© Published in Journal of Business Ethics 4(1985), pp. 117-129.

Ethical Behavior in Business: A Hierarchical Approach from the Talmud

Hershey H. Friedman

ABSTRACT. The Talmud, the compilation of Jewish oral law, is over 1500 years old and includes extensive discussions of business ethics. This paper presents four levels of ethical behavior in business gleaned from the words of the Talmud. At the lowest level, an individual is just barely inside the law; the highest level is "the way of the pious". The author has attempted to relate the ethics in ancient business situations to business practices today.

How ethical should a person be? What about a corporation? An industry? in business, as in other areas, the establishment of ethical standards and practices is of great importance. Obviously, every businessperson can be expected to operate within the law. However, one can expect to encounter many business situations containing ethical dilemmas not covered by the law. Thus, it is incumbent upon us to establish and abide by a code of minimal ethical behavior.

In establishing ethical standards it is important to realize that there are various levels of ethical behavior in business (as in other areas) culminating in quintessential altruism. One current thinker has proposed that there exist the following levels to moral behavior: the first is a "zone of indifference" where people act freely doing what they please; emerging from this zone, one crosses the threshold of "minimal altruism" after which helping others is obligatory if it is at no cost; the next threshold is the "cutoff for heroism" after which moral acts are considered heroic, that is, they are purely altruistic but not obligatory.1

Approximately 2000 years ago, the Talmud made implicit reference to various levels of ethical behavior. The Talmud, consisting of the Mishna and the Gemara, is the Jewish oral law. it amplifies, explains, and elaborates on the written law of the Bible (the Pentateuch). The Mishna was compiled, edited, and finally committed to writing approximately 1800 years ago. The Gemara, consisting mainly of analysis, discussion, and commentary on the Mishna, was completed and put into written form approximately 1500 years ago. The Talmud consists of 63 tractates (volumes) which include discussions of laws (and moral obligations) with regard to religious rites, marital relations, business, torts, social relations, holidays, etc.2 Since the Talmud frequently adopts a case approach, it does not always come to a firm conclusion regarding the final law, but presents many opposing viewpoints and arguments.

Maimonides (1134-1204), a physician, philosopher, and Torah scholar of the 12th century, wrote a code of Jewish law, known as Mishneh Torah, in which he presented the laws neatly arranged and organized, without the Talmudic debate.

Later, Rabbi Joseph Karo (1488-1575) drew upon the works of Maimonides and other scholars of Talmudic law in developing the Shulchan Aruch, the (more or less) definitive code of Jewish law. The Shulchan Aruch is used by observant Jewry all over the world to this day. Thus, the major sources of the rules governing Jewish life are: the Pentateuch, the Mishna, the Gemara, Maimonides' Mishneh Torah, and Joseph Karo's Shulchan Aruch.

Although the Talmud is an ancient document, many of the problems addressed in it have their modern counterparts. This is especially true of those relating to ethical behavior in business. In fact, it is interesting to note the similarities between Jewish law and English law as pointed out by the late Rabbi Dr. Isaac Herzog, Chief Rabbi of Israel, in his work, The Main Institutions of Jewish Law.3 In addition, a recent article has demonstrated the relevance of Talmudic laws, principles, and philosophy to modern-day business problems.4

The Talmud uses various expressions in its treatment of the different types of ethical dilemmas. From these expressions, a hierarchical model of ethical behavior can be developed. That there was an implied hierarchy in the Talmud's approach to ethical standards was first noted by Herzog.5

One unique aspect of Talmudic law is that every individual is expected not only to abide by the strict letter of the law but also to go beyond it. In fact, the Talmud proposes as a contributory factor for the destruction of Jerusalem (by the Romans under Vespasian and Titus) that judgments were based strictly on the law and did not go beyond the boundary of the law (Babylonian Talmud, Baba Metzia 30b). Although there is a great deal of controversy as to whether one may be forced by the court to go beyond the requirements of the law, one is certainly morally obligated to do so. in fact, the court uses moral suasion and tells a defendant that he or she is obligated to go beyond the limit of the law (Shulchan Aruch Choshen Mishpat 12:2).

In this paper, the author presents four levels of ethical behavior in business gleaned from the words of the Talmud. it is hoped that, in some way, these standards may help us in the establishment of ethical standards today. As individuals, and as members of various industries, many of us have come to realize that establishing and abiding by a set of ethical standards is not a trivial task. The hard lessons learned thousands of years ago often prove to be quite adaptable to our so-called modern age. After all, it is quite true that from region to region, and from century to century, while some things may change, the people are still the same.

 

Level I

The Talmud uses a variety of different approaches to deal with someone who has committed a serious moral offense for which one cannot be prosecuted.

Liable to heavenly punishment

The Talmud enumerates several cases in which the offender is "exempt under the laws of mankind" (i.e., cannot be prosecuted) but is considered guilty and "liable under the laws of Heaven". These are, essentially, cases in which one indirectly albeit maliciously caused damage to another. For example, consider the following cases.

Case 1. 1: An individual breaks down a neighbor's wall letting an animal out to do damage. If the wall was shaky and should have been torn down anyway, this individual is 64exempt under the laws of mankind, liable under the laws of Heaven" (Babylonian Talmud, Baba Kama 55b - 56a).

