Jews, Commerce and Controversy





Mr. Karp is an Associate Professor in the Judaic Studies and History Departments at Binghamton University, SUNY. His most recent book is The Politics of Jewish Commerce: Economic Thought and Emancipation in Europe, 1638-1848, published by Cambridge University Press.

As the story of Bernie Madoff ‘s massive fraud began to circulate following his December 11 arrest, many Jews experienced a profound sense of unease – and not just in their pocketbooks. Even prior to the Madoff debacle, September’s tales of financial market breakdown seemed packed with references to Jewish brokers and bankers whose complex machinations were implicated in if not held responsible for the mayhem. It did not matter that many of the victims were themselves Jews, or that the companies with historically Jewish names, such as the bankrupted Lehmann Brothers, lacked any current Jewish connection. Jews knew that anti-Semites would overlook such details and seek to exploit the crisis.  As commentator Bradley Burston put it in a December 21 column for the Israeli newspaper Ha-Aretz, “for the true Anti-Semite Christmas came early this year.”

The reaction of many Jews – and the overreaction of some – is not difficult to understand. The image of Jews as financial crooks has been part of the anti-Semitic arsenal for centuries. It is a venerable and variegated one with countless incarnations: the Jewish usurer of the Christian middle ages, the ghetto sharper of early modern Italy; the suspicious peddler wandering the back country roads of eighteenth-century Germany; the pawnbroker fencing stolen goods in Victorian London; the fin de siècle banking dynasty reaping windfall profits through political manipulation; and of course the fraudulent speculator pocketing his gains as markets crash around him. These are some of the stock anti-Semitic representations associated with Jews and money, and their poisonous potency is incontrovertible.

Yet the ubiquity of such associations demands that they be elucidated, not just refuted. How did these associations first emerge and why have they long resonated with the general public (at least until the aftermath of the Holocaust)? Are they rank fabrications or do they possess some grain of historical truth, distorted but not entirely concocted by anti-Semites. Even broaching these questions makes many Jews nervous. A recent article by Staci Burling in the Sunday business section of the Philadelphia Inquirer underscores the point. Drawing attention to an upcoming series of lectures sponsored by the Wharton Business School on the topic of Jews and commerce (I am delivering the first of these) sparked a firestorm of criticism from donors and alumni who feared that such publicity would only serve to legitimize stereotypes at a moment of severe economic hardship. And judging from the ugly anti-Jewish comments posted by online readers of Burling’s article, one can certainly see their point.

Jews’ squeamishness about investigating their economic history is nothing new. When academic Jewish scholars began doggedly researching Jewish history in the mid nineteenth century, they consistently downplayed the economic dimension.  It was only in the first decades of the twentieth century that a field of Jewish economic history came into being, first, in reaction to the sensational 1912 book by the German sociologist Werner Sombart, The Jews in Modern Capitalism, and second, inspired by the penetration of Marxism and other socialist creeds into the worldviews of Jewish historians in Eastern Europe.  These leftist scholars sought to shift the historical emphasis from the lofty doctrines of rabbis and philosophers to the “everyday life” of Jewish laborers. As one of the leaders of the effort, Ignacy Schipper, put it, “we know about the Sabbath Jew and his extra Sabbath soul. But it is time we got to know the history of the weekday Jew and his weekday thoughts, ... the history of Jewish working life.”

Schipper could make this pronouncement because a significant Jewish working class existed in Poland and Russia, in contrast to central and western Europe. Yet Marxism proved ill-suited to the task of elucidating Jewish economic life. Even in the East, the Jewish population remained essentially skewed toward commercial and middleman occupations. The socialist Jewish historians who wished to lay bear the story of the Jewish “common man” constantly ran up against the ambiguous character of the Jewish population, which straddled the economic ladder between middle and bottom, commercial and proletarian.

In fact, despite their unique qualities, East European Jews resembled their Western co-religionists in important ways. In the middle of the nineteenth century both groups continued to speak Yiddish or had only recently abandoned it as the mother tongue; both possessed experience as sojourners in the countryside who provided commercial and financial services to rural non-Jewish populations; and both were now striving to reconstitute their livelihoods in a world undergoing revolutionary changes in industry and transportation. In meeting this challenge, the more Westernized Jews could even offer their poor cousins a boost, although they often did so while holding their own noses.

These are the factors that best explain the modern Jewish “success” story. Jews were better equipped than most to adapt to capitalism because they had inherited a body of commercial experience derived from centuries of serving as commercial and financial specialists in European life. Jews’ very existence in Christendom as a tolerated religious minority, however at times miserable and precarious, had been unique. The Jews of the late Roman imperial diaspora were agriculturalists, artisans, mercenaries, but not prominently merchants. Yet in a process still little understood by historians, small groups of Italian and Mediterranean Jews migrated to northern Europe during the early middle ages, where they were granted privileges in return for performing commercial services. Very likely it was the seventh- and eighth-century Islamic conquests of much of the Mediterranean world that established the precondition for Jews to serve as intermediaries and long-distance traders, eventually affording them skills as money changers and access to liquid capital with which to provide banking services. These skills were transportable, so that when local conditions became inhospitable, Jews could move on. As the German economic historian Wilhelm Roscher observed in a seminal 1875 article, the persecution of Jews often coincided with growing competition from Christian merchants. But as Roscher explained Jews could always relocate to still underdeveloped regions and new frontiers to begin the process anew.

