Milton Friedman, recipient of the 1976 Nobel Memorial Prize in Economic Science, is a Senior Research Fellow at the Hoover Institution. This article is reprinted with the permission of Encounter and The Fraser Institute.

“Capitalism and the Jews” was originally presented as a lecture before the Mont Pelerin Society in 1972. It subsequently was published in England and Canada and appears here without significant revision.

Jews, Intellectualism, and Anti-Capitalism 

A second simple explanation is that the Jewish anti-capitalist mentality simply reflects the general tendency for intellectuals to be anti-capitalist plus the disproportionate representation of Jews among intellectuals. For example, Nathan Glazer writes, “The general explanations for this phenomenon [the attachment of the major part of the intelligentsia to the Left] are well known. Freed from the restraints of conservative and traditional thinking, the intelligentsia finds it easier to accept revolutionary thinking, which attacks the established order of things in politics, religion, culture, and society . . . . Whatever it is that affected intellectuals, also affected Jews.”^[11] Glazer goes on, however, to qualify greatly this interpretation by citing some factors that affected Jews differently from other intellectuals. This explanation undoubtedly has more validity than Fuchs’ simple-minded identification of anti-capitalism with Jewish religion and culture. As the West German example quoted earlier suggests, non-Jewish intellectuals are capable of becoming dominantly collectivist. And there is no doubt that the intellectual forces Glazer refers to affected Jewish intellectuals along with non-Jewish. However, the explanation seems highly incomplete in two respects. First, my impression is that a far larger percentage of Jewish intellectuals than of non-Jewish have been collectivist. Second, and more important, this explanation does not account for the different attitudes of the great mass of Jews and non-Jews who are not intellectual. To explain this difference we must dig deeper. 

A third simple explanation that doubtless has some validity is the natural tendency for all of us to take the good things that happen to us for granted but to attribute any bad things to evil men or an evil system. Competitive capitalism has permitted Jews to flourish economically and culturally because it has prevented anti- Se-mites from imposing their values on others, and from discriminating against Jews at other people’s expense. But the other side of that coin is that it protects anti- Semites from having other people’s values imposed on them. It protects them in the expression of their anti- Semitism in their personal behavior so long as they do it at their own expense. Competitive capitalism has therefore not eliminated social anti-Semitism. The free competition of ideas that is the natural companion of competitive capitalism might in time lead to a change in tastes and values that would eliminate social anti- Semitism but there is no assurance that it will. As the New Testament put it, “In my Father’s house are many mansions.” 

No doubt, Jews have reacted in part by attributing the residual discrimination to “the System.” But that hardly explains why the part of the “system” to which the discrimination has been attributed is “capitalism.” Why not, in nineteenth-century Britain, to the established church and the aristocracy; in nineteenth- and twentieth-century Germany, to the bureaucracy; and in twentieth-century U.S., to the social rather than economic establishment. After all, Jewish history surely offers more than ample evidence that anti-Semitism has no special connection with a market economy. So this explanation, too, is unsatisfactory. 

I come now to two explanations that seem to me much more fundamental. 

Judaism and Secularism 

The first explanation, which has to do with the particular circumstances in Europe in the nineteenth century, I owe to the extremely perceptive analysis of Werner Cohn in his unpublished Ph.D. dissertation on the “Sources of American Jewish Liberalism.” Cohn points out that: 

Beginning with the era of the French revolution, the European political spectrum became divided into a “Left” and a “Right” along an axis that involved the issue of secularism. The Right (conservative, Monarchical, “clerical”) maintained that there must be a place for the church in the public order; the Left (Democratic, Liberal, Radical) held that there can be no (public) Church at all . . . .The axis separating left from right also formed a natural boundary for the pale of Jewish political participation. It was the Left, with its new secular concept of citizenship, that had accomplished the Emancipation, and it was only the Left that could see a place for the Jews in public life. No Conservative party in Europe—from the bitterly hostile Monarchists in Russia through the strongly Christian “noines” in France to the amiable Tories in England—could reconcile itself to full Jewish political equality. Jews supported the Left, then, not only because they had become unshakeable partisans of the Emancipation, but also because they had no choice; as far as the internal life of the Right was concerned, the Emancipation had never taken place, and the Christian religion remained a prerequisite for political participation.

Note in this connection that the only major leaders of Conservative parties of Jewish or-igin—Benjamin Disraeli in England, Friedrich Julius Stahl in Germany—were both professing Christians (Disraeli’s father was convened, Stahl was baptized at age 19).