Case 1.2: An individual does not come forward to testify on another's behalf. This individual is indirectly causing the other party a potential loss by not testifying (Babylonian Talmud, Baba Kama 55b - 56a).

Case 1.3: Someone gave a hot coal (which would naturally extinguish itself if not tampered with) to an idiot or a child who causes it to flare up and thereby cause damage. The individual who gave the irresponsible party the coal is indirectly responsible for the damage (Babylonian Talmud, Baba Kama 56a; Shulchan Aruch Choshen Mishpat 418:7).

Case 1.4: A person shouts (or blows a trumpet) in another's ear, terrifying him and causing him to become ill. This is considered indirect damage if there was absolutely no physical contact (Babylonian Talmud, Baba Kama 56a; Shulchan Aruch Choshen Mishpat 420:32).

Case 1.5: An individual accidentally stumbles in the street breaking a pitcher. He leaves the shards in the street and/or does not clean up the puddle. Then, if another party slips on the shards or liquid, the one who broke the pitcher is considered to have indirectly caused the damage. The offender cannot be prosecuted in court since (a) the breakage was not due to negligence or maliciousness and (b) it is presumed that he relinquished ownership of the broken pieces and the spilled contents so that they are no longer his property at the time of the accident. He is, however, liable to the Heavenly court if he had ample time to clean up the mess and did not do so (Babylonian Talmud, Baba Kama 28b-29a; Shulchan Aruch Choshen Mishpat 412:4).

In all of the abovementioned cases, the offender was guilty of indirectly causing another party some harm. The Talmud uses very strong language to indicate the seriousness of this nonprosecutable offense.

Today, many of us are guilty of indirectly causing another party serious damage and do not realize the ethical implications of our actions (or inactions). Withholding testimony is something many of us are guilty of. If a friend is 'unjustly' suing a large organization (e.g., insurance company, hospital, business, etc.), how many of us would testify on behalf of the defendant if we had information that our friend was lying? Also, many firms are guilty of leaving garbage (not to mention dumping hazardous chemicals) in areas in which it can result in someone being harmed. How quickly do firms clean up after accidental spillage?

The public curse

Case I.6: If one has purchased a movable object and paid for it but has not yet taken title, either party can legally change his or her mind about the purchase. According to Jewish law, title does not change hands for movable objects until the buyer performs a certain symbolic action to indicate legal acquisition. One major method of accomplishing legal acquisition is known as ‘meshichah' which literally means 'pulling’, that is, pulling the object towards oneself. One who has changed his or her mind about a purchase after money has already changed hands was frowned upon, so much so that the one who withdrew from the transaction was subjected, in public, to the following curse administered by the wronged party:

The One who punished the generation of the flood, the generation of the dispersion, the people of Sodom and Gomorrah, and the Egyptians who drowned in the sea, should punish the person who does not stand by his word.

This curse was not taken lightly and probably served as a deterrent for those who were weak in moral values (Babylonian Talmud, Baba Metzia 44a, 48a).

Today, too, one hears of people who, without considering the ethical ramifications, back out of deals that were thought to be completed except for the legal paperwork. Similarly, some people have no qualms about withdrawing from a major purchase even after putting down a deposit on it. They feel that sacrificing the deposit is 'punishment' enough (many even consider it their right to get the deposit back), and never consider that they might have a higher obligation.

Wicked one

Case I. 7: Negotiations leading to the sale of an item have been concluded. That is, the terms and the price of the sale have been set and all that remains is the actual legal closing. Then, if an outsider (a third party) comes along and makes the purchase instead, the interloper is referred to as a wicked person (especially if a similar item can be purchased elsewhere for the same price) (Babylonian Talmud, Kiddushin 59a). In fact, a public denunciation of the 'wicked one' was made (Me'iras Einayim on Shulchan Aruch Choshen Mishpat 237:1).

Today, this type of situation, quite common in corporate acquisitions, is viewed in a completely different way. The interloper is referred to as using shrewd business tactics and the original intended purchaser is considered an inept bungler. A company using such aggressive tactics is often rewarded --in the short run, at least-- by an increase in the value of its stock.

Case I. 8: One who has unknowingly purchased property which another party was on the verge of buying is not considered wicked. It is, however, the "way of the pious" (this term will be discussed below) to leave the object for the first party (Babylonian Talmud, Kiddushin 59a; Aruch Hashulchan Choshen Mishpat 237:2).

Case I. 9: The Talmud says that if one invests on terms that are "near to profit and far from loss", he is wicked (Babylonian Talmud, Baba Metzia 70a). The terms "near" and "far" do not refer to probabilities of success and failure but to the conditions of the investment. An example of an investment with conditions that are 'near to profit and far from loss' is: in the event of a profit, the investor receives half the profit (plus the principal); in the event of a loss, the other party must return to the investor the full principal. The Talmudic sages believed that such an "investment" circumvents the spirit of the prohibition against receiving interest by treating what is, in fact, a loan as a business investment. Thus, the lender was guilty of an action having the 'taste' of usury, which is prohibited.