The seventeenth-century Italian rabbi, Simone Luzzatto, once observed that Jews had been educated in the school of harsh necessity to seek out and exploit new economic niches. With the onset of modernity, this habituation to scraping and scrambling enabled Jews eventually to stake out a prominent position within an economic order now defined by market relations. By the late nineteenth century Jews had come to constitute a kind of “impoverished bourgeoisie,” devastated by discrimination yet possessing the “cultural capital” to rapidly climb back up the ladder as capitalism advanced. The phenomenon was more cultural than economic. The Jews’ essentially middle class orientation ensured that business would be only one among several important avenues to their rise (others included professions, such as teaching, union officialdom, accountancy, and at the higher levels, law and medicine). This Jewish “overrepresentation” (disproportionate participation in certain occupations relative to their percentage in the population) ensures that they will be prominent as not just Madoffs but also as Brandeises and Franfurters.

It is no wonder that the legacy of commerce makes many Jews nervous. And yet that legacy is as much a tale of heroism and survival as of villainy and scandal. Even in difficult times like our own, it is an inheritance that Jews should proudly embrace.


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Elliott Aron Green - 2/11/2009

Per, if global trade declines and there are fewer machines, why would the price of oil go up? Or maybe you mean that a higher price for oil will cause a decline in trade and necessitate fewer machines?


N. Friedman - 2/10/2009

Per,

I do not know if any of your predictions will come true or, if they come true, will prove meaningful.

Maybe the price of oil will spike. Maybe it will rise gradually. Maybe it will stay relatively stable for a good long while. Maybe an alternative fuel will undermine the importance of oil. This is all speculation.

As for the past, we are certainly, at least in part, the product of what came before. But, that does not mean that it is only the past that counts or that the past delegitimizes the present.

Yes, there was slavery at one time and it played an important role in the economics of the New World and in Europe and, I should add, in the Muslim regions. At this point, the only places where slavery plays any important role anymore is in East Africa, most particularly in Sudan and, to a lesser extent, in the Gulf region Arab states.

As for the conquest of the Americas, that certainly occurred. But, that is a fact going back centuries so, while it is interesting and important, I doubt it helps determine where the economy is going today.


Per Fagereng - 2/10/2009

Not being an economist may be a plus. A lot of economists don't seem to have much grasp of history. They take our present system for granted. They don't realize how much it depended on the conquest of the Americas and slavery. They treat the environment as an "externality" outside the system.

It looks fairly certain that the price of oil will rise rapidly in the future. You don't have to be an economist to see that global trade will decline and our agriculture will change -- fewer machines, more people on the land.

And getting back to the original point of this discussion, if there is little growth it makes a debt-based economy less sustainable.


N. Friedman - 2/10/2009

Per,

I am not an economist. It seems to me, however, that our current economic crisis will someday end, whether sooner or later remains to be seen, and the US economy will retain substantial continuity with its past - whether closer to the model preferred by Democrats or closer to the model preferred by Republicans remaining an open question. Either path differs in degree, not in kind.


Per Fagereng - 2/10/2009

Thus far...and here we are with a credit economy that may soon collapse. Debt forces an economy to grow, which historically was less of a problem when we first conquered the Americas. Now we see limits to oil and other resources, and maybe the end of growth.

If the credit economy is saturated, and people avoid any more borrowing, banks will go out of business.


N. Friedman - 2/10/2009

Per,

I am not an economist. But I do know that the lending of money for interest is, thus far, necessary for an economy to thrive. That, of course, does not mean that it is a sufficient condition for an economy to thrive or that all lending for interest is good.

In my prior posts, I was only comparing lending money for interest to systems where such activity is forbidden.


Per Fagereng - 2/9/2009

One thread exhausted, let's try another. Opposition to interest may not be as stupid as Friedman thinks. The US Treasury borrows its currency from the banking cartel (aka Federal Reserve) and then gives it back to the banks. Is this living in a modern society?


N. Friedman - 2/9/2009

Omar,

You have, for whatever reason, misread what I wrote. I did not say you believed in the prohibition against interest. I instead wrote: "So, I think that there is more flexibility in Muslim behavior than in beliefs held by the devout, So, I think that there is more flexibility in Muslim behavior than in beliefs held by the devout, even if you and they believe it to be an absolute "harem." you and they believe it to be an absolute 'harem.'"

Note that I used the important qualifier "even if." That changes the meaning entirely from what you have taken my words to mean. I actually have no idea what you, Omar, think.


