specific Biblical mitzvah, although Rambam and Aruch Ha-Shulhan give it a de-oraita framework. Aside from my preference to be guided by She’iltot, the topic appeals to me for its challenge to our capitalistic assumptions of the value of free pricing of goods.

Don’t Manipulate the Market

She’ilta 32 cites Baba Batra 90b; in the name of time, let’s go straight there. To not ignore She’iltot completely, consider why he put this in Va-Yigash. He does not say, but I think it’s because of the somewhat troubling end of the parsha, where Yosef uses the stored grain to extract the Egyptians’ possessions, set up a tax/servitude system for Par’oh. She’iltot seems to be reminding his readers Jews do not act that way with each other, as the Gemara will say.

The baraita in Baba Batra points to Amos 8;5, which lists people who manipulate markets for their gain. The Gemara says the contemporary parallels are those who store produce (to create artificial scarcity), lend at interest, use falsely small measures (the measuring cup says a gallon but is less), or jack up prices [Rashbam says all of these refer to cities of majority Jewish population, a complexifying factor to which we will return].

Two verses later, Amos says Hashem swears by (or “concerning”) the pride of Ya’akov, “if” He will forget their actions forever. Something about these sins earns eternal opprobrium, unless the sinner repents.

Limiting the Prohibition

Rav carves out a significant loophole, a farmer is allowed to refrain from marketing his own produce. The prohibited storing involves buying up fruit to store and keep out of the marketplace. [One of my early market awarenesses was when the Hunt brothers tried to corner the silver market in 1980]. While Rav seems to leave room for a farmer to choose not to enter the markets, the Gemara later—and Shulhan Aruch Hoshen Mishpat 231;24– insert a caveat, during famine, a farmer may only keep enough for his family for a year.

The Gemara goes on to say the prohibition only encompasses basic necessities, in the Gemara’s world, wine, oil, and flour [this is another of those areas I just can’t escape assuming a future Sanhedrin will adjust; it reminds us the definition of “necessity” is socially and culturally dependent]. Spices such as cumin and pepper are not included in this protection.

One more exception in the Gemara: the runup to a shemittah year. A farmer in year six who retained enough for him and his family for three years would be perfectly within his rights.

Policing the Markets

Rambam, Laws of Sales 14;1, allows a seller to be forthright about what his wares cost him and what he is charging as profit, with no worries about ona’ah, overcharging. (The Gemara speaks of overcharging as if any amount extra is a problem, and more than a sixth nullifies the transaction.)

However, he calls for every community to set prices for the staples of life, and to police those [in paragraph nine, he allows each community to set prices for whatever it wants]. In his view, sellers deserve a profit, but not an exorbitant one [I think it means treating basic grocery stores as if they were public utilities]. Shulhan Aruch Hoshen Mishpat 231 echoes Rambam, but adds “a person should not be profiting off what is essential for life, other than a sixth.”

Shulhan Aruch agrees the seller is allowed to make more if s/he has to spend time marketing the item, and can only sell out his/her inventory over time. Those costs can be added to the price, above which s/he should still profit only a sixth, he says.

If prices have risen despite this Jew, s/he may sell at the higher price; and all of this is only where the courts can effectively police the prices [another easy opening for confusion: how big does the black market have to be before we throw up our hands and say the courts aren’t policing it effectively?]. No individual Jew is required to forego money others are making. Aruch Ha-Shulhan 231;24 sees the idea as the reason these rules do not apply in places with majority non-Jews; since the non-Jews will not agree to the system, the Jew(s) need not take the hit.

This is a communal issue, Shulhan Aruch is saying, perhaps the reason paragraph 21 allows corporal or other punishments for those who raise or manipulate prices beyond what is proper.

The Nature of the Prohibition

I point it out because Rambam chose this chapter to codify the Gemara we just reviewed. At first glance, it implies there is a sort of fraud  or overcharging in price manipulation by buying up goods. Shulhan Aruch does the same, puts these ideas in Hoshen Mishpat 231, the laws of overcharging and fraudulent transactions.

