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Moral Capitalism: A Biblical-(Answered)


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Friedman, Hersey H., & Adler, William, D. (October 01, 2011). Moral Capitalism: A Biblical Perspective.?American Journal of Economics and Sociology, 70,?4, 1014-1028.

Moral Capitalism: A Biblical Perspective











ABSTRACT. We argue that laissez-faire capitalism in its current form is


unsustainable, and that if it is to survive, we need to develop a new


moral capitalism. An underexplored source on the subject that may


provide insight into current difficulties is the Hebrew Bible. We


explicate four basic principles of the Hebrew Bible and Talmud on


economic affairs, and show how these ancient ideas can be used to


create a more moral economic system.






During the past several decades many crises have beset the American


laissez-faire capitalist system. The savings and loan debacle cost


American taxpayers $124 billion and led to the failure of more than


1,000 banks. This was followed by numerous corporate scandals


involving accounting fraud and financial irregularities at such firms as


Enron, Adelphia, Global Crossing, WorldCom, and Tyco International.


In 2008, the largest Ponzi scheme in history, perpetrated by Bernard


Madoff, also made it apparent that our financial system was not being


monitored properly. The final straw, of course, has been the financial


meltdown that has nearly destroyed the world economy. Millions of


jobs have been lost worldwide and trillions of dollars in assets have




It is ironic that just when the world has given up on communism,


it has become clear that capitalism in its current form, based on


theories of pure rationality, is also in trouble. A number of scholars


have been warning the American public that capitalism based solely


on greed was dangerous. Robinson (2007) asserted that the singleminded pursuit of self-interest has caused much harm to society and


*Hershey H. Friedman is Professor of Business and Marketing at Brooklyn College of


the City University of New York. He can be reached via email at


**William D. Adler is Patrick Henry Postdoctoral Fellow, John Hopkins University,


Political Science Department. He can be reached via email at


American Journal of Economics and Sociology, Vol. 70, No. 4 (October, 2011).


? 2011 American Journal of Economics and Sociology, Inc.



Moral Capitalism






that we should cease associating Adam Smith with this doctrine. In


actuality, Smith believed that ?society . . . cannot subsist among those


who are at all times ready to hurt and injure one another.? In the book


he believed would establish his reputation, The Theory of Moral


Sentiments, Smith made it clear that he believed that economic growth


depended on morality. To Smith, benevolence?not pursuit of selfinterest?was one of the highest virtues (Pack 1991). Smith (2002: 162)


argued that:


Man . . . ought to regard himself, not as something separated and detached,


but as a citizen of the world, a member of the vast commonwealth of


nature and to the interest of this great community, he ought at all times to


be willing that his own little interest should be sacrificed.



Alvey (1999) demonstrates how economics started out as a moral


science but somehow got derailed and is no longer concerned about


ethics. He quotes Sen, who discusses the discipline and says ?economics has been substantially impoverished by the distance that has


grown by economics and ethics.?


Suskind (2008) reports that Alan Greenspan, Chairman of the


Federal Reserve, was at a meeting on February 22, 2002 after


the Enron debacle and was upset with what was happening in the


corporate world. Greenspan noted how easy it was for CEOs to ?craft?


financial statements in ways that could deceive the public. He slapped


the table and exclaimed, ?there?s been too much gaming of the


system. Capitalism is not working! There?s been a corrupting of the


system of capitalism? (Suskind 2008). Lawrence H. Summers, in a 2003


speech to the Chicago Economic Club, made the following prescient


remark: ?For it is the irony of the market system that while its very


success depends on harnessing the power of self-interest, its very


sustainability depends upon people?s willingness to engage in acts


that are not self-interested? (Snyder Belousek 2009).


The business world will have to make significant changes to overcome its tendency toward selfishness. One way this can be accomplished is through changes in the business school curriculum. The


current financial crisis has made it quite apparent, for instance, that


business schools have to rethink what they are teaching (Holland


2009; Jacobs 2009; Vass 2009). Mandatory ethics courses in most MBA


curricula have apparently not been very successful. One study found






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that graduate business students are the most likely to cheat; 56 percent


of them admitted to cheating (Di Meglio 2006). Even before the


financial meltdown, scholars were maintaining that ?today?s business


schools, by elevating shareholder profit above social benefits and


other concerns, may have unintentionally become breeding grounds


for a generation of Gordon Gekkos? (Mangan 2006: A14?A16). Friedman and Friedman (2008) maintain that it is time for homo spiritualis


to replace homo economicus in the business curriculum.