Cunning, wicked one

The Talmud occasionally uses a variation of the above expression in referring to the "cunning, wicked person". The Mishna states that a cunning, wicked person brings destruction upon the world.18 The prototype cunning, wicked person is described in the following case.

Case 1. 10: The Mishna defines a poor person as one who has less than 200 zuz, an amount considered suitable for approximately one year's worth of food and clothing. Anyone who has 200 zuz, or more, does not qualify to collect the gleanings of the harvest, forgotten sheaves, produce of the corners of the field, or the poor man's tithe. As long as a person has less than 200 zuz, he may accept any amount of charity (even a huge sum) and may even receive charity simultaneously from (say) one thousand different people (Babylonian Talmud, Peah 8:8). A cunning, wicked person is one who sees a 'marginally' poor person (e.g., one zuz less than 200) that is about to harvest the gleanings of a field (or collect a large sum from a wealthy donor) and gives the poor person a single zuz so as to bring his total assets to the 200 zuz limit. The effect of this cunning wicked one's "generosity" is, naturally, to cause the other fellow to lose his legal status as a poor person. He is then not permitted to take the gleanings (or accept the sum of money)( (Babylonian Talmud, Sotah 21b; see also Leviticus 19: 9-10 and Deuteronomy 24:19 for discussions of the poor person's entitlements).

The Gemara brings forth for discussion several other examples of cunning, wicked people:

Case 1. 11: One goes to a judge and presents his/her,,side of a case before the other party to the suit arrives (Babylonian Talmud, Sotah 21b). This will serve to prejudice the judge in his/her favor since the judge hears one point of view without the other side having an opportunity to refute. in fact without the other party to the suit present, the "cunning, wicked person" can easily lie. of course, an honest judge should himself be careful to hear testimony only when both sides are present.

The above case reminds one of the unscrupulous practice of leaking information to the media in order to help one's case or hurt the opponent's case.

Case 1. 12: A person receives property from another whose instructions were, 'My property is for you, and after you for-.' One who advises him to sell the property before the second party has a chance to acquire it is considered a cunning, wicked person (Babylonian Talmud, Sotah 21b). This advice has the following undesirable consequences: The wishes of the giver of the property have been thwarted; the one who was to receive the property second (after the death of the first) gets nothing; and the adviser has not even gained anything tangible from the entire affair. According to Jewish law, although such a sale is frowned upon it cannot be prevented.

The adviser in this case is reminiscent of a well-known, modern-day character type -- the sly accountant, lawyer, or financial adviser who advises his clients how to cheat others and get away with it.

Behaved with deceit

Sometimes, the Talmud refers to an individual as one who has "behaved with deceit".

Case 1. 13: One asks a friend to go and purchase a specific item for him and the messenger goes and buys it for himself. The transaction is considered valid, but the messenger has behaved with deceit (Jerusalem Talmud, Kiddushin 3:1; Shulchan Aruch Choshen Mishpat 183:2).

Case 1. 14: One asks a friend to act as his representative and betroth a certain woman for him. The messenger goes and betroths her himself (with the woman's consent, of course). What he did is done (i.e., legally valid), but the messenger has behaved with deceit (Babylonian Talmud, Kiddushin 58b - 59a).

Even today, there are many situations in which one sends a trusted employee to act as a representative of the firm, and the employee turns around and acts in her own best interest to the detriment of the firm.

In the manner of Sodom

Sometimes, the Talmud uses the expression "in the manner of Sodom", in order to describe certain morally reprehensible acts. in general, these acts are such that one party refuses to grant a benefit to another even though granting this benefit would cost him (the first party) absolutely nothing. The Talmud states that one may even be compelled by the court not to act "in the manner of Sodom" (Babylonian Talmud, Baba Bathra 12b).

Case 1. 15: The courts would actually force an heir to allow the property of an estate to be divided up in such a way that the other heir would get a benefit (e.g., the inherited field would be contiguous to land already owned by the second heir), as long as the first heir is not harmed in any way (Babylonian Talmud, Baba Bathra 12b; Shulchan Aruch Choshen Mishpat 174: 1, 3).

Rabbi Joseph Karo, author of the Shulchan Aruch, states the principle very succintly: "The general principle is that when something is good for one party and absolutely does not cause the other party any loss, we force him (the latter party) to go along with it" (e.g., divide the estate as in the above case) (Shulchan Aruch Choshen Mishpat 174:3).

Case I. 16: A person rents a mill and agrees to grind grain for the owner in lieu of paying rent. The owner becomes wealthy and wishes to have his grains ground elsewhere; he asks the tenant to begin paying rent. If the tenant has no customers to grind grain for, then he can insist that the mill owner sticks to the original agreement. if, however, the leasee grinds for others, and could easily grind grain for a paying customer in place of grinding the owner's grain, then using the principle of "we force someone not to act in the manner of Sodom", the court insists that the leasee charge other people for his service and pay the owner in currency (Babylonian Talmud, Kethubos 103a; Shulchan Aruch Choshen Mishpat 318:1).

There is a classical discussion in the Talmud as to whether one may be charged a fee in a case where one party derives a benefit and the other party sustains no loss. For example, the following case.

