Says Free-Market Ethics Must Have Roots in ‘Religious Ideas’ : Israeli Economist Envisions a Moral Economy

WASHINGTON — The first glimpse of Meir Tamari is deceiving--the huge white beard, the black floor-length coat and a black felt hat hiding a large yarmulke.

But this is no holy man stepping out from the pages of an Isaac Bashevis Singer story. Cloaked in the garb of the Hasidic Jew is one of Israel’s more influential economists and one of the world’s leading thinkers on the questions of ethics in business.

In a decade that celebrates the triumph of free-market capitalism over its communist challenge, Tamari’s beliefs are a provocative blend of free-market advocacy and Old Testament morality. He is both a believer and a critic.

And his vision of a “Jewish economy” speaks directly to an American business community eager for an ethical system that reaches beyond the obvious platitudes about insider trading and the excesses of greed.

“Judaism is a moral system, not an economic system, but the guidelines, the framework, is there,” said Tamari, chief economist of the Governor’s Office of the Bank of Israel, the Israeli equivalent of the Federal Reserve Board, now in Washington as visiting scholar at the Bethesda, Md.-based Foundation for Jewish Studies. “A Jewish economy is a free-market economy restricted in order to satisfy the social and moral teachings of Judaism.”

‘Kosher Money Laws’

The framework that Tamari speaks of begins with the five books that make up the Torah, the first part of the Old Testament. Of the 613 divine commandments mentioned in the scripture, Tamari points out that more than 100 are laws governing the conduct of business--”kosher money laws” he calls them.

And even in their literal application, he argues, they are no less relevant to today’s bond trader and deal maker than they were to the shepherds and tradesmen of Israel 3,000 years ago.

“The free-market economy is the most effective means of providing goods and services,” Tamari explained recently, “but at the same time the economy may have to be distorted or regulated in order to protect the weak, in order to prevent immoral abuse. Judaism is a value structure. Market efficiency is very important, but I don’t think we want it to be more important than morality. . . .”

“The whole concept of ‘let the buyer beware,’ for example--putting the onus on the buyer--this is a Roman notion rejected in Judaism,” he said. “The onus is on the seller. The seller is always obligated to point out any defects in a product he’s selling. Judaism does not accept the notion of a victimless crime. In America there is some amount of consumer protection, but that’s not true in many countries.”

Unique in Jewish law, Tamari pointed out, is a requirement that the business person must “do a favor for someone if one can make a profit and the other doesn’t have a loss”--for example, lending someone a piece of property that could help him and not hurt you. A corollary to such a rule would require a person who is selling property to give a right of first refusal, at market price, to his neighbor.

Such a Jewish economy, Tamari said, would place the importance of money and business in a “proper perspective.” Among other things, it would suggest a mandatory tax system to help the poor and, if necessary, a system of price controls on basic goods to make sure no one lives below poverty level.

“There are other aims in human life besides increasing wealth in the Jewish context--worshiping God, promoting morality, preventing damage to others,” Tamari reminds his listeners, who have included members of Congress, World Bank officials, university and business audiences here and in Europe, and those who have read his recently published book, “With All Your Possessions: Jewish Ethics and Economic Life.”

Opportunity for Dishonesty

There is an environmentalist strain to this business morality. “It is impermissible to waste resources even when they belong to you,” Tamari said. “We receive natural resources from God, not just for us, but for future generations. There is something to be said for placing limitations on consumption. You can’t make a national economy into a disposable society. An economy based on the rape of natural resources is unjust.”

At times, it sounds as a left-leaning, socialist mind is at work here, but in time the listener discovers a more complex view, arrived at after a long journey, from Tamari’s native South Africa to an Israeli kibbutz, a communal farm.

For while Tamari finds plenty of opportunity for corruption in the capitalist pursuit of wealth, he has found in the socialist system an equally fertile breeding ground for dishonesty. In a state such as Israel, founded as it was on socialist principles and whose economy is still dominated in large part by socialist-leaning institutions, his is a controversial point of view.

“It took many years for me to discover, but I found out that there isn’t an economic system which doesn’t create moral problems. People will always have moral problems. It’s not enough to change the system. When I was younger, I believed that to change the system was enough. But unless we change man, educate man, we won’t solve the problem.”

Tamari’s early economic beliefs were shaped by two experiences--his youth in South Africa and 10 years he spent on a kibbutz.

“In South Africa, I was economically and socially left,” Tamari said. “Apartheid motivated my generation. Apartheid is evil. We felt that we were living in an economic system which wasn’t answering moral needs, poverty, hunger, so many people in my generation thought a planned economy would provide these things.”

Tamari, who emigrated to Israel in 1950, said he was drawn to kibbutz living by the notion that a planned economy in which all is shared is more egalitarian than the free-market system.

Marx and Common Sense

“The whole purpose of kibbutz was to do away with private property; people would work for the benefit of the group,” he said. “But we discovered faults in the system. Some people would say that the system itself runs contrary to human nature. The economic structure and reality clashed.”

There are hints of Karl Marx--and common sense--in Tamari’s assertion that all humans “have the desire” for money and possessions. But that leads him to the conclusion that the socialist system--whether in a kibbutz or an East Bloc nation--can promote corruption, because it does not provide an outlet for people’s material and entrepreneurial needs.

On the kibbutz, Tamari said, he found that a rule that prohibited members from holding private bank accounts bred corruption, because members who wanted to keep money outside the kibbutz were forced to lie. Flourishing black markets are another example of immorality caused by socialist economies, he said.

But it is the ethical problems raised by the free-market economies most on the minds of Tamari’s audiences here. He tries to steer his discussion away from glamour crimes and focus on everyday infractions that, although not necessarily illegal, are considered in Jewish law to be immoral--using a company telephone for personal calls or padding expenses.

“Everywhere I go, people want to talk to me about insider trading,” Tamari said. “You know why they want to talk about it? Because they don’t do it. They never want to talk about the things they do. ‘(Ivan) Boesky did it. It’s his problem. We don’t have a moral problem,’ that’s the attitude.”

Tamari welcomes the recent interest in the teaching of ethics at American business schools. He sees limitations in any ethical code not rooted in religious ideas:

“I asked somebody who invited me to speak at his university how he tells his students what is moral and what is not moral,” Tamari said. “He said, ‘It’s a consensus of what decent and right-thinking people think,’ which actually means people who agree with him, because everybody thinks they are decent and right-thinking. That in itself is not worth very much.

Fight Can Never Stop

“We have to understand that you cannot have a moral system in economics unless you have a moral system in life generally. People make a big mistake about that. I think there’s enough experience to show that legislation and educational courses by themselves cannot do the job.”

“Economic immorality has always existed,” he said. “In Judaism, the fight against immorality can never stop. The prophets list economic transgression as a curse for God’s displeasure, just like idolatry and adultery. We would like to argue that there are in the Torah the tools to limit this immorality.”