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Rabbi Lord Jonathan Sacks

kind of collective madness takes hold did, and this could not be known in depression/recession that followed.
of people – the sages said adam bahul advance. It can be shown that if both That happened because the banks no
al mamono, meaning, roughly, “money people act rationally in their own longer trusted one another. Credit was
makes us do wild things” – and people interest, they will produce an outcome no longer freely available and in one
come to believe that they are leading that is bad for both of them. This country after another the economy
a charmed life, that luck is with them, seems to refute the basic premise of stalled.
that they will neither fail nor be found market economics, that the pursuit of
out. They even believe they can bribe self-interest serves the common good. The key word, used by both Isaiah
G-d to look the other way. In the end, and the Sages, is emunah, meaning
it all comes crashing down and those The negative outcome of the Prisoner’s faithfulness and trust. Isaiah in
who suffer most tend to be those who Dilemma can only be avoided if the our haftarah twice uses the phrase
deserve it least. two people repeatedly find themselves kirya ne’emana, “faithful city.” The
in the same situation. Eventually, Sages say that in heaven we will be
Isaiah is making a prophetic point they realize they are harming one asked, Did you conduct your business
but one that has implications for another and themselves. They learn be’emunah? – meaning, in such a
economics and politics today and to cooperate, which they can only do way as to inspire trust. The market
can be stated even in secular terms. if they trust one another, and they will economy depends on trust. Absent
The market economy is and must be only do this if the other has earned that, and depend instead on contracts,
a moral enterprise. Absent that, and that trust by acting honestly and with lawyers, regulations and supervisory
eventually, it will fail. integrity. authorities, and there will be yet more
scandals, collapses and crashes, since
There used to be a belief among In other words, the market economy the ingenuity of those who seek to
superficial readers of Adam Smith, depends on moral virtues that are not sidestep the rules always exceeds those
prophet of free trade, that the market themselves produced by the market whose job it is to apply them. The only
economy did not depend on morality and may be undermined by the market safe regulatory authority is conscience,
at all: “It is not from the benevolence itself. For if the market is about the the voice of G-d within the human
of the butcher, the brewer, or the baker pursuit of profit, and if we can gain heart forbidding us to do what we
that we expect our dinner, but from at other people’s expense, then the know is wrong but think we can get
their regard to their own interest.” pursuit of profit will lead, first to shady away with.
It was the brilliance of the system practices (“your silver has become
that it turned self-interest into the dross, your choice wine is diluted with Isaiah’s warning is as timely now as it
common good by what Smith called, water”), then to the breakdown of was 27 centuries ago. When morality
almost mystically, an “invisible hand.” trust, and then to the collapse of the is missing and economics and politics
Morality was not part of the system. It market itself. are driven by self-interest alone, trust
was unnecessary. fails and the social fabric unravels.
A classic instance of this happened That is how all great superpowers
This was a misreading of Smith, who after the financial crash in 2008. For a began their decline, and there is no
took morality very seriously indeed decade, banks had engaged in doubtful exception.
and wrote a book called The Theory practices, notably subprime mortgages
of Moral Sentiments. But it was also and the securitization of risk through In the long term, the evidence shows
a misreading of economics. This was financial instruments so complex that it is sounder to follow prophets
made clear, two centuries later, by a that even bankers themselves later than profits.
paradox in Games Theory known as admitted they did not fully understand
The Prisoner’s Dilemma. Without them. They continued to authorize
going into details, this imagined two them despite Warren Buffet’s warning 1 Hamlet, Act 3 Scene 1.
people faced with a choice (to stay in 2002 that subprime mortgages Rabbi Lord Jonathan Sacks is Emeritus
silent, confess, or accuse the other). were “instruments of mass financial Chief Rabbi of the United Hebrew
The outcome of their decision would destruction.” The result was the crash. Congregations of the Commonwealth
depend on what the other person But that was not the source of the @RabbiSacks · www.RabbiSacks.org

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