Capitalism and the Jews

by Jerry Z. Muller
Princeton University Press, 267 pages, $24.95

http://www.futureofcapitalism.com/939/capitalism-and-the-jews

With the Economist hosting forums for money manager Jeremy Grantham to denounce the financial industry as a "blood-sucker," with New York Times columnist Maureen Dowd calling Goldman Sachs "blood-sucking," with the Huffington Post and the New York Times running articles denouncing the financial industry as "parasitic," with the Atlantic running a piece by Michael Kinsley pondering a much-discussed article comparing Goldman Sachs to a vampire squid – well, what exquisite timing for the release of the book Capitalism and the Jews, by Jerry Muller.

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."

Or to that of the anti-Semitic American automaker Henry Ford, who Mr. Muller quotes as writing that, "the Jew is a mere huckster, a trader who doesn't want to produce, but to make something out of what somebody else produces."

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. He also quotes a passage from the Talmud on division of labor that presages Adam Smith's Wealth of Nations.

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, naming Trotsky, Sverdlov, Kamenev, and Zinoviev, among others.

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: "the conspicuous role played by Jews in the Communist movement, though rarely the primary cause of the anti-Jewish sentiment, fanned the flames of anti-Semitism," or "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, though, he is more assertive: "That the leaders of the suppressed revolutions were so often Jews was a crucial factor in the recrudescence of political anti-Semitism in Germany," he writes. "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."

It seems to me that anti-Semitism is a fundamentally irrational emotion, and that linking it to Jewish involvement in revolutionary or Communist activity comes perilously close to excusing it. After all, the Jews were being denounced as greedy capitalists at just the same time as they were being denounced as dangerous Communists, which suggests 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 have a way of overlapping and influencing each other. "For centuries, Jewish economic success led anti-Semites to condemn capitalism as a form of Jewish domination and exploitation," Mr. Muller writes. "In addition, the way in which modern, non-Jewish intellectuals thought about capitalism was often related to how they thought about Jews."

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.

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Reviewed by Ira Stoll  |  February 1, 2010 at 1:27 pm Related Topics:  Banking, Book Reviews, Capital Markets Regulation, Goldman Sachs, Press, Religion receive the latest by email: subscribe to the free futureofcapitalism.com mailing list