Leaders as diverse as President Barack Obama, French premier


Nicolas Sarkozy, and Pope Benedict XVI all agree that capitalism


based on selfish behavior is not sustainable (Berenson 2008). The


Pope just signed his third encyclical, ?Charity in Truth? (Caritas in


Veritate), in which he calls for a radical new approach to the world


economy that requires ?greater social responsibility on the part of


business? (Donadio and Goodstein 2009). The Pope notes that the


?pernicious effects of sin are evident? in our economic system and he


singles out the financiers who have not been building their work on


an ethical foundation (Donadio and Goodstein 2009). President


Obama, in a speech at Georgetown University on April 14, 2009,


called for ?a new economic foundation? for the United States. He felt


that the Bible could be used as a basis for this new approach


(Leonhardt 2009).


We agree with the president. The Hebrew Bible is replete with


precepts that deal with business ethics and can therefore be used as


a starting point for those interested in developing a more moral


capitalistic system. Considerably more than 100 of the 613 precepts in


the Pentateuch1 deal with economic life and business (Green 1997).


The Bible has had a profound effect on a countless number of people.


The Bible is the most popular book of all time?it is estimated that as


many as 6 billion copies have been sold?and is the source of many


metaphors and scenarios that can be very helpful to those interested


in developing a new kind of capitalism.


Rather than attempting to merely maximize shareholder wealth,


companies need to give workers and consumers a stake in the


investments they make. A model of capitalism oriented around strict


principles of rationality has encouraged too much selfishness. Stakeholder theory has long recognized the importance of including moral



Moral Capitalism






principles in the running of businesses (Freeman 1984). Leaders must


consider the interests of all the stakeholders, rather than only do what


is best for shareholders. These stakeholders include the local community, customers, employees, the environment, the nation, society, and


suppliers. Of course, decisions that are good for one group may be


contrary to the interests of other groups. An ethical leader does not


only focus on the needs of stockholders and is thus mainly interested


in short-term profits. Instead, the needs of all stakeholders are considered and balanced.


Based on work by Donaldson and Preston (1995), we argue here for


a moral conception of corporate responsibility, guided by the principles of the Hebrew Bible. This article will outline four principles,


derived from the Hebrew Bible and Talmud, on which a new moral


capitalism can be based. Together, these principles can be used as a


foundation for an economic system that produces growth and jobs


while simultaneously incorporating ethical, environmental, and social


responsibility and respecting human dignity.


A New Kind of Capitalism: Four Biblical Principles


Principle One: Material Wealth, Not Greed



Scholars such as Friedman (2001) and Levine (1998) agree that the


attitude of the Hebrew Bible towards wealth is quite positive. One


does not have to be an ascetic and disdain owning property. The ideal


system is not one in which every individual has exactly the same


amount of property. The Bible recognizes that there will be poor as


well as wealthy individuals. What matters is how the wealth is used


and whether or not one is grateful to God for it. Wealth, peace, and/or


long life should be seen as rewards from God for obeying His laws


(Leviticus 26: 3?13; Deuteronomy 11: 13?16; Deuteronomy 25: 15;


Proverbs 22: 4). The patriarchs, Abraham, Isaac, and Jacob, were all


affluent. Abraham leaves Egypt ?very rich in livestock, silver, and gold?


(Genesis 13: 2). He uses his wealth to build altars for God and to tithe


(Genesis 13: 18; Genesis 14: 20). The Bible states clearly that Isaac was


blessed by God and became very prosperous, so prosperous that he


aroused the envy of the Philistines (Genesis 26: 12?14). Jacob had to






The American Journal of Economics and Sociology



escape Esau and arrives in Padan Aram, hometown of Laban, penniless. Twenty years later, after working as a shepherd for his fatherin-law, Laban, Jacob becomes extremely wealthy. In fact, in his prayer,


he notes how kind God has been to him; he started out with only a


staff and became so prosperous that he has become two entire camps


(Genesis 32: 11).


