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TORAH-BASED ECONOMICS

Panel: Stop Charging Interest, Watch Prosperity Return

Hundreds of interest-free banks and credit unions, including Islamic banks, were largely unharmed by the current global crisis.

Stop Charging Interest

Photo Credit: Yori Yanover

Sadly, the term “Jewish Banking” doesn’t bring the most positive associations to many minds. I have just googled these two words and most of the results pointed to debates for and against various conspiracy theories and anti-Semitic propaganda. There is no need to repeat that drivel here, or even argue with it. However, one wonders if there is anything properly Jewish about the way many Jews handle finance and the economy today. The question is particularly acute regarding the Jews who live in their own land, under their own rule, and without the harsh circumstances of the long exile.

Being a Zionist and a Jewish believer, I feel that the time has come for the People of Israel to start going back to our own culture and values. The economy is not the only aspect of our heritage that has been pushed aside in favour of alien norms, but perhaps it is important enough to serve as a first step toward the goal of cultural revival.

Perhaps the public can now understand how the very un-Jewish ways of managing the world’s financial and economic affairs have created enormous troubles.

About a year ago, a group of Israeli scholars and activists founded an online research project titled “Jewish Banking.” The project’s main focus is Ribit (interest, usury). As we know, the Torah and Jewish Law forbid charging or paying interest on loans. Many Orthodox Israelis also know that Rabbinical courts have formulated a document called Heter Iska, which uses a technical framework of a kosher partnership, and through it allows Israeli banks to charge and pay interest.

Despite the legal and logical problems with the above procedure, the “Jewish Banking” project does not claim that it should be abolished immediately. Instead, the group is working on creating alternative methods that should gradually replace the problematic Heter Iska.

There are several reasons to pursue these alternatives.

One obvious reason: the return of the People of Israel to the Land of Israel should also generate a return to the social and cultural values of Israel. The prohibition against Ribit is only one of several laws that may shape a better society through a Torah approach to the economy. Perhaps today we can see how both extremes—Socialism and unrestrained Capitalism—have failed in providing a better future for our children. The laws of the Torah can help us find the golden social path in our times.

Moreover, the current global economy undermines one of the most important values of both classical Judaism and modern Zionism: Freedom. The Torah actually commands us to remain free humans, committed only to the Master of the Universe. Zionism is our national liberation movement, as stated in Israel’s national anthem: “To be a free People in our Land.” Granted, we may feel that collective liberation has been achieved to a large extent in Israel, but do we really feel personally free in our everyday lives here?

Many Israelis would say: “Yes and no…” It’s true that we don’t feel like a downtrodden minority in our country, but we rarely feel that every one of us is in control of their life. The social protests in the summer of 2011 have shown that even the more comfortable middle classes are not happy with their prospects. When a young Israeli couple thinks about marriage, the first question that comes to mind is the enormous mortgage, or alternatively the wild rental rates that would be needed to house their future family. The soaring cost of living in Israel means that even a family that earns two full salaries can barely survive at a reasonable level. The shaky condition of many pension funds and savings plans only add worries about the future, both ours and our children’s.

Similar phenomena are happening in many other countries, which proves the point: the global system is cracking.

The system which is on the verge of a breakdown (the terms “going off a cliff,” “bursting bubble,” and “recession” are regularly being used to describe the U.S. and other Western economies) is all based on credit, which means debt generated by interest-Ribit.

Take the Ribit out of the global economy and the main motivation for creating gigantic debts would disappear. This is not a theory. It has been proven by hundreds of interest-free banks and credit unions, including Islamic banks, that were largely unharmed by the current global crisis.

Contrary to some popular slogans, Religion does not stand against personal liberty. At least our own heritage and religious law may well liberate us from our current enslavement to the big banks, centralised economies and powerful corporations.

Cleaning Israel from the Ribit can help in building a truly free, prosperous and compassionate society in the Promised Land.

About the Author: Ehud Tokatly is an Israeli writer, editor, translator, media expert, educator, software & Internet developer and entrepreneur. His father's family has lived in Jerusalem for seven generations. His mother escaped from Germany just before the holocaust. Following his military service, he studied theater at Tel Aviv University, and film & television in Harrow College of Higher Education, as well as Judaic studies at the Dvar Yerushalayim Yeshiva, in London. He has written more than 100 screenplays for productions in Israel and abroad. His 1988 children's book "The Lost Children of Tarshish" (with co-writers S. and J. Klitsner) was published in Israel, the US and Russia. In the 1990's, he co-founded MovieStar Systems Ltd. -- a start-up company that developed software tools for the media production industry. In 2002, he published a modern adaptation of Herzl's famous utopia - "Altneuland." He lives in Jerusalem with his wife.


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12 Responses to “Panel: Stop Charging Interest, Watch Prosperity Return”

  1. Charlie Hall says:

    What is wrong with the Heter Iska?

  2. Charlie Hall says:

    What is wrong with the Heter Iska?

  3. This article is absurd and I love the Heter Iska. It proves the idea that, where there's a Rabbinic will, there's a halachic way. (If only agunas somehow affected economics, the halacha would have been "adjusted" ages ago.)

  4. Gil Gilman says:

    Whether the article is absurd or not, there will be dramatic changes in the coming months, certainly no longer than a year or two, which involve debt restructuring, as well as debt forgiveness. That aspect has already been taking place through debt consolidation and debt brokering. No one wants to be chained indefinitely to debt that is merely interest on the original. This is the position in which the United States finds itself, the debt having risen to 64% of the GDP and is somewhere over $15 trillion. China and Japan are the main debt holders with about 9% and 7% respectively, followed distantly by the oil exporting countries, Brazil, and Caribbean bankers with a combined 5%. Joe Blow may very well discover an easing of burdens at the end of the rainbow of national concerns.

  5. Gil Gilman says:

    Whether the article is absurd or not, there will be dramatic changes in the coming months, certainly no longer than a year or two, which involve debt restructuring, as well as debt forgiveness. That aspect has already been taking place through debt consolidation and debt brokering. No one wants to be chained indefinitely to debt that is merely interest on the original. This is the position in which the United States finds itself, the debt having risen to 64% of the GDP and is somewhere over $15 trillion. China and Japan are the main debt holders with about 9% and 7% respectively, followed distantly by the oil exporting countries, Brazil, and Caribbean bankers with a combined 5%. Joe Blow may very well discover an easing of burdens at the end of the rainbow of national concerns.

  6. Charlie Hall says:

    The real national debt for the US is more like ten trillion. The remainder is government agencies owing each other.

  7. Gil Gilman says:

    lol….well that boosts China and Japan 14% and 11% respectively

  8. William Haworth says:

    China's expectation on purchasing Treasury bills with excess USD was not to receive the USD back with interest but to buy political stability with an employed working class achieved by juicing demand for Chinese manufactures over US manufactures.

  9. Was Shylock in the Merchant of Venice not a notorious Jewish banker? Didn't he charge even more than only the Torah forbidden interest? And is interest banking in fact not Shylockian blood sucking usury, impovering the sheople? When will be the next Torah commanded Jubilee?

  10. Nancy Kramer says:

    Charlie – heter iska means that you and the lender actually go into a partnership ad hoc on a particular business. It also means that, should you lose, the lender also loses. No suchthing in modern day banking. It's literally writing the word Kosher on a pig.

  11. Gil Gilman says:

    Same result, different page. Now if the Chinese sweatshop workers could only learn to make clothes that fit me, that aren't too tight in the armpits and crotch.

  12. Ruth Hirt says:

    Holy Scriptures have never waned in its verity and sanctity. It is power, may I remind you. Go back to the Holy Scriptures.

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