פרשת ויחי: שִׁמְעוֹן וְלֵוִי אַחִים כְּלֵי חָמָס מְכֵרֹתֵיהֶם.
This article draws from Rav Shamshon Rafael Hirsch.
Two Hebrew words for profit, for gain, are Yitron, and Betza. Yitron means ‘expansion’. There is an expansion of goods, services, and value in the economy. Put into Pareto terms, it is possible that everyone can gain, or at the least, that no one loses. So, when Yitron occurs as the result of economic activity and ingenuity, it is a question of distribution of the gains.
Betza is substantively different. It is related to the word Petza which means ‘to wound’. Betza is the type of profit where one person gains at another person’s expense or ‘wounding’. In other words, there’s a ‘zero-sum game’ at play.
The argument is: To the extent that an economy is motivated, organized, and conducted, with reinforcement by legal and financial structures, to achieve Betza, as opposed to Yitron, it is headed for ‘end stage’ failure or collapse. I utilize the term ‘end-stage’ failure much the way the term is used with respect to heart failure or kidney failure. The heart or kidney can be ‘in failure’ and still function, albeit, at a much-diminished capacity, for a while, until… ’end stage’ occurs.
Examples of Yitron abound. Think of innovation and invention that lead to new products, services, or efficiencies. Alas, examples of Betza also abound. Whether or not the reader will agree that the following examples are good examples of Betza, I would suggest that the above-stated argument is still worthy of analysis and debate.
The more common examples are in situations (not every situation) where a seller (or manufacturer) takes advantage of information asymmetry to provide an inferior quality product marketed as a superior quality product. Transaction costs make it prohibitive for the buyer to ascertain the true quality. ‘Marketing’ can be quite convincing, even when patently or mostly false. We all know this from experience. Moreover, in the calculus of the seller, ‘marketing’ costs much less than ‘quality’, and the cost of being revealed is judged to be small.
There is a Mishna in Bava Metzia 4:12 about mixing the wines and advertising superior wine or sifting the bran and cleaning only the top layer: (translation and Bartenura here.)
Of course, this model is predicated on the notion that there is little if any inherent value to integrity and honesty, except for its utility in gaining a profit. (Alas, there is an implicit editorial or, better, lament, here that ‘integrity’ and ‘honesty’ are gone from much of economic life. Oh, we see people claiming these qualities and even putting them onto their product names, but these are lower cost ploys….’marketing’.)
Banks are notorious for Betza. Many (possibly hundreds) of the popular Betza schemes fall under the rubric called ‘predatory lending’ which generates billions in fees (late fees and many hidden fees – that the targeted consumers aren’t keen enough to discern). The Housing Bubble of the early 2000s may be an example where there was substantial Betza (even though there was some Yitron as well). Banks gave large mortgages to people who could according to the usual financial prudence and calculation could afford (or sustain) only small mortgages.
The reader may be able to think of other economic activity that follows the ‘zero-sum’ game plan or Betza.
I would like to conclude with the notion of Chamas, the Hebrew word which is often translated as robbery or violence. Rav Hirsch translates Chamas as legalized stealing. The sages of the Talmud provide support for this definition by saying that Chamas is stealing less than can be recovered in a court of law. At the time of Noah and The Flood, the world was full of legalized immorality and legalized stealing, Chamas. The decision to let The Flood occur was primarily because of all the Chamas that was the engine of economic activity in the time of Noah.
To this writer, when Betza and Chamas work together (and there is substantive overlap between the two, for sure) and reach some ‘critical mass’ in the economy, ‘failure’ follows. I do hope it’s not ‘end-stage’.