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Capitalism and the Jews

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With columnists for major newspapers denouncing banks as "blood-sucking," the financial industry as "parasitic," and one big bank as a "vampire squid" - well, what exquisite timing for the release of the book Capitalism and the Jews.

Mr. Muller's work is, on the whole, a model of clear thinking and useful information about how accurately to understand the long and complicated relationship between Jews, capitalism, and anti-Semitism. It's a valuable read for anyone who wants to understand why all the talk about the difference between the "Wall Street" economy and the "Main Street" economy isn't necessarily as benign as it might seem.

The book by Mr. Muller, a professor of history at Catholic University, consists of a short introduction and four chapters. It's the first chapter, "The Long Shadow of Usury," that's the most enlightening.

"Usury was an important concept with a long shadow. It was significant because the condemnation of lending money at interest was based on the presumptive illegitimacy of all economic gain not derived from physical labor. That way of conceiving of economic activity led to a failure to recognize the role of knowledge and the evaluation of risk in economic life," he writes. "So closely was the reviled practice of usury identified with the Jews that St. Bernard of Clairvaux, the leader of the Cistercian Order, in the middle of the twelfth century referred to the taking of usury as 'Jewing'" says Mr. Muller, noting that the interest rates charged by Jews, "in keeping with the scarcity of capital in the medieval economy and the high risks incurred by Jewish moneylenders, whose loans were often canceled under public pressure, and whose assets were frequently confiscated," ranged from 33% to 60% a year.

It was Karl Marx, who was converted to Lutheranism as a child by his parents, who managed to combine the old blood libel against the Jews with an attack on capitalism. "Capital is dead labor which, vampire-like, lives only by sucking living labor, and lives the more, the more labor it sucks," Mr. Muller quotes Marx as saying in Capital. Mr. Muller goes on, "When Lenin later referred to the necessity of eliminating capitalists because they were 'bloodsuckers,' he was merely heightening Marx's own metaphor."

It is a short leap from this to the work of the Nazi economic theorist Gottfried Feder, who, Mr. Muller writes, "distinguished between Aryan and Jewish forms of capitalism, the former industrial and creative, the latter financial and parasitic."

In subsequent chapters, Mr. Muller describes Jewish contributions to capitalism and speculates about some of the reasons for Jewish prominence and success. Americans may know that Jews founded Lehman Brothers and Goldman Sachs, but Mr. Muller reports that Jews helped to establish Deutsche Bank and Dresdner Bank in Germany, as well as Credit Mobilier in France. Some of this is because of values contained in the religion of Judaism itself. "Unlike Christianity, Judaism considered poverty anything but ennobling," Mr. Muller writes.

Mr. Muller rejects the claim made by Milton Friedman in 1972 that "for at least the past century the Jews have been consistently opposed to capitalism and have done much on an ideological level to undermine it." Mr. Muller calls that "at best a half-truth." In fact, he writes, "many of the foremost theorists of capitalist activity have been Jews," or of Jewish origin, pointing to Milton Friedman himself, Alan Greenspan, Ayn Rand, Ludwig Von Mises, Irving Kristol, and Margaret Thatcher's advisers including Keith Joseph, Leon Brittan, and Nigel Lawson.

The author does not flinch, though, from describing Jewish involvement in Bolshevism.
Mr. Muller gets out onto the thinnest ice when he blames Jewish involvement in revolutionary activity and communism for inflaming European anti-Semitism. Sometimes, he frames this claim cautiously: "To be sure, in much of eastern Europe anti-Semitism long antedated the Bolshevik Revolution, and would have been a substantial factor in interwar politics even without the prominence of Jews in the Communist movement."

Other times he is more assertive: "In Germany, where political anti-Semitism had been on the Wane before 1914, the role of the Jews in the postwar revolutions was the key element in the revival of anti-Semitism on the right."

That the Jews were being denounced as greedy capitalists at just the same time as they were being denounced as dangerous Communists suggests to me that the denunciations were, at bottom, more about hating Jews than about hating either capitalists or communists.