Case I. 17: One who normally pays rent for accommodations is living on another's property - a property which is never rented out - without the owner's knowledge. There is a great deal of controversy in the Talmud in this case. On the one hand, the 'squatter' can say, 'What did you lose? You never rent out these premises anyway and I did not cause any damage'. On the other hand, the owner can say, 'You derived a benefit, for without my premises you would have been forced to go elsewhere and pay rent' (Babylonian Talmud, Baba Kama 20a - 20b).

The law, in the above case, is that the person living in the property without the owner's knowledge does not have to pay. However, if the owner asks him to leave and he does not leave then he must, at the very least, pay rent. Furthermore, one cannot force the owner to allow one to live in property which is not being used. This, despite the fact that we do force one not to act "in the manner of Sodom", in a case where one party benefits and the other sustains no loss. This case is different since the owner could easily benefit from this property by using it or renting it out. He just does not have the urge to do so presently, and the court cannot force him to allow someone to use the property free of charge (Shulchan Aruch Choshen Mishpat 363: 6).

It should be pointed out that if the squatter causes even a very slight damage, then he becomes obligated to pay, not only for the very slight damage but the entire rental fee as well. After all, the squatter's benefit was no longer at absolutely no cost to the owner (Shulchan Aruch Choshen Mishpat 363: 7).

These laws concerning one who receives a benefit at no cost to another party may be easier for us to comprehend if we bear in mind that some sages of the Talmud felt that one who says, 'What is mine is mine, and what is yours is yours', is a Sodom-type of person (Babylonian Talmud, Avot 5: 10). Some sages disagreed, believing that this sort of character was an average type. It seems, though, that the first view prevailed, especially when the reason underlying the above philosophy was mainly so that he could justify not helping others (i.e., the emphasis is on 'mine is mine').

In all of the above Level I cases, the person has committed a particularly reprehensible, albeit nonprosecutable, offense and therefore the Talmud uses very strong language. The best that can be done, on occasion is to somehow coerce the offender to do what is ethically correct. In most of the above cases, the court is only permitted the use of moral suasion.

Level II

In this second level of ethical behavior in business, the Talmud uses a milder form of censure.

Fulfilling one's duty toward Heaven

Sometimes the Talmud will use the phrase "in order that one may fulfill one's duty toward Heaven."

Case II. l: Someone says to two people, 'I stole a maneh (a unit of currency: one maneh = 100 dinarim) from one of you but I do not know from whom'. The two 'victims' did not even know they were robbed. in this case, the penitent thief is required to return to them one maneh which they divide between themselves. However, if the thief wishes to fulfill his duty toward Heaven, he should pay each party a maneh (Babylonian Talmud, Baba Metzia 37a; Shulchan Aruch Choshen Mishpat 365: 2).

Case 11. 2: The same principle applies in the case of two people who have asked a third to watch over their money. One gave a maneh (100 dinarim) for safekeeping; the other, 200 dinarim. Suppose neither the watchman nor the depositors remember who gave which sum. if the watchman, who should have been more careful in keeping track of the money, wishes to fulfill his duty toward Heaven, he should give each of the two depositors 200 dinarim (Babylonian Talmud, Baba Metzia 37a; Shulchan Aruch Choshen Mishpat 300: 1).

Case II.3: One person claims that another party owes him a maneh. The other party claims that he does not know whether or not he borrowed the money. The court requires the defendent to swear an oath (rabbinically prescribed) to the effect that he really does not know whether or not he borrowed the money. Then, the defendant is under no legal obligation to pay. However, if he wishes to fulfill his obligation toward Heaven, he should pay (Babylonian Talmud, Baba Kama 118a; Shulchan Aruch Choshen Mishpat 75: 9).

The above cases demonstrate that one who is uncertain about a debt, and is at least partially responsible for the situation, has an ethical obligation to ensure that everyone involved is paid in full and that no one is hurt because of him.

Although the two expressions, "liable under the laws of Heaven" (a Level I term) and "in order to fulfill one's duty toward Heaven", some somewhat similar, there is a major difference between them. The first expression implies that one has definitely caused some damage but cannot be prosecuted because of a loophole or technicality in the law (i.e., the damage was done via indirect means). The latter expression is much milder and is normally reserved for situations in which the Talmud feels that an individual (who is uncertain about a debt) should pay even though this payment might result in undeserved compensation for another party. in the case of the thief who only robbed one of two people (Case 11.1), when both parties are 'repaid' one person is certain to receive undeserved compensation.

A firm whose ethical standards are at this level will reimburse people who might possibly have been harmed by its product, and will not be afraid to compensate consumers for fear that some consumers will receive this compensation undeservedly.

Pleasing the spirit of the sages

The Talmud makes occasional use of the expressions "lacking in honesty" and "not pleasing to the spirit of the sages". Apparently, the two terms are virtually interchangeable and will therefore be treated together.

Case II. 4: One makes a verbal commitment (not legally binding in ancient Talmudic law) to buy or sell something. Even if no money has changed hands and no symbolic acquisition has been made (i.e., the deal is not yet legally binding), one has an ethical obligation to go through with the deal. Someone who does not abide by his word is 'lacking in honesty' and his action is 46not pleasing to the spirit of the sages" (Babylonian Talmud, Baba Metzia 48a, 49a; Shulchan Aruch Choshen Mishpat 204: 7). In this case there is no public curse since money has not changed hands.

