Price Regulation in Jewish Law
Jewish law provides for government intervention in the markets for goods and services through price controls, limits on profits, and perhaps even allowing cartels to operate.
Jewish civil law has not been in force for several centuries in most places in the world. (Israeli civil law takes note of precedents from Jewish law but is not bound by them alone.) As a result, in this area as in others, Jewish law has not kept pace with many aspects of the changes in the markets for goods and services since Talmudic and medieval times. Principles can be discerned in that earlier legislation, however, that could guide one to a theory of Jewish practice and even to a renewed and expanded body of law applicable to our contemporary situation. Reprinted with permission from Ethics in the Market Place: A Jewish Perspective, published by The Library of Jewish Law, 2000, where extensive notes supplement the text presented here.
Is Price Control Good?
In the Talmud, we find varying opinions on whether it is desirable to impose price controls. While the baraita [mishnaic statement from the early rabbinic period] that treats the subject establishes that
'"market officers are appointed to [supervise] measures, but no such officers are appointed for [supervising] prices,"
it is followed by the opinion that
"market officers are appointed to [supervise] both measures and prices, on account of deceivers." (Babylonian Talmud Bava Batra 89a)
In Babylonia, the question of price controls was subject to a disagreement between the Exilarch [the political leader of Babylonian Jewry] and the [Talmudic] Sages. The Babylonian Talmud (Bava Batra 99a) tells that the Exilarch appointed market officers to supervise prices as well as measures. The Jerusalem Talmud (Bava Batra 5:5, folio 15a) relates that the Amora [that is, post-Mishnaic rabbinic sage] Rav was appointed as market officer by the Exilarch and that since he administered punishment for infractions concerning weights and measures but not for infractions of price controls, the Exilarch had him imprisoned.
An explanation of the opinion that market officers are not appointed to supervise prices may be found in the commentary of Rashbam [Rabbi Samuel ben Meir, twelfth century commentator from Northern France]:
“Market officers are not appointed to supervise prices and prevent merchants from selling high: it is logical that this is not necessary, for if one wants to sell at a high price, another who needs money will sell more cheaply, all the buyers will go to him, and the first will be forced to sell cheaply.” (Rashbam on BT Bava Batra 99a)
According to Rashbam's explanation, this opinion holds that there is no need to interfere with the forces of the free market.
Concerning the opinion that market officers to supervise prices are needed because of the existence of deceivers, Rashbam offers several explanations:
“On account of deceivers who wait until one sells his merchandise cheaply, and then they sell high,” and “On account of deceivers who sell high, declaring they have added to the quantity, or those who place the better quality wheat on top and wheat of poorer quality on the bottom, or various other kinds of deception.”
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