For most of this book, though, Mr. Muller is a sensible guide to the way that views of capitalism and views of the Jews do have a way of overlapping and influencing each other. As he puts it, "An affirmative approach toward capitalism often went together with a measure of sympathy toward the Jews, while antipathy to commerce and antipathy to the Jews typically went hand in hand." Mr. Muller mostly leaves it to readers to think about how these precedents apply to the debates of the present day, but there is plenty to think about.

Professor Jerry Muller makes a compelling case in showing that the attitude of Jews towards capitalism was overshadowed by the contemptuous view that Christianity held about trade and commerce for a long time (pp. 33; 158). Until the 19th century C.E., anti-Semitism was predominantly religious in nature, grounded in the sympathy that the Christian churches had for peasants and artisans, the sources of "sweat" labor (pp. 18; 28; 54; 70; 116).

At the same time, these churches failed to understand the economic value of gathering and analyzing information (pp. 19; 116; 205-206). Christianity officially regarded trade and money lending as "unproductive," "parasitic," and "usurious" best left to those outside the community of the faithful, i.e., the Jews (pp. 8; 15; 23-25; 27; 37-38; 43; 116-117).

The "cultural capital" of Jews positioned them well to play a disproportional role in (early) modern capitalism for the following reasons (pp. 4; 9; 209; 213):

1. Judaism was more favorably disposed toward commerce than Christianity which was inclined to glorify poverty (pp. 5; 77; 81-85; 110-115).

2. Jewish culture prized "religious intellectualism" which was easily transferred from religious to secular learning (pp. 70; 87-89).

3. Judaism favored a lifestyle based on discipline, the conscious planning of action, and the avoidance of intoxication (p. 88).

4. Jewish success in the market was based upon longer time horizons. Success for those Jews starting at the low end of commercial life required a willingness to work long and hard and to save in order to accumulate capital (pp. 58-59; 61; 88-89).

5. The propensity to develop social networks was due, in part, to the exclusion of Jews from the larger, gentile society, which provided both a form of collective self-policing and a proto-social security system (pp. 7; 53; 91-92).

6. Jewish culture put much emphasis on high familial investment in children (pp. 92-93).

With the industrial revolution firing on all cylinders, anti-Semitism shifted its emphasis by attacking the Jews as capitalists bent on destroying and despoiling the traditional society (pp. 41; 44; 56-57; 158). The social and economic stratification in which Jews were placed made many of them economically successful, which created resentment among social losers in a given capitalist society (pp. 65-66; 129; 189; 204-205; 213-214). To reduce the resentment created by their success, Jews supported 1) tzedakah (= philanthropy) whose beneficiaries also included non-Jews and 2) income redistribution through governmental income transfers (pp. 126; 130-131).

After WWI, anti-Semites came to the outlandish realization that Jewish capitalists would participate in their own destruction by cooperating with their communist counterparts to topple Christian civilization (p. 161)!

To his credit, Professor Muller brilliantly shows why Milton Friedman's argument, that Jews played a prominent role in disparaging capitalism while profiting from it enormously, clearly lacks nuance (pp. 73; 124). To come to this conclusion, Professor Muller looks at the range of Jewish political responses to capitalism that he labels integrationist, isolationist, socialist, and nationalist, respectively (pp. 10-12; 104; 190).

1. The majority of Jews in Europe and North America opted for integrating themselves into the broader capitalist economy without repudiating their distinct Jewish identity (pp. 39; 104; 109; 115; 215).

2. The isolationist (or Orthodox) Jews found niches in the capitalist economy that would reduce, to the strict minimum, their social interactions with gentiles and less orthodox Jews (p. 105).

3. The socialist Jews believed in the substitution of the untried communism to the failing capitalist system for the same reasons that non-Jews espoused this ideology (pp. 35; 80; 105-107). Furthermore, these Jews naively hoped that abolishing capitalism would take care of anti-Semitism which was often linked to anti-capitalism (pp. 42; 133). The disastrous role that some Central and Eastern European Jews played in different communist revolutions in the wake of both WWI and WWII, reinforced the prevalent anti-Semitism that did not need additional oil to burn brightly in the hearts of anti-Semites (pp. 124; 140-141; 151; 158; 165-170; 174; 183; 188). The identification of Jews with communism was based upon a distortion similar to the exaggeration of the reality that Jews were more successful capitalists (pp. 135; 147; 152-153; 163; 175-177). Most Jews did not embrace communism because of its atheism and its economic policy (pp. 140; 174). Most communists were not Jews (p. 160). To their credit, these socialist Jews, however, debunked the stereotype of the Jews as "greedy" and "materialistic" (pp. 126; 137).