N. Friedman - 2/9/2009

Omar,

I was not being touchy. I was correcting one your errors.


Elliott Aron Green - 2/9/2009

Omar, I believe the New Testament refers to "moneychangers" at the Temple, not "money lenders."

Anyhow, it is good of good of you to recall that we had a Temple in ancient times, which was in Jerusalem as you know.


omar ibrahim baker - 2/9/2009

Mr Friedman
Is it that you failed to note or that you noted and chose to ignore my question :
"How can you tell what I believe in as you assert in your statement "even if you and they believe it to be an absolute "harem." "

Is that NOT typical of you and of M+1 to assume and presume things that you deem good PR material?
Which only confirms my earlier claim that:
"Extrapolation seems to be a highly contagious ailment with some."


omar ibrahim baker - 2/9/2009

"Money lenders" as I understand it and as I used it here denotes a profession; it is neither an insult nor a slander.
Your sickly sensitivity to words must be an outcome of the Madoff malaise; though understandable it certainly is NOT called for here!


N. Friedman - 2/9/2009

Omar,

I have read your original post. My post was directly responsive to what you wrote.

In any event, traditionally, it was strictly forbidden for Christians to loan money for interest. That is something that comes directly out of the Jewish Scriptures, which are incorporated by Christians as the Old Testament.

By the way, interest was also something that was at one time forbidden, as a matter of religious law, for Jews. That would include those Jews you call money lenders. Which is to say, they followed the same rules as Muslims today who continue to retain antiquated societal practices dressed up in religious terminology.

Christianity does not really have the equivalent of Shari'a. So, if your point is that there is no Christian law opposed to usury, that is technically true but irrelevant as a practical matter. Due to the express prohibition in the Jewish Scriptures, it was strictly forbidden by Christianity through the religion's influence over national laws.

So, again, Omar, you are off base.


omar ibrahim baker - 2/9/2009

Mr Friedman
Your post is irrelevant to what I wrote and I fail to see why you address me with a riposte, a rejoinder, attitude.
Force of habit??

However there is a big difference between something being forbidden by society (Christian society also strictly forbid interest on loans.) and by strict religious/canonical injunction, as I presume you can tell; which is neither to belittle the former nor to aggrandize the latter!
Your mini, micro?, lecture on banking is appreciated though neither needed nor having anything new or relevant to say.

Need I tell you that 2+2=4??, I guess you know that much!

How can you tell what I believe in as you assert in your statement "even if you and they believe it to be an absolute "harem." "

Extrapolation seems to be a highly contagious ailment with some.


N. Friedman - 2/9/2009

One note of correction: Christian society and countries until the early years of the modern era strictly forbid interest on loans.


N. Friedman - 2/9/2009

Omar,

Evidently it has not occurred to you that in Europe, Christian society also strictly forbid interest on loans.

In any event, opposition to interest is as stupid and destructive a view whether it arrives in its Islamic, Christian or any other form.

Nowadays - it is all but impossible to live in modern society without paying interest and, in fact, such a society cannot operate without the payment of interest - there are Muslims who describe a fee paid for the use of money (e.g. related to a mortgage) as something other than interest. So, I think that there is more flexibility in Muslim behavior than in beliefs held by the devout, even if you and they believe it to be an absolute "harem." In fact, my understanding is that the fatwa permitting the payment of such fees has been criticized for effectively pretending that such fees are not interest when, by any normal understanding of the word "interest,' such payments are interest.


omar ibrahim baker - 2/9/2009



Karp's reference to the influence Islamic advance into Europe had on Jewish mercantile/ banking expertise is interesting although I am NOT sure, I do NOT know enough to judge, how valid that is.
However Karp missed what I deem to be a more relevant point in this context of intercultural exchange.
The fact that usury is, religiously/canonically , very strictly, uncontrovertibly and unquestionably forbidden by and in Islam ( an absolute "haram") must have had as great an influence in furthering Jewish mercantile/banking proficiency during that era.
Why the Jews and not the Christians, both of whom as non Moslems are not beholden by that injunction, could reasonably be due to the to the very old “cultural" Jewish background/tradition of primitive banking with the proverbial "money lenders" surrounding the temple in BC years.


Lorraine Paul - 2/9/2009

I have not read the entire article but felt compelled to mention Sir Sydney Myer.

Sir Sydney's father was a Russian-Jew who started out as an itinerant peddler in country Victoria and then opened an emporium in Bendigo, a Victorian regional centre.

He then progressed by opening one of the biggest, and most successful, emporiums in Australia...Myer Melbourne. His biography written by his daughter, Pamela Warrender (Prince of Merchants) is fascinating!

Sir Sydney did not stop there but became one of the most assiduous philanthropists in Victoria.

Victorians, and, indeed, all Australians have reason to be exceptionally proud of him!!!

He is not alone in his philanthropy as Richard Pratt, who, although his business practices have come under question, has also been, along with his wife, a valued patron of the Arts!

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