Wealth is good; greed, on the other hand, is not. One scholar, in


discussing the Ten Commandments, asks why the dictum ?you shall


not covet the house of your fellow, you shall not covet the wife of


your fellow, his servant, his maid, his ox, his donkey, nor anything


that belongs to your fellow? (Exodus 20: 14) is considered so important as to require inclusion in the Decalogue. After all, it is only


coveting, and does not seem to require much in the way of action. His


answer is that once you engage in coveting?which inevitably entails


greed and lust (itself a manifestation of greed)?you often end up


violating the other nine commandments as well (Avi Ezer, commentary


to Exodus 20: 14). This commandment thereby demonstrates that


there is nothing intrinsically wrong with owning property; greed,


however, is considered a serious problem.


Amos (4: 1) says that acquiring wealth is acceptable, but using it for


the wrong purposes is not: ?Hear this word, you cows of Bashan, who


are on the hill of Samaria, who defraud the poor, who crush the


needy, who say to their husbands, ?Bring so we may carouse!? ?


Clearly, the prophet is concerned about the wives of the powerful and


wealthy who in their desire for a flamboyant lifestyle push their


husbands to become deceitful and not care for the destitute.


Kantzer (1989), in his discussion of Christian business ethics,


makes a clear distinction between greed and the acquisitive motive:


?greed is always bad. The acquisitive motive implanted in us at


Creation is not bad; it represents a divine, providential motive for


work and expenditure of energy for our own good.? Green (1997:


21?30) uses the Hebrew Bible and Talmud in developing guiding


principles of Jewish business ethics. He likewise concludes that


Jewish law takes into account the belief that ?all wealth derives from


and, in a sense, belongs to God, who apportions it to human beings


as caretakers and stewards.? God?s ultimate ownership of all property makes humanity ?tenant farmers for God,? in his view. Business



Moral Capitalism






activity is fine, as are profits, as long as people are guided by moral




There are numerous examples in the Hebrew Bible where kindness


trumps the belief in private property and other principles of capitalism. Thus, the Bible demands (Exodus 22: 25?26): ?if you ever take


your neighbor?s garment as a pledge, you must return it to him before


nightfall. For that is his only covering, it is his garment for his skin.


What will he sleep in? When he cries to Me, I will hear, for I am


gracious.? Similarly, one is not permitted to take a widow?s garment as


a pledge (Deuteronomy 24: 17). Land was restored to its original


owners during the Jubilee year (Leviticus 25: 13). On this concept,


Hertz (1992: 533) observes, ?in this way the original equal division of


the land was restored. The permanent accumulation of land in the


hands of a few was prevented, and those whom fault or misfortune


had thrown into poverty were given a ?second chance.? ? Of course,


historically not everyone did this for purely altruistic reasons; nevertheless, the Bible?s aim is to encourage good behavior regardless of


underlying motives. It is inevitable that with time wealth will become


inequitably distributed and the gap between rich and poor will be


great. The Jubilee ensures that there will be a redistribution of wealth


every 50 years. Hertz (1992: 533), quoting Heine, makes the observation that the Bible aims at the ?moralization of property.? Thus, we


see that capitalism based on greed is not consistent with biblical


values. Capitalism that has biblical values built into it can help lead to


a more acceptable economic system.


Principle Two: Industriousness



According to the Bible, working hard is an integral component of a


moral life. As the Psalmist declares (128: 2): ?when you eat the labor


of your hands, you shall be happy, and it shall be well with you.?


Schnall (2001: 49) feels that this text supports the view ?that the six


days of labor hold intrinsic religious value in rough parallel to the


spiritual benefits derived from the Sabbath itself.? The creation story in


Genesis shows God being pleased after each day of creation with


what He has accomplished, demonstrating that even God finds great


joy in productive labor.






The American Journal of Economics and Sociology



Rae (2004) notes that the messianic vision of Isaiah (2: 4) in which


nations will ?beat their swords into plowshares and their spears into


pruning hooks? is one in which people work with their tools, plowshares and pruning hooks. Humankind works to improve the world


and make it a better place for everyone. This will help lead to Isaiah?s


vision of a future with all of humanity living in an idyllic, rustic,


spiritual world filled with beauty and peace (Isaiah 11: 6?9).


