Jewish Ethical Principles for Business

The principles of ethics embodied in Jewish legal and ethical writings apply explicitly to business situations.

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Abbreviated from Insight Israel 3:1 (October 2002), published by The Schechter Institute of Jewish Studies in Jerusalem. Some bibliographic references that have been eliminated here, as well as a bibliography on Jewish business ethics, can be found in the original version of this article, available on-line. The opinions expressed here are the author’s own and in no way reflect an official policy of the Schechter Institute.

In addition to all the laws mentioned [in the parallel article on specific legislation related to business ethics], the halakhah contains a number of ethical principles which go one step beyond what we would normally expect a businessman to do.

Beyond the Letter of the Law

The first principle is called “lifnim mishurat hadin”, which means “beyond the letter of the law”. Here is one classic case. According to Jewish law, a purchase has not been concluded until the buyer has physically “lifted up” the item being bought (Mishnah Bava Metzia 4:2). In light of this fact, the following story [from an early post-Talmudic code of Jewish law] is quite surprising:

“It happened that Rav Safra had some wine for sale, and a potential buyer came to him while he was reciting the Shema [required twice daily]. The customer said ‘Sell me this wine for such and such a price.’ Rav Safra did not answer [so as not to interrupt theShema]. Assuming that he was unwilling to settle for the price offered, the customer added to his original offer, and said, ‘Sell me this wine for such and such a price.’ Rav Safra still did not answer. [Presumably, this cycle was repeated, with ever-escalating prices.] Upon finishing theShema, Rav Safra said to him: ‘From the time you made your first offer, I had resolved in my mind to sell it to you. Therefore I may take no greater amount [than your first bid].’” (Sheiltot Vayehi, No. 38)

The Sheiltot went so far as to make Rav Safra’s behavior a halakhic norm for all Jews. It rules:

“There is no question if he said ‘I will sell you this,’ but even if he merely resolved in his mind to sell something [at a particular price], even if he did not articulate it, he should not go back on that resolution…”

This decision was not included in later codes of Jewish law, yet the concept of lifnim mishurat hadin remained an ideal, which Jews strive to emulate until today.

Indeed, Rav Safra’s behavior was repeated by a German Jew some 1600 years later. The firm of Beer, Sondheimer and Company is reported to have owed its tremendous expansion to the following fact. On a Friday in 1870, just before the Franco-German War broke out, Mr. Beer left his office for the Sabbath rest. He had large holdings in copper and other metals necessary for the waging of war. The porter received a number of telegrams, which he presented on Sunday morning to his employer. They came from the War Ministry and offered to buy all metals in the possession of Mr. Beer; each successive wire increased the price.

When Mr. Beer, on Sunday, went through these messages, he informed the War Department that he would have accepted the first offer and that he had failed to answer it because it was the Sabbath. He was, therefore, prepared to let the government have all his merchandise at the rate originally suggested to him. The War Ministry was so impressed by this example of living Judaism that they made the firm its main supplier and thus established its global significance. (Leo Jung in Contemporary Jewish Ethics, ed. Marc Kellner, New York 1978

Remaining Above Suspicion

The second ethical principle is taken from the Numbers 32:22: “Vihyitem neki'im meihashem umiyisrael”—“And you shall be guiltless before the Lord and before Israel.” This principal dictates that those in a position of trust must be above suspicion. Thus, in Talmudic times, charity collectors were not permitted to exchange copper coins which they had collected, for their own silver coins, because this might give the impression of impropriety. Therefore, they were only allowed to exchange the coins with outsiders (Babylonian Talmud Bava Batra 8b). Similarly, when surplus food accumulated in the soup kitchen, the overseers could not buy the food themselves but had to sell it to others (ibid.).

This principle of “above suspicion” finds easy application in the modern business setting. A manager or a treasurer of a company can frequently secure reimbursement of business expenses without submitting receipts. The principle of “v’heyitem neki'im,” however, requires him to submit the appropriate documentation in order to avoid suspicion of embezzlement (Aaron Levine, Economics and Jewish Law, Hoboken 1987, 16-17).

Giving God a Good Name, and the Opposite

The last two principles I shall mention are especially relevant to Jews living in a non-Jewish society. They apply not only to business ethics but to all of our relations with our non-Jewish neighbors. They are called Kiddush Hashem, or the sanctification of God’s name, and Hillul Hashem or the desecration of God’s name. They stem from a verse inLeviticus (22:32): “You shall not desecrate My holy name, that I may be sanctified in the midst of the people of Israel—I am the Lord who sanctifies you.” This verse means that any good or holy act done by a Jew sanctifies God’s name in the eyes of his Jewish and gentile neighbors, while any bad or profane act done by a Jew desecrates God’s name in the eyes of the public. When a Jew cheats on his taxes, the tax official does not say, “Max Goldberg is a cheat,” but rather “Jews are thieves, what an unethical religion.” When a Jewish retailer overcharges, the customer does not say “Joe Schwartz is a thief,” but rather, “Jews are thieves, what an unjust God.”

As we learn in the midrash (Seder Eliyahu Rabbah, Chap. 26): “When a man is not loving in his business dealings, even if he learns Torah and studies Mishnah, people who see him say: ‘woe to so-and-so who has studied Torah! …’ Thus, through such a man, is the name of Heaven desecrated.”

Conversely, when a Jew is scrupulously honest, it not only reflects well on him; it reflects well on the entire Jewish people and on God. As we learn in the classic story about [Rabbi] Shimon ben Shetah (Palestinian Talmud, Bava Batra 2:5, folio 8c):

Shimon ben Shetah was in the flax trade. His students said to him, “Retire from the flax trade and we will buy you a donkey and you won’t have to work so hard.” They bought a donkey for him from a non-Jewish trader. As it turned out, a precious gem was hanging from its neck. They came to him and said, “From now on, you won’t have to work anymore!” He replied, “why not?” They explained, “We bought you a donkey from a non-Jewish trader and we found a precious gem hanging from its neck.” Shimon said, “And did its master know?” They replied, “no.” He said, “Go and return it…. Do you think I am a barbarian?! I want to hear the non-Jew say ‘Blessed be the God of the Jews’ more than I want all the material rewards of this world!”

The Hasidic rabbi, Rav Nachman of Kossover, taught that we should always have the Lord in our thoughts. He was asked, “Can we think of the Lord when we are engaged in buying and selling?” “Surely we can,” answered the Rabbi. “If we are able to think of business when we are praying, we should be able to think of praying when we are doing business.” (Louis Newman, The Hasidic Anthology, p. 343)

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Rabbi David Golinkin

Rabbi David Golinkin, Ph.D., is president and rector of the Schechter Institute of Jewish Studies in Jerusalem, where he teaches Talmud and Jewish law, and he heads the Va'ad Halakhah (committee on Jewish law) of the Masorti, or Conservative, movement's Rabbinical Assembly in Israel.