From the Industrial Revolution to the Dotcom Revolution, intellectual, social and economic history was dominated by the struggle between Communism and Capitalism. Faintly but persistently, that great debate was punctuated with calls for a “Third Way”…a socio-economic alternative that might capture the most attractive features of both systems while discarding the undesirable elements of each.
Proponents of a Third Way are typically looking to combine the egalitarian and communitarian virtues of Communism with productivity and personal liberty, the strengths of Capitalism.
It turns out that just such a Third Way was proposed over 2500 years ago…in the Old Testament book of Leviticus. The socio-economic blueprint laid out there embodies just those positive elements that we have come to associate with the best aspects of both Capitalism and Communism.
At first glance, it might appear that a socio-economic program written over two millennia ago for an agrarian economy could not possibly be implemented in a modern industrial society. But that would be incorrect. Upon deeper reflection, it is clear that the Levitican program could be implemented today and, if implemented, would have enormous positive implications, both for social justice and for economic productivity.
In the Manifesto of the Communist Party, first published in 1848, Karl Marx famously wrote: “…The theory of the Communists may be summed up in the single sentence: Abolition of private property.” That single sentence became the rallying cry for a movement which in many respects dominated a 150 year period of world history.
At the other end of the ideological see-saw, of course, was the 18th century theory of Capitalism. These two great economic philosophies battled over one issue above all others: Who should own (control) society’s “means of production”?
We have Marx to thank for the concept. He correctly understood that each society, each social epoch, is characterized by its means of production, i.e. by the way in which it generates wealth, and by the ownership of those means of production. Control over the means of production leads to concentration of wealth which translates into social power and often entails the power to exploit or even enslave.
In Marx’ 19th century, means of production consisted of factories and machines, augmented by the labor of “wage slaves”. The bourgeoisie owned these means of production, either de jure as in the case of factories or de facto as in the case of labor.
Marx did not decry the Industrial Revolution; he was no Green! He saw factories and machines as precisely the instruments that would create the wealth needed to free the workers of the world from their chains. He decried the fact that ownership of the means of production was centralized in the hands of a few capitalists, who by and large did no work but accumulated wealth and power at the expense of the proletariat, merely because they owned society’s productive assets.
Marx’s solution was to abolish the institution of private property (as it relates to productive assets), to collectivize productive property under the common ownership of the workers and to entrust the management of that property to institutions representing those workers (e.g. soviets, the Communist Party or the state).
Two great challenges confront every economic system: the generation of wealth and the distribution of that wealth. The success of every economic system must be measured according to these two criteria.
Evaluating the generation of wealth is easy; it’s basically a matter of arithmetic. Evaluating the distribution of wealth is much more difficult; it’s more a matter of ethics. Values enter the discussion at every turn:
- Should wealth be distributed among members of society in proportion to the contribution of each toward the production of that wealth?
- Should wealth be distributed among members of society in proportion to the needs of each member?
- Should wealth be distributed equally among all members of society, regardless of the contribution or the need of any particular member?
There is no immediately obvious, universally correct set of answers to these questions. Plus there is another question which cuts diagonally across all three:
- If the production of wealth is in any way a function of the way in which that wealth is to be distributed, should the value of maximizing wealth influence in any way the decisions we make regarding its distribution?
In his Theory of Justice, John Rawls proposed a solution to this enigma. He suggested that the optimum distribution of wealth was the distribution that would lead to the maximum production of wealth consistent with the provision of basic economic security to every member society. His rationale: this is what an objective member of society would choose provided that that member of society had no advance idea whether she would be at top or the bottom end of the economic ladder. This state of ‘disinformation’ is what Rousseau called “the State of Nature”.
The ideologies of Communism and Capitalism have both been well tested in the laboratory of real life; how did each fare?
Communism did a reasonably good job of leveling economic (and therefore social) inequality; but it did an absolutely horrible job of maximizing the production. Capitalism, on the other hand, did an astoundingly good job of maximizing the production but a poor job managing social and economic inequality and providing basic economic security.
After 65 years of real life experimentation, the “workers of the world” did indeed unite. They voted with their feet: Yes to Capitalism, No to Communism! Apparently applying Rawls’ calculus, they decided it was better to risk being at the bottom of a Capitalist heap than to languish hopelessly in the middle of a Communist one.
But this does not solve the dilemma: social justice is not an option, it is an imperative! Just as no man can validly sell himself into slavery, neither can he bargain away his natural right to a basic share of society’s goods. Capitalism cannot celebrate its triumph until it fulfills Rawls’ condition of providing basic economic security to every member of society.
Of course, folks will disagree, and rightly so, about what constitutes basic economic security; but most will agree that it has not yet been universally achieved. It certainly includes a decent place to live, decent clothing and enough to eat; but it’s more than that. It must include a safe environment, a healthy diet, health care and education. But it’s even more than that; it must also include the opportunity for economic, social and intellectual advancement…the right to “be all that you can be”.
Clearly, the Capitalist world has a ways to go to meet John Rawls’ standards. Most if not all Capitalist societies have made some effort to construct a safety net. In some countries, the net is weak and full of holes; in other countries, it is stronger but tends to rob initiative and the sense of self-worth from those who rely on it. Can we do better?
Yes…but we need to look back 2500 years to learn how!
“You shall count seven weeks of years – seven times seven years – such that the seven weeks of years amounts to forty-nine years…You shall treat this fiftieth year as sacred. You shall proclaim liberty in the land for all its inhabitants. It shall be a Jubilee for you…In this year of Jubilee, then, each of you shall return to your own property…The land shall not be sold irrevocably; for the land is mine and you are but resident aliens and under my authority.” — Leviticus
The social system outlined in Leviticus is based on the theory that every tribe of Israel began its career in Canaan with an equal share of productive property (i.e. land) and that every family within each tribe likewise began with an equal share.