The ?Woman of Valor? hymn in Proverbs (31: 10?31) describes the


attributes of the perfect wife. What is fascinating about it is that it


describes an entrepreneurial woman. The following are the traits of


this ideal woman: (1) She is industrious:


She seeks out wool and flax, and works with her hands willingly . . . She


stretches out her hands onto the distaff, and her palms support the


spindle . . . She arises while it is yet night, and gives food to her household


and a portion to her maidservants . . . She does not eat the bread of





(2) She is enterprising: ?She considers a field and buys it; from the fruit


of her handiwork she plants a vineyard . . . She makes a cloak and


sells it, and supplies aprons to the merchant.? (3) She is honest: ?She


knows that her merchandise is good.? (4) She is charitable: ?She


spreads out her palm to the poor; and extends her hand to the


needy . . . the lesson of kindness is on her tongue.? (5) She is devout:


?a woman who is God-fearing shall be praised.? The Bible thus


describes an entrepreneur who simultaneously refuses to lose sight of


higher goals.


Principle Three: Social Responsibility



Jonathan Sacks, the Chief Rabbi of Great Britain, sees the Bible as


?God?s call to human responsibility? (Sacks 2005: 28). In fact, he


argues that responsibility is its ?greatest overarching theme? (Sacks


2005: 135). As noted above, prophets such as Isaiah (1: 17) stressed


that humanity should ?learn to do good.? The Bible demands that our


entire economic system be built on a foundation of social responsibility. Friedman and Klein (forthcoming) demonstrate that the Hebrew


Bible was concerned with such issues as conservation of resources,


pollution, humane treatment of animals, and beautifying the environ-



Moral Capitalism






ment. Humankind, according to Jewish tradition, has an obligation to


make the world a better place. This philosophy is known as tikkun


olam, which means repairing the world. People have an obligation to


imitate God (Leviticus 19: 2), which implies acting in a manner that is


concerned with social realities, in the same way that God cares about


society (Levine 1993: 14?15). People were given dominion over the


entire earth (Genesis 1: 26) for a purpose. We are the caretakers of this


planet and have to continue God?s work of creation by improving the


world and making it a better place for all. Each individual is obligated


to participate in this task (Tamari 1998). Indeed, the Psalmist (104: 14)


thanks God for the wondrous and magnificent world He created. The


Psalmist (104: 24) concludes, ?how manifold are your works O God!


All were made with wisdom; the earth is full of your possessions.?


The Bible is concerned with all aspects of business ethics. In fact,


Friedman (2000) shows how many of ethicists? contemporary concerns regarding business ethics have their antecedents in the Hebrew


Bible. Thus, fair treatment of employees, avoidance of fraud and


deception, tampering with weights and measures, and raising prices


unjustly are all serious crimes. Indeed, the verse states (Proverbs 11:


1): ?dishonest scales are an abomination to the Lord; but a just weight


is his delight.? The Talmudic sages thought business ethics were so


important that they say the first question an individual is asked in the


next world at the final judgment is, ?were you honest in your business


dealings?? (Babylonian Talmud, Shabbat 31a). The prophet Jeremiah


(9: 23?24) succinctly stated what truly matters. Individuals, organizations, and countries should not be praised for their might or riches, but


for ?practicing kindness, justice, and righteousness to everyone on




There has to be some regulation since people are often tempted to


cheat. Thus, the first independent audit is described in the Book of


Exodus. The Bible states (Exodus 38: 21?31), ?these are the accounts


of the Tabernacle, the Tabernacle of the Testimony, as they were


calculated according to the commandment of Moses . . .? Moses realized the importance of making a full accounting of all contributions


and commanded others to do a proper audit so that the Israelites


would not have cause to suspect that even one piece of gold or silver


used in the construction of the Tabernacle went into any individual?s






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pocket (Midrash Exodus Rabbah 51: 1). The Bible placed strict limits


on charging interest (Exodus 22: 25; Deuteronomy 23: 19?20). Similarly, the Talmud (Babylonian Talmud, Baba Batra 89a) reports that


the sages required market commissioners to be appointed to supervise


weights and measures.


A key component of social responsibility is respect for all people


and society at large. There are numerous passages in the Bible dealing


with helping the poor and downtrodden. The Psalmist declares


(Psalms 82: 3): ?do justice to the needy and the orphan; deal righteously with the poor and the impoverished; rescue the needy and the


destitute and save them from the hand of the wicked.? The Bible


constantly refers to helping the destitute, the orphan, the widow, and


the stranger. Isaiah (1: 17) also makes this very same point: ?learn to


do good; seek justice, aid the oppressed, defend the orphan, plead for


the widow.?