4. The nationalist (or Zionist) Jews emphasized first and foremost the need for a homeland over which Jews would exercise sovereign power without coming to an agreement on the prevailing economic system (p. 106). Zionism was a reaction to the rise of ethnic nationalism that had a basis in the politics of capitalist economic transformation of others (pp. 190-191; 194-199; 202; 208-210). These nationalist Jews faced two unique and formidable obstacles compared to most other ethnic groups: 1. Re-(acquire) a territorial base on which to form a nation-state and 2. Transform themselves from an economically and socially specialized stratum into a combination of "peoplehood" and "statehood" needed to re-(acquire) sovereignty over a distinct territory (pp. 215-218). Professor Muller observes on this subject that the Israeli economy transitioned much faster from its agrarian, socialist beginnings to its present-day highly commercial nature than older Western capitalist economies did (pp. 122-123). The recently published book "Start-Up Nation" by Dan Senor and Saul Singer is illuminating on this subject.

Professor Muller acknowledges that the high representation of Jews in intellectual professions makes them stand out as standard bearers of almost any political ideology (p. 125). The concept of "tikkun olam" (= repairing the world) in Judaism is not alien to this development.

In summary, Professor Muller realizes a tour de force in remaining as objective as possible in his examination of the multidimensional relationship that Jews have had with capitalism.

Professional historian Jerry Z. Muller's new book on Capitalism and the Jews is a collection of four essays covering four various topics concerning capitalism and Jewish and European history. The first essay covers medieval European history into modern European history. Ever since the Middle Ages in Western Europe, Jews were associated with the handling of money. It was more than just money lending, however, Jews were lenders of money with interest: a practice that was seen as sinful and "blood-sucking".

Usury was considered a base practice for several reasons. For one, writers from classical antiquity saw no justification for deriving money from money; "Money does not beget money," the old proverb went. The most influential of these classical writers was Aristotle, whose works were disseminated to the Christian West in the High Middle Ages, and whose philosophy worked its way into the thought of Catholic theologians. Interpreting the passage on interest from Deuteronomy (Deut. 23: "You may lend with interest to foreigners, but to your brother you may not lend with interest") liberally such that "brother" meant all people, usury became sinful in Catholic lands in the 12th century. Indeed, the Second Lateran Council expressly forbade the practice in 1139, and Dante's Inferno would place usurers along with murderers and blasphemers in the seventh ring of hell.

Yet from about 1050 to 1300 "new agricultural surpluses in Europe made greater commerce and urbanization possible, and that made the economic function of lending money more important". As the Italian wit Benvenudi de Rambaldis da Imola put it, "those who engage in usury go to hell; those who fail to engage in usury fall into poverty". The church solved this dilemma in the early 12th century by allowing Jews to practice the sinful activity, since, they reasoned, Jews were not subject to canon law and were condemned to hell anyway because of their repudiation of Jesus Christ. Medieval Kings saw benefits to this rule, since they were able to exact heavy taxes from Jewish usurers (essentially) in exchange for their existence. Thus the rigid connection of Jews with usury began.

Loaning money at interest was indeed a most ignoble profession. Yet in most cases many Jews had no suitable alternative. In the words of Rabbi Eliezer ben Nathan of Mainz (died c. 1170), the Jews had to loan money at interest because they "own[ed] no fields or vineyards whereby they could live, [therefore] lending money to non-Jews [was] necessary and therefore permitted" (quoted in Anti-Semitism: Myth and Hate from Antiquity to the Present). Jews in Western Christendom thus served as a "metaphor-turned-flesh" for money lending, usury, and proto-capitalism. Muller writes, the image of usury "was closely connected to that of the Jew, who was regarded as avaricious, and as an outsider and wanderer, able to engage in so reviled an activity as money lending because he was beyond the community of shared faith".

