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A Brief His​tory of Jews and Money

February 26, 2009 By:
​Derek Penslar
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The winter of 2009 might appear to be an indelicate time to discuss the relationship between Jews and money. The world is in economic crisis, and Jews have figured in a number of discredited enterprises in the United States. Their alleged involvement in recent criminal financial activities (i.e., Bernie Madoff, Herbert and Marion Sandler) is particularly sensitive to the Jewish community, especially because this wrongdoing appears to be linked with -- and in the case of the Sandlers' World Savings, even partly responsible for -- the financial meltdown.

But historians, like economists, enjoy thinking in the long term, and the current downturn has to be seen against a background of several centuries of remarkable Jewish economic success.

Rabbis and Jewish ethicists are wont to quote passages from the Hebrew Bible to depict a distinctively Jewish attitude toward money and business. But let's not blur text and context: A prescriptive normative statement is not the same as history. Besides, the foundational texts of Jewish civilization were produced long before Jews came to enjoy spectacular business success.

Biblical Israel's economy was largely agrarian. The world of late antiquity in which the Mishnah and Talmud were composed was more urban, but Jews were by no means economically distinct within it. A particular Jewish economic profile only began to emerge in the high Middle Ages, and then, only in select parts of the world. Jewish civilization dates back 3,000 years or more, but the archetype of the innovative Jewish financier is at most 800 years old.

So the secrets of Jewish economic success do not lie in unchanging Jewish qualities, but rather in a particular moment of contact between Jews and the first wave of economic globalization in history -- the birth of capitalism in the late Middle Ages.

Like many ethnic minorities, Jews have often occupied specific economic niches in the lands in which they have dwelled. Jews became the archetypal representatives of what social scientists call a "middleman minority," concentrated in commercial occupations considered by the dominant elites to be of low status.

In modern history, middleman minorities (i.e., ethnic Chinese in southeast Asia, Indians in southern Africa, Greeks in the eastern Mediterranean) have concentrated in small, family-run enterprises, made use of extensive family and ethnic links to markets and supply sources abroad, and had low operating expenses and profit margins. They have enjoyed high income levels but low status, stimulating the minorities to strive to win social approval through ever-greater financial success.

Jews have attracted much attention for their prominence in real estate, media, medicine, law and especially finance. Family and social networks ease access into such fields -- and contribute to success once in them. The inseparability of social and economic networking has been made clear in the tragic fate of Madoff's investors, who were linked via social organizations and longstanding friendships.

Economic niches are created by both internal and external factors. Jews have had particular abilities that attracted them to certain livelihoods. At the same time, disabilities have played a major role in pushing Jews into low-status and risky undertakings that have at times resulted in spectacular success. And they have often failed, just as spectacularly.

Over the past 50 years, the push factors behind the creation of Jewish economic niches have almost entirely disappeared, yet the pull factors have remained sufficiently powerful to propel new generations into lucrative careers. The capacity to succeed is not ingrained in Jews; it had an origin in time and, most likely, will some day come to an end. Yet, however the global economy is shifting, it's difficult to imagine how Jews -- with their high levels of education and family connections -- would be unable to meet the challenges facing them.

Derek Penslar is a professor of Jewish history at the University of Toronto. This year, he is a fellow at the Herbert D. Katz Center for Advanced Judaic Studies at the University of Pennsylvania, where the focus this year is Jews and economics.

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