February 8

Q: How does Jewish bankruptcy law ensure kindness toward the less wealthy?

Jewish Bankruptcy Law as a Vehicle for Societal Kindness
Dr. Russell Jay Hendel

ABSTRACT
How does Jewish law govern the division of insufficient assets among the creditors of the deceased? Unlike the traditional secular method of paying each creditor an amount proportional to what is due him, Jewish bankruptcy law has the smallest debt paid off first by paying the amount of the smallest debt to each of the lenders. If money remains after that, then the next smallest amount is paid off. This process is continued until the estate is exhausted.

Although this method seems contrary to common sense, it is used today as a practical solution to other types of allotment problems. Besides defending its rationality, this article will show that the Jewish system makes society more personal and charitable, consistent with the tradition and vision of loving-kindness combined with justice passed down to us by our forefather Abraham.

Jewish Psychology

Maimonides considers the following situation:

A person with $1000 can either give a single donation of $1000 to charity, or he can give $1 a day for 1000 days. Which method builds better character?

Maimonides explains that frequency, not intensity, is the determining factor in acquiring a character trait. If one wants to become a giving, charitable person, one should do many small acts of giving, as opposed to one big act.

For our purposes, this comment of Maimonides is sufficient. There are numerous other types of situations, however, where the frequency versus intensity principle is operative. For example, it is better to eat three small meals a day than one big meal. The Vilna Gaon achieved his learning by taking scattered small naps rather than one big sleep at night. Students are better prepared by studying small amounts each night the week before the exam instead of cramming the night before. A marriage is strengthened more by many small acts of thoughtfulness than by, say, one big romantic trip. These examples demonstrate Maimonides' principle of frequency versus intensity.

This approach is behavioral. Many rabbis today would argue that the focal point of psychology is not behavioral. Rabbi Manis Friedman emphasizes the acquisition of "personal borders"; Rabbi Abraham Twerski, self esteem. Similarly, some non-behavioral learning theorists emphasize the importance of role models, the attribution of causation, or the internal development of conceptual structures.

Our concern is not the development of a holistic psychological approach but a discussion of the preferred method for acquiring specific habit patterns (in our case, being charitable and socially kind and just). Frequency rather than intensity achieves this goal.

Section VI:

How the Halakhic Method Increases Kindness

We are now in a position to suggest a defense for the halakhic method.

• G-d wishes the Jewish people to follow Abraham's way of life.
• The descendants of Abraham are commanded to be just and charitable.
• Maimonides' principle of frequency versus intensity says that to become charitable we must do many acts of charity.
• Giving a loan is considered the highest form of charity.
• The profit and repayment motif is considered a strong incentive ("reward and punishment" in behavioral terminology) for economic behavior in the Torah.
• Therefore, to create an Abrahamitic community of just and charitable people, we select the allocation system with axioms that "reward" the greatest number of lending acts. Such a system must prefer rewarding many small acts of lending over one big act of lending.
• We conclude that the halakhic method is the one needed to increase kindness in the world. In other words, in a society with the halakhic method of allocation, small loans are encouraged, since the lenders are more likely to get their money back. This in turn encourages many small business ventures because they rely on good loans for initial capital formation. By contrast, a society with the proportional method of allocation discourages small loans since they are certain to lose out to bigger loans when allocation takes place. Discouraging small loans discourages small businesses. The economy becomes depersonalized, and banks become the principal, large lenders.

BIO
Dr. Russell Jay Hendel currently works as an actuary for the US government in Philadelphia. He has taught at various colleges and universities, most recently as adjunct associate professor of mathematics and computer science at Drexel University. While obtaining his doctorate at MIT in Boston, he participated in weekly Torah study with Rabbi Dr. Joseph B. Soloveitchik, who deeply influenced him. This article adds to his list of Judaica papers in which Dr. Hendel defends the rationality of ostensibly strange halakhot (Jewish laws) and midrashim (Jewish hermeneutic and homiletic literature).