The Bible sees the positive side of the acquisitive motive and in


private property. Yet there are some laws that seem to be inconsistent


with the concept of private property. These laws deal with gleanings


and the corner of the field. The Bible states (Leviticus 19: 9?10):


When you harvest the harvest of your land, you shall not complete your


reaping to the corner of your field, and the gleanings of your harvest you


are not to gather. You shall not glean your vineyard; and the fallen fruit of


your vineyard you are not to gather; for the poor and the stranger you are


to leave them.



Another passage expresses a similar idea (Deuteronomy 24: 19?21):


When you reap the harvest in your field and overlook a sheaf in the field,


do not turn back to get it; for the stranger, the orphan, and the widow it


shall be?in order that the Lord your God may bless you in all your


undertakings. When you beat down the fruit of your olive trees, do not go


over them again; for the stranger, the orphan, and the widow it shall be.


When you gather the grapes of your vineyard, do not pick it over again;


for the stranger, the orphan, and the widow it shall be.



The corners of the field were not harvested by the owner but were left


for the poor. In addition, individual stalks that fell from the sickle


during the harvest had to be left for the poor. Also, if a bundle of grain


was accidentally left in the field during the harvest, it too had to be left


for the indigent. In a similar vein, the farmer was not permitted to pick



Moral Capitalism






all the fruits off the vine or tree and leave it bare. He was obligated


to leave the gleanings of the vine and the olive tree for the poor


(Maimonides, Mishneh Torah, Laws of Gifts to the Poor, 1: 1?15).


What is unique about these laws is that private property from the


biblical perspective is not entirely private. Humankind is permitted to


own property; however, God is a silent partner who demands that a


portion of this property be used for spiritual purposes. The Bible in


effect gives the indigent the right to a portion of a landowner?s field.


From the Book of Ruth (Chapter 2), it is apparent that the poor


followed the harvesters while they were working and picked up the


gleanings. The harvesters did not have the right to tell them not to


trespass. Indeed, the poor owned the corner of the field and the


gleanings belonged to them. The verse (Leviticus 25: 23) stresses the


fact that the true owner of all property is not man: ?the land shall not


be sold in perpetuity, for the land is Mine: for you are strangers and


sojourners with me.? The obvious lesson to be derived from this is that


the Bible accepts private property but demands that a portion of the


profits be used to help the poor. Charity is not sufficient.


Capitalism that draws from the Bible requires that all firms help the


poor by setting aside a portion of a company?s profits for the needy.


According to Maimonides (Mishneh Torah, Laws of Gifts to the Poor,


10: 7), the highest form of charity is providing one with the ability to


earn a living so that the individual does not become poor. He derives


this from the verse in Leviticus (25: 35) that talks about ?strengthening?


the destitute individual: ?if your brother becomes impoverished and


his hand falters beside you, you shall strengthen him, whether he is a


stranger or a native, so that he can live with you.? This may be


accomplished by providing a gift or loan enabling one to start a


business, taking the destitute person in as a partner, or helping the


individual find employment. Thus, government should work with


business to ?strengthen? those in economic jeopardy by providing


individuals with training and employment. If a firm finds that it has to


close down a plant because of economic conditions, management


should do everything possible to find employment for the affected


employees in other parts of the company.


The obligation to take care of the poor and helpless is not merely


the responsibility of individuals but is also the responsibility of the






The American Journal of Economics and Sociology



entire society. The economic system has to function in a way such that


the poor and helpless are taken care of. Ezekiel argues that the sin of


Sodom was not caring about the plight of the needy: ?Behold, this was


the sin of your sister Sodom; she and her daughters had pride, plenty


of bread, and untroubled tranquility; yet she did not strengthen the


hand of the poor and the needy? (Ezekiel 16: 49). Ezekiel also says


that since ?the people of the land have perpetrated fraud and committed robbery; they have wronged the poor and needy and


defrauded the stranger without redress . . . I have therefore poured out


My wrath over them and consumed them with My fire of fury? (Ezekiel


22: 29, 31).


Job started out as a wealthy capitalist and emphasized how he ran


his business with concern for those around him: ?because I rescued


the poor that cried, and an orphan, and him who had no one to help


him, the blessings of the forlorn came upon me, and I caused the


widow?s heart to sing with joy? (Job 29: 13). A system that makes the


poor and helpless ?sing with joy? is the only one in accordance with


the Bible. Job describes how a...


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