Already in halacha 2, Rambam limits the idea to foods necessary for life, wine, oil, and flour, but herbs (which “only” provide taste) are not to be regulated this way, the seller can charge what he wants.

Maggid Mishneh there pointed out the distinction comes from the Gemara we saw. But for a line of Rambam’s we are about to see, it would have led me to assume Rambam saw hoarding as a form of ona’ah, selling materials for more than supposed to.

Life Necessities, in Israel, Aren’t a Business

Halacha 4 of the chapter records a prohibition on making a business out of selling essentials in Israel (ona’ah rules are not limited to Israel). Rambam thinks all sellers are required to bring their wares, sell them inexpensively (meaning: taking only the costs of bringing them to market plus a fixed living wage for the seller). Where there’s a surplus, Rambam allows treating even the wine, oil, or flour as a commodity, a good off of which to profit.

Later, in halacha 8, Rambam also prohibits exporting these essential items from Israel [unless there’s a surplus], or even within Israel from one kingdom to another, lest it leave the original area with insufficient resources.

When Rambam presents the prohibition we mentioned earlier, of withholding any produce in times of famine, he says doing anything to cause prices to rise, fiddling with pricing or hoarding produce is like one who lends at interest. Maggid Mishneh points out Rambam was inferring from the baraita on Baba Batra 90b, which had listed lending at interest along with hoarding among those Amos warned of God’s permanent memory of their misdeeds.

Fraud? Usury? Livable Life Conditions?

Rambam’s placement and rhetoric push our discussion in dissimilar directions. He puts the issue in a chapter devoted to proper pricing, but compares our issue to lending at interest.

I suggest he thought the Gemara linked hoarding to usury to make a subsidiary point, there are many ways to prey on the defenseless, all problematic. Cornering a market in essential items warps pricing, indistinguishably (or nearly so) from simply charging too much and pretending it is the value. It also hurts the vulnerable the most. Like usury, because in Torah and Talmudic times, borrowing money was usually done out of necessity.

Aruch Ha-Shulhan 231;25 adds another verse this person violates, perhaps bringing the topic full circle. He says one who fosters raised prices transgresses Va-Yikra 25;36, that your brother shall live with you. Possibly, he only means the usury aspect we have already seen, since the phrase closes a verse about exactly that, except its plain meaning includes a lot more. Also, Rambam quoted the verse (as far as I found) in the mitzvah of tzedakah, Obligation 195, where Ramban quoted it as the source of a mitzvah he thought Rambam should have counted among the 613, the obligation to return misbegotten usury.

Aruch Ha-Shulhan thus opens the door to the idea that market manipulation violates our general obligation to foster livable working conditions for our fellow Jews [an idea R. Uziel thought meant Jewish employers had to pay their Jewish employees a living wage, even if that was higher than non-Jews’ needs], to the idea that charity isn’t only about giving the destitute, it includes fostering an environment where those on the edge can find what they need.

I’m not sure what mitzvah de-oraita we have been discussing, which maybe is valuable in itself, a reminder that we likely won’t be able to include all the Torah itself requires in a specific mitzvah. Whether it’s because we have an obligation to build a society where Jews can find their basic needs, because we may not falsely impose financial burdens on the vulnerable of our society, or because manipulating the markets is a type of fraud, we must not do it, at least with essential items, where Jews are the majority.

[An addendum: I know capitalists claim the most efficient way to get things done is the free market; I can think of many counterarguments, but let’s leave it at the Torah saying that for basic necessities, whatever is in that list, we have a fraternal obligation to make sure our fellow Jews can find those necessities at affordable prices. It may be less efficient in some sense, it may make it more difficult for grocers to make the living they want, but it pays off in the security of people knowing they will at least have what they need.]

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