Business Regulation and Price Control in Talmudic Economics

Abstract

Rulers from as long ago as ancient Egypt and Mesopotamia have tried to control various aspects of their economies, whether to ensure adequate supplies of basic commodities in times of war or famine, or to protect the power and incomes of the rulers themselves. There have been various ancient price edicts, which have had some effectiveness, at least during the lifetimes of their promulgators, principally because they referred to products which were largely produced under the direct control of the state. It was obvious even to the most ancient observers that radical changes in the equilibrium between buyers and sellers, such as those caused by sudden shortages in times of war or natural disaster and their attendant famines, gave opportunities to those in possession of goods necessary for the maintenance of life itself, to raise their prices and “profiteer” thereby. The same phenomenon was the reason for the frequent attempts to set ceilings on interest rates, which, in an era when almost all loans were for personal consumption rather than for commercial or investment purposes, had the effect of wiping out financially the borrowers who could not repay their loans in time, which in turn led to serfdom and slavery. Such crises were frequently the occasions for appeals to rulers to protect the population from such exploitation. It was undoubtedly against such a background that the Jews of Talmudic times interpreted the biblical rules against “oppression” to mean a total prohibition of the taking of interest, and limits on “overcharging”, as will be discussed below. In the Greco‐Roman world the idea of control of prices was a result partly of philosophical inquiry into general economic theory, and partly the desire of moralists to prevent the “injustice” of some people gaining “immoderate” profits at the expense of others. Plato saw the desire of merchants for “unbounded” gain rather than “reasonable” profit as a dangerous social evil resulting from the acquisitive nature of man. In his ideal conception, the state ought to set prices in accordance with the cost of production plus fair reward for the seller's efforts (i.e., profit), and to have these standards enforced by market overseers. Such officials, generally called agoranomoi, actually existed in a number of Greek states, but were more often concerned with regulating weights and measures and maintaining orderliness in the market place rather than with controlling prices.

Citation

Gershfield, E.M. (1986), "Business Regulation and Price Control in Talmudic Economics", International Journal of Social Economics, Vol. 13 No. 9, pp. 45-51. https://doi.org/10.1108/eb014024