At the time of the Exodus from Egypt, land was the fundamental means of production, the primary source of all wealth, augmented by flocks and by labor. In theory at least, every family in the new society started out with an equal stake in the means of production.
In some ways, this notion anticipates the “state of nature” concept found in writings of John Locke and Jean Jacques Rousseau (e.g. Social Contract). But while the state of nature in their writings was essentially an intellectual fiction, the original division of productive property in Canaan may actually reflect some historical reality.
But the egalitarian social code of the Israelites did not envision economic relations remaining static. Rather, it anticipated that some families would grow wealthier, others poorer. The authors of Leviticus understood that some would ultimately be forced to sell their land, and even their labor, in order to survive. Leviticus did not forbid such economic activity…but it did limit its impact with a social safety net and, more radically, with a program to redistribute wealth.
Leviticus calls for the total redistribution (or “restoration”) of productive wealth (i.e. the means of production) every 50 years. “…On the tenth day of the seventh month let the ram’s horn resound; on this, the Day of Atonement…each of you shall return to your own property.”
Every 50 years, there’s a do-over. According to Leviticus, the State of Nature is “renewable”.
Compare this “primitive” social system with the more sophisticated Capitalist and Communist systems. Under capitalism, there are generally no do-overs; the sins (or mere mistakes) of the fathers are most definitely visited on their sons and daughters for many generations to come.
Communist societies, on the other hand, have a different problem. Here the means of production are owned in common. This at least theoretically solves the problem of inequality but it does nothing to motivate production. Without a system of economic incentives, labor languishes and there is little in the way of innovation or investment.
The economic system offered by Leviticus solves this conundrum. All productive property is private! There are few restrictions on amassing wealth. Incentives for labor and commerce abound. Yet every 50 years, all productive property is redistributed so every 2nd generation gets a fresh start. It seems like the best of both worlds, a perfect solution.
The New Testament also incorporates the Levitcan program, at least symbolically. In the Gospel of Luke, we read that Jesus fed 5000 people on 5 loaves of bread and 2 fish. He seated them in groups of 50 (the Jubilee number) and when they had finished eating, the “scraps” filled 12 baskets.
The “groups of 50” refer to Leviticus’ 50 year Jubilee period. 5000 is 50 x 100. Multiplying by 100 or 1000 is a common technique used in Biblical literature to suggest an infinite or at least indeterminable quantity.
12 the number of ‘complete completeness’ in the Bible. It is 3x 4, 3 representing God (Trinity?) and 4 representing Earth (4 corners?). It is also the number of the signs of the Zodiac, the tribes of Israel and even Jesus’ apolstles.
So at one level at least, Luke is telling us that a return to the Levitcan program could feed the whole world indefinitely…and still produce an unlimited surplus.
But you say, “It’s impractical; there’s simply no way that the productive property of the United States could be totally reallocated; and even if it were economically possible, the advantaged interests would never stand for it.”
Jesus encountered similar resistance. According to the Gospel of Mark, Jesus begah his ministry by proclaiming an “acceptable year” (i.e. Jubilee) in a local synagogue. The worshipers chased him out of town and nearly threw him off a cliff. Clearly, 1st century Gallileans were no more eager to share their wealth than 21st century ‘one percenters’.
But there may be another way to skin this cat: What is the difference between reallocating 100% of ownership every 50 years and reallocating 2% of ownership every year? (2% x 50 years = 100%)
It is perfectly possible, both economically and politically, to follow Leviticus’ socio-economic blueprint today. The key is understanding what is meant, both in Leviticus and in Marx, by “productive property”. We’re not talking about someone’s primary residence (at least not up to a certain value). We’re not talking about clothes, cars, toys or jewels (again, at least up to a certain value). We’re talking cash, stocks and bonds, rental property, etc… We talking about property that generates property.
To implement Leviticus’ socio-economic program, we simply need to tweak our tax code to impose a 2% per annum tax on all productive assets (aka “capital”), 100% of the proceeds to be “redistributed” as follows:
Revenue should first go to fund the benefit costs (not admin costs) of all entitlement and social welfare programs. (No funding for national defense, bureaucracy, or infrastructure from this new revenue source.) Remaining revenue should be directed to a special economic development bank (think ‘national private equity fund’) designed to bank roll economic opportunities for disadvantaged individuals and families, just as Leviticus intended.
Such a program would do a lot to level the socio-economic playing field but it would also stimulate the production of additional wealth. Once the cost of entitlement and social welfare benefits has been transferred to this new revenue source, taxes on labor (income tax) and investment (capital gains tax) can be significantly reduced. In turn, productivity will soar.
Enhanced social justice, broadened economic opportunity, increased productivity…these are the first order consequences of the Levitican program. But there are second order consequences as well:
- The newly created economic opportunities will immediately generate new income, eventually new wealth, and ultimately even more tax revenue.
- The success of these new economic enterprises will reduce the burden on entitlement programs, thereby freeing-up even more revenue for economic development.
- The imposition of a 2% tax on capital will discourage people from leaving their wealth idle. They will seek more aggressive investment opportunities in order to protect their principle…and this in turn will generate further economic growth.
The Levitican program is a “virtuous cycle”. Do we dare to talk of third order consequences?
Leviticus imagined a permanently sustainable economic system in which wealth was progressively accumulated and redistributed. Marx envisioned a similar Utopia. Could the implementation of the Levitican program actually turn these visions into reality?