There is a major argument among the commentaries as to the law if the person changing his/her mind has done so because the market price has changed (e.g., she agreed to sell her home for $50,000 and can now get $70,000 for it). Some commentaries feel that the Talmud's use of the term "lacking in honesty" only applies to those who change their minds when prices have not changed. Other commentaries believe that even when market prices have changed one who retracts from a verbal agreement is considered "lacking in honesty".

The final decision is a compromise. if the market price changes, one is not considered "lacking in honesty". However, it is considered the "way of the pious" (a Level IV term) not to retract from a verbal agreement even after market prices have changed (Aruch Hashulchan Choshen Mishpat 204:8). Apparently, only an ethical person of the highest degree would not use the reasonable excuse that when she made the oral commitment (which is not legally binding in Jewish law) it was with the implicit understanding that were the price to change she would not go through with the deal.

Case II. 5: A person promised his friend a small present and subsequently changed his mind. Since the friend expects to receive the present (which is not always the case with very large gifts), the 'giver' who changed his mind is "lacking in honesty") (Babylonian Talmud, Baba Metzia 49a; Shulchan Aruch Choshen Mishpat 204: 8).

Case Il. 6: An individual wrote his will leaving his estate to strangers instead of to his own children. His will is legally valid but his actions are not pleasing to the spirit of the sages" (Babylonian Talmud, Baba Bathra 133b).

Case II. 7: A thief or a usurer desires to repent and attempts to return the money he has taken. it is not proper for the victim to accept the misappropriated funds. Victims who do accept repayment in this type of situation will "not be pleasing to the spirit of the sages" (Babylonian Talmud, Baba Kama 94b). This is the law when the thief or usurer operated 4professionally', with the result that a great deal of his assets are ill-gotten when he desires to repent. For if he is to return all his ill-gotten gains, he will be left with almost nothing. This rule was enacted in order to make it easier for wrong-doers to repent. This 'measure for the benefit of repentant sinners' holds as long as the wrong-doer if a professional (i.e., he did this chronically) and has not been forced to repent. Other exceptions: if stolen objects are in his possession, he must return them; if a victim is in debt to others and needs this money in order to pay off his debts, he may accept repayment. Also, should the robber or usurer say, 'I desire to fulfill my duty toward Heaven' and insist upon returning his ill-gotten wealth, then the victim(s) are permitted to accept (Babylonian Talmud, Baba Kama 94b; Shulchan Aruch Choshen Mishpat 366: 1).

The following two cases describe situations which prompted the Talmud to make use of the phrase, "It is pleasing to the spirit of the sages of Israel".

Case 11.8: An individual paid back his/her debt even though the Sabbatical year had passed (Babylonian Talmud, Shevi'ith 10:9). The Sabbatical year, which automatically cancels debts, is discussed in Deuteronomy (15: 1-3).

Case II 9: This is the case of one who abides by his word (even when no formal act of acquisition has been made and no money has changed hands) (Babylonian Talmud, Shevi'ith 10: 9). This is the reverse of the situation described above (Case II.4) in which a person who does not abide by his word is described as one whose actions are "not pleasing to the spirit of the sages".

A firm or individual at this level of ethical behavior pays off debts even when the statute of limitations would not obligate one to do so. For example, some ethical businesspeople known to the author, who were forced to declare bankruptcy, still took it upon themselves to pay back their debts (years later, when financially able). of course, they were not legally compelled to do this.

Many businesspeople have the policy "my word is my bond", and do live up to this standard of ethics even when not bound by written contract. In American law, while verbal agreements can be binding, they are difficult to enforce.


Level III

Nothing but resentment

This third level encompasses a variety of situations for which the Talmud uses the rather indirect expression, "one does not have anything against the other party except for resentment" in order to designate a practice as unethical. One major commentary takes note of the fact that the Talmud does not use a stronger (more direct) expression such as "one has resentment against the other party". The tone of the Talmudic expression indicates that there is no obligation to remove the cause of the 'resentment' (e.g., by making payment) even if one wishes to satisfy Heaven (Tiferes Israel, Babylonian Talmud Baba Metzia 6: 1).

In the cases in which the Talmud used this expression, it is clear that it is permissible for the victim to bear resentment. This is an important point. The Talmudic sages believed that bearing a grudge against someone required justification, lest one violate the Biblical injunction, "Thou shalt not hate thy brother in thy heart" (Leviticus 19: 17). Thus, even the right to harbor resentment requires rabbinical sanction.

It is worth noting that although one has the right to bear resentment in some situations, one certainly does not have the right to seek revenge. Otherwise, one would be guilty of violating the Biblical prohibition, "Thou shalt not take vengeance" (Leviticus 19: 18). Practically speaking, there is little one can do when given the right to feel wronged. Perhaps, this right serves only to place a moral obligation on the part of the responsible party to attempt to mollify the plaintiff. Or, if one wishes to be superethical (the "way of the pious"), then one can pay the offended person.

