The Global Recession and Jewish Law

Abstract

This paper puts the current global recession in the context of Jewish theological thought. We will show that the failed conduct of the players in the subprime sector violates specific moral principles. Moreover, no amount of wrongdoing by these players could spiral into an international financial meltdown without the legal underpinning of the holder-in-due-course doctrine. We demonstrate that Jewish law rejects this doctrine. To prevent the recurrence of the current debacle, Jewish law's imitatio Dei principle calls for the restructuring of the incentive system economic actors face. It consists of replacing the perverted system of incentives now in place with sticks and carrots designed to tilt economic actors toward virtue and away from wrongdoing. Beyond fixing the incentive system, the current malaise tells us that we are living in a society of broken promises. Improving the moral climate of society hence entails reinforcing the values of integrity and taking responsibility seriously. Jewish religious thought puts the onus on parents and the educational system to accomplish this.