The second essay focuses on Milton Friedman's lecture "Capitalism and the Jews" and challenges Friedman's main presumptions and conclusions. In this lecture (Muller tells us) Friedman said that Jews have historically benefited from capitalism, yet they (modern and contemporary Jews) have tended to oppose capitalism. Muller responds by showing that although many prominent communist/socialist leaders were Jewish (e.g. Trotsky, Luxemburg, Kamenev, Zinoviev), it is simply a false oversimplification to say that most Jews have opposed capitalism.

The third essay titled "Radical Anti-Capitalism" examines Jews that indeed have opposed capitalism. In the same vein as Friedman's observation, popular imagination saw European Jewry as supporters of communist and socialist parties in post-WWI Europe. This had some truth, but, Muller shows, it was not as if most or even a large plurality of European Jews supported communist revolution. Rather, many communist parties had Jewish members in prominent roles. Moreover, the promise of anti-nationalism and equality led many young Jews to join communist parties; this caused fascists, conservatives, and other right-wingers to conclude through a jaundiced eye that "Judeo-Bolshevism" was a real spectre that was infiltrating their respective societies. One cannot help but think of the most menacing case of anti-Jewish sentiment: the Nazis.

After WWII the trend seemed to continue as many Jews held high positions in post-WWII Eastern Europe under the shadow of the Soviet Union. This was because many Jews saw the soviets as liberators in Poland and elsewhere, and wanted to help the battle against nationalism--a nationalism(s) that had often relegated Jews as second-class citizens, or denied Jews citizenship entirely. Interestingly, Muller suggests that this (Jews joining the communist cause after WWII) was nourished because Stalin and the Kremlin feared the possible spread of Titoism and felt that communist Jews were unlikely to go the way of the nationalist-communism of Tito after what the Jews experienced in WWII. Muller writes, "communists of Jewish origin seemed the least likely to form an alliance with the local populace against the hegemony of the Soviets."

Yet Jewish communists were later to be persecuted and purged in Eastern European communist politics. The "Doctors' Plot" was one prominent example of the embodiment of anti-Jewish sentiment in post-WWII politics, as were purgings of Jews from the governments of Czechoslovakia and Poland and elsewhere.

The final essay in this volume summarizes Ernest Gellner's thesis on nationalism and applies it to Jewish nationalism: nationalism developed when agrarian society transformed into industrial society because the state/government needed to teach potential industrial workers how to read and communicate in a standard national language. Some communities were of course outside of the newfound nationhood-ness (for example Greeks, overseas Chinese and Indians, Armenians, Parsees, and Jews). These stateless nations could assimilate or create their own nations, which is what Jews did in time.

Muller's short volume on capitalism and the Jews was a pleasure to read, and contained many insightful observations. I found the first and third essays to be very valuable, and the truly interested reader will find the entire volume valuable as well. Muller necessarily paints with a broad brush, but the end product is neither blurred nor affronting. I highly recommend this book to readers of both Jewish and European history.

Minor irritation with the Kindle formatting, but an excellent read and obviously well-researched.

I found the history fascinating - I don't feel I can add significant commentary in that regard - but I do want to mention that the Kindle edition had numerous formatting and layout issues. They were many places in the text that did not display correctly, where words were hyphenated in the middle of the sentence, and where because of incorrect wrapping spaces were missing after some commas or hyphenated words.

I just finished reading this book, and although the title did raise eyebrows among my friends, the book is as objective as possible. The author, a HISTORIAN, writes on the topic of this book purposefully, accurately, OBJECTIVELY - and purely in a historical context. This is NOT neo-nazi propoganda, anti-semetic, racist, bigoted, demeaning or anything else negative in the slightest sense. I enjoyed it very much, as I do many other business, economic, and history books - and this book combines those areas perfectly. The author should be commended for writing such a unique and fascinating book. It should be read by any people in the business world who want a simple, accurate and well-written collection of four essays that explain the historical background of "Capitalism and the Jews" (which by the way was the title of a speech given by Milton Friedman, a Jew himself, President Reagan's main economic advisor in the 80s). I write this review as an atheist/former Catholic with a background in economics and business consulting.