Case 111. 1: An employer instructed a worker (i.e., a foreman) to hire other workers at the rate of four zuz (a unit of currency) per day. The foreman found workers and, perhaps wishing to save his employer some money, informed them that the employer is only willing to pay three zuz per day. (it should be pointed out that the foreman did not pocket the difference.) The workmen agreed to work for the three zuz wage. Should the workmen discover that their employer had been willing to pay four zuz, these workers then would have no legal recourse except for the right to bear resentment against the foreman. Their argument to the foreman might be, ''Do you disagree with the verse in Proverbs (3: 27) which states "Do not withhold good from those to whom it is due"?' (Babylonian Talmud, Baba Metzia 76a). Their right to resentment is due to the fact that the foreman managed to hire them at a lower salary than the boss' instructions provided for.

Today, as well, many managers (foremen, supervisors, personnel departments, etc.) will do the same in order to look good for their bosses. The Talmud would obviously frown on this practice but would agree that from a legal, and even ethical (at least third level ethics), standpoint one has no obligation to make up the difference to the employee. The employee accepted the salary and is stuck with it. The employee, however, does have the right to feel wronged and may even bear resentment.

Case 111. 2: A worker is hired for a job. If either the employer or the employee changes his mind before the work has started, then the offended party has nothing against the party that backed out of the arrangement except for resentment (Babylonian Talmud, Baba Metzia 76b). The reason that one even has the right to bear resentment is that now he will have to go to the trouble of finding another worker or another job (depending on who backed out). Suppose it was the employer who had a change of heart, and the employee cannot find another job. If, when the employee was assured of the job he had other opportunities for work, then the employer must compensate him (Shulchan Aruch Choshen Mishpat 333: 2).

The general rule in the case of an employer or employee who changes his/her mind before the work has begun is: As long as there is no monetary loss (i.e., the employer can find other workers, the employee can find another job), even though it will mean some trouble in finding a replacement, the wronged party only has the right to have resentment.

Many commentaries point out the reason that the Talmud did not consider the party that changes his/her mind as 'lacking in honesty'. This is because it was assumed that there was a good reason for this turnaround. The employer changed his mind either because he did not need the workers or could get others at a lower price. The employee changed his mind because he could earn more money elsewhere. When one changes his mind without any reason, not only does the other party have the right to bear resentment, but the former is considered to be 'lacking in honesty’ (Be'er Hetev on Shulchan Aruch Choshen Mishpat 333:1).

In addition, several commentaries state that if it is very easy to find replacements and if the party that backed out had a good reason for doing so, then the 'deserted' party does not even have the right to bear resentment (Be'er Hetev on Shulchan Aruch Choshen Mishpat 333:1).

Obviously, these rules apply to today's business environment as well. In fact, the author knows of people who have been told by potential employers, 'The job is yours. Don't look any further -- you'll be hearing from us shortly'. The firms were never heard from again. On the other hand, employees sometimes accept jobs to start in a few weeks and continue to seek employment in the hope that they will find a better offer. Clearly, when it comes to employer-employee relations, all parties involved in a situation must carefully examine the ethical ramifications of any intended action.

Case III. 3: One rents a particular donkey for riding and it dies midway through the journey, at a place where another donkey can be obtained. if the carcass is of sufficient value so that he can use it to buy or rent another donkey, he may sell the carcass for this purpose. if not, he pays for the half-trip anyway and has nothing but resentment' against the person who rented him the sickly donkey. If the donkey dies in the middle of nowhere, no benefit has been derived by the rider and, consequently, he is not obligated to pay for any portion of his trip (Babylonian Talmud, Baba Metzia 79a; Shulchan Aruch Choshen Mishpat 310:2).

Many of us have felt more than a little resentment towards firms which rented us faulty equipment (e.g., cars, machinery) which fails before the job is completed. Even if, in replacing the faulty equipment, no monetary loss is suffered, still a firm has a very strong obligation to ensure that any equipment rented out is first thoroughly tested.

Case III.4: A person rented a ship for an entire journey, but then unloaded it in mid-route. He subsequently rented the ship to another party for the second part of the journey so that there was no monetary loss for the owner of the ship. He does have to pay the owner an additional sum covering the extra wear and tear due to the loading and unloading of the new cargo. Although the owner may not be happy that the trip has been delayed and/or may not like having to deal with another party (who may be a slow payer), he has nothing but the right to bear resentment (Babylonian Talmud, Baba Metzia 79b; Shulchan Aruch Choshen Mishpat 311:6).

Case III. 5: One who rented a ship for an entire journey sold the cargo to another party while it was en route (i.e., in the middle of the journey). Although the ship's owner has incurred no losses because of this transaction (i.e., the first party pays for the first part of the trip, the second party pays for the second part of the trip), the owner has the right to bear resentment since the second party may not be a pleasant person to work with (Shulchan Aruch Choshen Mishpat 311:6).

Today, these principles may be applied in the case of one who sublets his premises. The owner may not like the new occupant. Also, the wear and tear on the premises during the moving process should not be overlooked.

