Thursday, October 07, 2010

God Allows for Inefficiency

I recently came across these verses in Deuteronomy 15:1-3:
1 At the end of every seven years you must cancel debts. 2 This is how it is to be done: Every creditor shall cancel the loan he has made to his fellow Israelite. He shall not require payment from his fellow Israelite or brother, because the LORD's time for canceling debts has been proclaimed. 3 You may require payment from a foreigner, but you must cancel any debt your brother owes you.
As you might have predicted, it caused some problems:
Seeing that the law which prescribed the release of all debts every seventh year brought about the harmful consequence that people refused to loan to one another and thus violated what was written in the Law, namely, that a money loan should not be withheld because of the approach of the Sabbatical year
deadweight loss, that is a loss to society, was created. It hurt lenders and it hurt borrowers. This was no surprise to God. Here are verses 7-9:
7 If there is a poor man among your brothers in any of the towns of the land that the LORD your God is giving you, do not be hardhearted or tightfisted toward your poor brother. 8 Rather be openhanded and freely lend him whatever he needs. 9 Be careful not to harbor this wicked thought: "The seventh year, the year for canceling debts, is near," so that you do not show ill will toward your needy brother and give him nothing.
Although the problem was predicted and offered a solution (be generous), the problem still occurred. So much so that Jewish culture created the compromise of an interest-free loan in the seventh year. I'm not sure where I stand on the issue. It is certainly something created specifically for the Jewish people's interaction with each other (with the emphasis on "brother" in verse 3). Either way, I think there is a characteristic of God that cannot be missed: He was willing to created inefficiencies in the market to strengthen cultural and relational bonds. And since he is unchanging, he still is.


  1. This is called "Jubilee."

  2. How closely it influences recession ?

  3. Justin, I think Jubilee was when the land returned to its original owners. Land was not sold, merely leased until Jubilee. Don't have the references handy, so I'm going from memory.

    Harrison, you did not mention indentured servitude as a way of satisfying debts. These services were also canceled every 7 years, unless the servant preferred to remain, in which case it was made permanent.

  4. Not sure what you're asking Kaushik.

    I didn't know about the indentured servitude part. But that confirms again how God is willing to intervene is market transactions, even if it causes inefficiency. Something that has large policy implications for me.

    I'm not sure about the Jubilee definition. Here's the Wiki article on it: The Jubilee (Hebrew Yovel יובל) year is the year at the end of seven cycles of Sabbatical years (Hebrew Shmita), and according to Biblical regulations had a special impact on the ownership and management of land in the territory of the kingdoms of Israel and of Judah; there is some debate whether it was the 49th year (the last year of seven sabbatical cycles, referred to as the Sabbath's Sabbath), or whether it was the following 50th year.


You are the reason why I do not write privately. I would love to hear your thoughts, whether you agree or not.