Business Competition in Judaism

What is unfair competition in business? There are many Jewish answers.

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Reprinted with permission from Louis Jacobs, The Jewish Religion: A Companion, published by Oxford University Press.

Jewish law accepts the principle that commercial activities are, in the nature of the case, competitive, but draws the line between fair and unfair competition. The key biblical texts is: “Thou shalt not remove they neighbor’s landmarks” (Deuteronomy 19:14). In the context this refers to a man moving the marker between his and his neighbor’s field so that he takes to himself some of his neighbor’s land. In rabbinic law this is applied to every attempt to encroach, unfairly, on a neighbor’s property or his means of earning a living. The operative word here is “unfair,” and the sources discuss at length how this is to be defined.

Fairness to Businessmen or Customers?

The Mishnah (Bava Metzia 4:11) records a debate between the second-century Palestinian Rabbi Judah and the sages on whether a shopkeeper is allowed to distribute burnt ears of corn and nuts to children who are sent by their parents to buy provisions. Rabbi Judah considers this to be unfair to the other shopkeepers in that it encourages the children to buy from his and not from them. The sages disagree. There is nothing wrong in this practice since the other shopkeepers can themselves compete by providing the children with even better goodies.

businessmenRabbi Judah also holds that it is forbidden for a shopkeeper to sell his goods below the standard market price but the sages say “Good for him” (literally, “May he be blessed”). Clearly, the debate revolves around the question of whose interests the law should seek to preserve, those of the traders or those of the general public. The law, as recorded in the [medieval] Codes [of Jewish law], follows the opinion of the sages. Economic conditions in second-century Palestine were different from those which obtain today, but it is not difficult to see how the debate can have some relevance even in our different form of society to the question of price controls and, say, issuing gift vouchers to customers.

When Is Protectionism Justified?

What of other forms of competition? The key passage is in the [Babylonian] Talmud tractate Bava Batra, 21b. The third-century Babylonian teacher Rabbi Huna ruled that if a resident of an alley sets up a hand-mill and another resident of the alley wishes to set up one next to him, the first has a right to stop him, because he can say: “You are interfering with my livelihood.” Rabbi Huna ben Joshua (not the same Rabbi Huna), however, disagrees and permits a resident of the same alley to compete, but not a resident of another town. He is uncertain what the law is with regard to the resident of another alley.

The Codes decide in favor of the second Rabbi Huna and are less tolerant of protectionist policies. Later authorities make a distinction between ruinous and non-ruinous competition. Where the competition only reduces the profits of the one who protests against the intrusion, the view of the second Rav Huna is followed. But where the competition will result in his financial ruin, the view of the first Rabbi Huna is adopted. Indeed, it is suggested, where the competition is ruinous, the second Rabbi Huna would agree that it is not allowed.

Contemporary Jewish scholars have tried to discover in these earlier sources principles that can be applied in the modern urban market, but to transfer and apply rules originally formulated against a far more primitive economic background to the social order of today with its monopolies, organized labor, and large corporations is bound to result in vagueness.

Jewish communities often issued special enactments to protect interests considered to be vital to the Jewish life of that community, or, in certain instances, to Jewish life as a whole. For instance, kosher meat imported from butchers who lived elsewhere was declared forbidden by communal edict in order to protect the supply of kosher meat by the local butcher, which would cease if he went out of business. Printers who risked their money to print Jewish works would often print in the frontispiece a stern prohibition by a famous rabbi, or rabbis, against another publisher publishing the same work within a stated period. The dispute between the printers of the Vilna and Slavita editions of the Talmud in the nineteenth century made case history in the discussion of monopolies in Jewish law.

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Rabbi Louis Jacobs

Rabbi Dr. Louis Jacobs (1920-2006) was a Masorti rabbi, the first leader of Masorti Judaism (also known as Conservative Judaism) in the United Kingdom, and a leading writer and thinker on Judaism.