Case III. 6: One person gives money to another who is supposed to buy commodities with it and split the profit. if the other party holds the money without using it, then the former has nothing against the latter except for resentment (Tosefta Baba Metzia 4: 22). The reason for the resentment is obvious. Instead of investing the money, the other party has left it idle and unused.

The general principle which may be derived from this third level of ethics is that the ethical firm or individual tries to avoid bringing about a situation in which the wronged party, while suffering no financial loss, will nonetheless be somewhat inconvenienced (e.g., having to find another job, employee, piece of equipment, etc.).


Level IV

The way of the pious

"The way of the pious" is the Talmud's expression for the highest form of ethical behavior, in business or otherwise. For example, a businessperson who leads his or her life according to "the way of the pious" would not take advantage of another's troubles even if it meant sacrificing some of his/her own time and/or money.

Case IV. 1: A fire breaks out on the Sabbath. Extinguishing a fire on the Sabbath, when there is absolutely no danger to life, is prohibited in Jewish law. Only a limited amount of possessions may be rescued by the household. The rabbis feared that if they allowed the members of the household to rescue all their possessions they might, in their eagerness to save everything, extinguish the fire. If the homeowner declares his possessions 'ownerless' by renouncing his rights to them, then individuals other than the fire victims are permitted to rescue the property (Babylonian Talmud, Shabbos 120a).

With regard to the above case, the Talmud describes two types of ethical people. "Heaven-fearing" people save the -ownerless' property and (although they could legally take it home as their own) return it to the owner, not wishing to take advantage of another's misfortune. However, they expect to receive some money (i.e., the wage of a laborer) to compensate them for their trouble. One following "the way of the pious" will also save the property and return it but will not charge for the labor. A pious person relinquishes his fee and does not take advantage of another's misfortune (Babylonian Talmud, Shabbos 120a).

The pious person is at a higher level than the Heaven-fearing person. The latter does not wish to benefit from another's misfortune but is still not willing to work for nothing. The pious person goes one step further and is willing to sacrifice his own time and efforts in order to help another.

The Talmud tells us that the pious of previous generations discarded their thorns and broken glassware by burying them in their own property, so deep that there was no chance that the plows would bring them back to the surface. Raba, a pious scholar of several centuries later, threw such waste materials into the Tigris River. Rabbi Sheshes burned them (Babylonian Talmud, Baba Kama 30a).

Even today, the proper method of waste disposal is a problem. Very ethical firms will select the method that is least likely to harm anyone, regardless of whether it is costlier or more difficult to implement than other alternatives. Unfortunately, some firms in the past have been more concerned with the 'bottom line' than with our society's welfare, with the result that, today, society has problems with many hazardous chemicals that were improperly disposed of.

 Case IV .2: This is the case of one who has been given a deficient coin (i.e., a coin in which the precious metal has been worn away through overuse) and wishes to return it to the person who gave it to him. The Mishna presents various views as to how much of a deficiency invalidates the coin (Babylonian Talmud, Baba Metzia 51b - 52a). One who has been given a coin which legally qualifies as being deficient has a certain amount of time to return it. In a city, the time limit is as long as it takes to show the coin to a money-changer. In a village, the time limit is until right before the following Sabbath since, by then, the recipient of the coin has probably tried to spend it when shopping for the Sabbath. if the party to whom the coin is returned recognizes the coin as the one he previously passed, it is the way of the pious to accept the coin even after many months have elapsed. This is considered to be the way of the pious since a pious person often goes beyond the strict letter of the law. Legally speaking, if the time limit has expired, the one who has passed the deficient coin is not required to take it back; and the recipient of the coin would not have anything against the other party except for resentment (a Level III term) (Babylonian Talmud, Baba Metzia 51b - 52a). Note that a pious person avoids acting in a way which will result in people harboring resentment against him.

Clearly, one who follows the way of the pious is one who goes beyond the boundaries of the law (Maimonides, Mishneh Torah, Book of Knowledge Hilchos Deos 1: 5; Rashi on Avot 6: 1). It is true, as pointed out above, that everyone has the obligation to go beyond the requirements of the law. However, the pious person always follows this principle and goes much further than others. The pious person reaches the highest level of ethics.

Case IV. 3: A person who invests in a manner such that 'loss is near and profit is far' has acted in the way of the pious (Babylonian Talmud, Baba Metzia 70a). As pointed out previously (see Case 1.9), the terms 'near' and 'far' refer to the conditions of the investment. One such investment might be the following: in the event of a profit, the investor receives one third of the profit (plus return of the principal); in the event of a loss, the other party reimburses the investor for half the loss. Indeed, this type of arrangement was encouraged. Thus, if A invests 300 dinarim worth of merchandise in B's business using the above conditions, the most A stands to gain is a 100 dinarim profit, and the most A can lose is 150 dinarim.

The pious person has been described as one who says 'mine is yours and yours is yours'. That is, he is always willing to help others and seeks no reward or benefit in return. The pious person is the antithesis of the wicked one (Level 1) who says 'mine is mine and yours is mine' (Babylonian Talmud, Avot 5: 10).

Rabbi Pinchos ben Yair enumerated various attributes (e.g., purity, humility, fear of sin), each of which can be acquired (in order), one leading to the next, through the study and application of the principles of the Bible. He concluded that, "piousness is greater than them all, as the Psalmist (Psalms 89: 20) says, 'then you spoke in a vision to your pious ones'" (Babylonian Talmud, Avodah Zarah 20b).