P.S. You might also like a recent book called Start-up Nation: The Story of Israel's Economic Miracle as well as Jerusalem 1913: The Origins of the Arab-Israeli Conflict

I found the author's The Mind and the Market: Capitalism in Western Thought very captivating and well-written, so I went ahead and bought the author's new book. For some reason this is much more dull reading. Maybe because the author is too close to the subject matter to be able to make it very interesting. With a title like this, the author sets himself up for failure, unless he really surprises the reader.

Good etiquette advises that discussing religion, money and politics with strangers is not prudent, but, fortunately, professor Jerry Z. Muller ignores this maxim. Instead, this broadly published academician presents four exceptional essays assessing the role of Jews in developing capitalism in terms of complex social, historical and religious structures. He wrote the series, which covers centuries of history, over the course of 30 years of study. His combined notes and bibliography alone are 29 pages. Muller tellingly shows the relationships among the political, theological and economic ideas that created some of the best and worst events in modern society. getAbstract highly recommends this enlightening, accessible work of contemporary scholarship.

Read more about this book in the online summary:
http://www.getabstract.com/summary/13577/capitalism-and-the-jews.html

How the author wrote this book without mentioning the history of the Rothschilds is like writing a book on the bible and not mentioning Jesus!

All in all, this book is what it promises to be: A series of expository essays that appear to be the crystallization of some thoughts that the author has had over the course of many years. Since there was so much information in the book, I can only give general impression thereof.

1. We all know the narrative that "Jews went into business because the trades and land ownership were banned to them." This book gives us a bit of detail about that and good references into which we can make further investigation. We all also knew that "Everyone hates the Jews because they are moneylenders," but Muller also gives us brief discussion of lots of seminal texts that helped to propagate Anti-Semitism and that characterized the zeitgeist of many different places.

2. A lot of mysteries were resolved very succinctly. For example:

a. Why were Jews so often associated with Communist movements, when they benefited more than anyone else from a free and open market? (Muller's answer is that Communism was something that promised to eliminate all barries of ethnicity.)
b. Why is the Jewish vote in the United States so heavily Democratic? Muller gave a satisfactory answer that: Philanthropy and paying more taxes than necessary are coping mechanisms to deal with the antipathy toward Jewish success.
c. Why are the Jewish people so hostile toward the idea of the nation-state? (For example, look at all the effor that the ACLU makes in weakening/ destroying the US-- and look who is heavily overrepresented in the ACLU?) Muller points out that movements of different types of nationalism always tended to have an ethnic component of which Jews found themselves on the wrong side. So, the easiest way to solve that problem is to just work hard to destroy any sense of nation in your host country.)
d. (p.87, second paragraph) What idiosyncracy in Judaism accounts for the intellectual capital of the Jews? And the answer that Muller provided was "..theirs was a religion oriented to continuous handling of texts...." and mastery of the spoken word. When one considers the long head start that the Jewish people had on literacy, their success looks less anomalous.

3. I do have some problems with Muller's designation of the Nazi Fascist Movement (and others) as being "on the right." (These movements were clearly on the left and that issue was taken up at some length in Jonah Goldberg's "Liberal Fascism.")

4. Something that the author did not intend to show (but to which one's attention could easily be drawn) was that continuous government collapse that characterized Eastern Europe.

5. Overall, I get the impression that the subjects of the book experienced the problems that they did simply as a result of being in a lot of the wrong places at the wrong time. The impression that the author gave was that the particular circumstances that he analyzed from each country worked out one way, but they could have just as easily worked out differently-- and that his subject(s) were more a product of historical circumstances than anything. Of course, the point of the essay was that it was expository and not an extended discussion of the circumstance of middleman minority groups.

6. In other texts, I have understood that if you have some nation that is being colonized/ conquered that the minority groups that are there can take on a special role with respect to the conquering nation. So, the Russians were willing to work with the Jews as administrators because they appeared to be a neutral party. The locals of the colonized country did not like the Jews because they appeared to be a 5th column. And so this is yet another of the very many different mechanisms leading to the same result (=Anti-Semitism).

7. The references were wonderfully organized and very easy to find.

This book was worth the new purchase price.

"Capitalism and the Jews" is on the ROROTOKO list of cutting-edge intellectual nonfiction. Professor Muller's book interview ran here as the cover feature on June 14, 2010.