Rabbi Judah states that one who wishes the become pious must be very careful about observing the laws of damages and torts, i.e., be extremely careful never to cause anyone any harm -- physically or financially. Raba says that one who wishes to become pious should observe the principles contained in the Ethics of the Fathers, a tractate of the Talmud dealing with morals, ethics, and proper conduct. For example, the philosophy of 'mine is yours and yours is yours' is from this tractate (Babylonian Talmud, Baba Kama 30a).

How far must a pious person go? The following case demonstrates the lengths one sometimes has to go to in order to do what is righteous.

Case IV.4: Some porters negligently broke a barrel of wine belonging to Rabbah who then confiscated the porters' property as restitution. Rab, the judge, advised Rabbah to return the property which he had seized. Rabbah asked Rab whether this was the law, and was answered with a quotation from Proverbs (2: 20) "That thou mayest walk in the way of good men..." The porters then complained that they were poor, had worked all day, and were in need. Rab told Rabbah to pay them. Rabbah again asked whether this was the law. Rab responded with the conclusion of the verse from Proverbs, ".. and keep the path of the righteous" (Babylonian Talmud, Baba Metzia 83a).

The following case is not an example of "the way of the pious" but it is an example of a situation in which every ordinary individual is expected to go beyond the requirements of the law.

Case IV. 5: One finds an object in such a place that it is presumed that the owner gave up any hope of recovering it (e.g., from the bottom of the sea). According to the law, one is under no obligation to return it. However, one should go beyond the law and return it to its 'rightful' owner. This principle is learned from a verse in Exodus (18: 20), "and thou shalt make known to them the way in which they must walk and the work which they must do". This verse is often used in order to teach that one should go beyond the requirements of the law (Babylonian Talmud, Baba Metzia 24b; Shulchan Aruch Choshen Mishpat 259: 5, 7).

Tosfos, a major commentary on the Talmud, ponders an important question relating to Case IVA, above: Why did Rab quote the verse from Proverbs as a means of telling Rabbah that be was obligated to go beyond the requirements of the law? Who not quote the passage from Exodus that is usually used for this purpose (see Case IV.5)? Tosfos concludes that the verse from Exodus "and the work which they must do" cannot be applied to a situation in which there Is a substantial monetary loss. In the case of the porters, Rabbah suffered a substantial loss due to the workers' negligence. By paying the workers despite the loss of his wine barrel, he went very far beyond the requirements of the law, further than the verse from Exodus suggests. Thus, Rab felt it was more appropriate to cite the verse from Proverbs "and keep the path of the righteous" (Tosafos, Babylonian Talmud, Baba Metzia 24b).

In our day, a firm which follows "the way of the pious" will be careful not to cause anyone damage -even damage whose effects may not be realized for many years. It also would not take advantage of individuals or firms that are willing to sell at a very low price because their backs are to the wall. The corporate philosophy of such a firm would include being good to consumers, good to employees, and good to society.

Conclusion

It is the author's contention that every person and corporate entity must strive to move up the ethics hierarchy. We may not be able to reach the summit - "the way of the pious" but the climb should still be attempted and is, itself, well worth the effort.

Finally, many people and firms which are deceptive and dishonest assume that by being philanthropic they can compensate for their misdeeds. indeed, many of our largest philanthropic foundations were founded by 'robber barons'. The Talmudic sages comment on this in their homiletical interpretation of the verse in Ecclesiastes (4: 6), "Better is a handful of quietness, than both hands full of labor and striving after wind" (i.e., better a little with content than much with contention). Their interpretation is, better is one who gives a small amount of charity from his own possessions than one who robs, oppresses, extorts, and then gives large amounts of charity from what belongs to others. Then, "striving after wind" is interpreted to mean that he wishes to be called a philanthropist. The sages reinforce their position on this matter by likening such corrupt philanthropists to one who "prostitutes herself for apples to give to the sick (Midrash Rabbah Ecclesiastes 4: 6).

The philosophy of the Talmud with regard to ethical behavior in business (and in all life's pursuits) was concisely and poetically summed up by Hillel in Tractate Avoth: "If I am not for myself, who will be for me? And, if I care only for myself, what am I? And, if not now, when?" (Babylonian Talmud, Avot 1: 14). Individuals and corporations must take care of themselves and make sure to turn a profit for no one else will do it for them. But, an individual or a firm that has no sense of ethics or social responsibility may indeed be called upon one day to ask the question, 'What am I?'

Notes

I James S. Fishkin, The Limits of obligation, Yale University Press, New Haven, Connecticut, 1982.

2 Morris Adler, The World of the Talmud, Schocken Books, New York, 1963.

3 Isaac Herzog, The Main Institutions of Jewish Law, Soncino Press, London, 1936.

4 Hershey H. Friedman, 'Talmudic Business Ethics: An Historical Perspective', Akron Business and Economic Review Vol. 11, Winter 1980, pp. 45-49.

5 Isaac Herzog, The Main Institutions of Jewish Law, pp. 381-386.