Cohn goes on to distinguish between two strands of Leftism: “rational” or “intellectual” and “radical.” He remarks that “Radical leftism . . . was the only political movement since the days of the Roman empire in which Jews could become the intellectual brethren of non-Jews . . . while intellectual Leftism was Christian at least in the sense of recognizing the distinction between ‘religious’ and ‘secular,’ radical Leftism—eschatological socialism in particular—began to constitute itself as a new religious faith in which no separation between the sacred and the profane was tolerated . . . [Intellectual-Leftism] offered [the Jews] a wholly rational and superficial admission to the larger society, [radical Leftism], a measure of real spiritual community.”

I share Glazer’s comment on these passages: “I do not think anyone has come closer to the heart of the matter than has the author of these paragraphs.”

Cohn’s argument goes far to explain the important role that Jewish intellectuals played in the Marxist and socialist movement, the almost universal acceptance of “democratic socialism” by the European Jews in the Zionist movement, particularly those who emigrated to Palestine, and the socialist sentiment among the German Jewish immigrants to the United States of the mid-nineteenth century and the much larger flood of East European Jews at the turn of the century.

Yet by itself it is hard to accept Cohn’s point as the whole explanation for the anti-capitalist mentality of the Jews. In the United States, from the very beginning, the separation of church and state was accepted constitutional doctrine. True, the initial upper class was Christian and Protestant, but that was true of the population as a whole. Indeed, the elite Puritan element was, if anything, pro-Semitic. As Sombart points out in reconciling his thesis about the role of Jews in capitalist development with Max Weber’s about the role of the Protestant Ethic in capitalist development, the Protestants, and the Puritans especially, went back to the Old Testament for their religious inspiration and patterned themselves on the ancient Hebrews. Sombart asserts: “Puritanism is Judaism.”^[12] Cohn too emphasizes this phenomenon, pointing to Puritan tolerance toward Jews in the colonial era, despite their general intolerance toward other religious sects.^[13]

To come down to more recent times in the United States, Theodore Roosevelt was highly popular among the Jews partly because of his willingness to object publicly to Russian pogroms. Outside of the closely knit socialist community in New York most Jews probably were Republicans rather than Democrats until the 1920s, when first A1 Smith and then Franklin Delano Roosevelt produced a massive shift to the Democrats from both the Right and the Left. The shift from the Left betokened a weakening of the European influence, rather than being a manifestation of it. Yet despite that weakening influence, the American Jewish community, which now consists largely of second and third and later generation Americans, retains its dominant leftish cast.

The final explanation that suggests itself is complementary to Cohn’s yet not at all identical with it. To justify itself by more than the reference to the alleged role of the Jews in Christ’s crucifixion, anti-Semitism produced a stereotype of a Jew as primarily interested in money, as a merchant or moneylender who put commercial interests ahead of human values, who was money-grasping, cunning, selfish and greedy, who would “jew” you down and insist on his pound of flesh. Jews could have reacted to this stereotype in two ways: first, by accepting the description but rejecting the values that regarded these traits as blameworthy; secondly, by accepting the values but rejecting the description. Had they adopted the first way, they could have stressed the benefits rendered by the merchant and by the moneylender—recalling perhaps Bentham’s comment that “the business of a money-lender . . . has no where nor at any time been a popular one. Those who have the resolution to sacrifice the present to the future, are natural objects of envy to those who have sacrificed the future to the present. The children who have eat their cake are the natural enemies of the children who have theirs. While the money is hoped for, and for a short time after it has been received, he who lends it is a friend and benefactor: by the time the money is spent, and the evil hour of reckoning is come, the benefactor is found to have changed his nature, and to have put on the tyrant and the oppressor. It is oppression for a man to reclaim his own money; it is none to keep it from him.”^[14]

Similarly, Jews could have noted that one man’s selfishness is another man’s self reliance; one man’s cunning, another’s wisdom; one man’s greed, another’s prudence.

But this reaction was hardly to be expected. None of us can escape the intellectual air we breathe, can fail to be influenced by the values of the community in which we live. As Jews left their closed ghettoes and shtetls and came into contact with the rest of the world, they inevitably came to accept and share the values of that world, the values that looked down on the “merely” commercial, that regarded money-lenders with contempt. They were led to say to themselves: if Jews are like that, the anti-Se-mites are right.

The other possible reaction is to deny that Jews are like the stereotype, to set out to persuade oneself, and incidentally the anti-Se-mites, that far from being money-grabbing, selfish and heartless, Jews are really public spirited, generous, and concerned with ideals rather than material goods. How better to do so than to attack the market with its reliance on monetary values and impersonal transactions and to glorify the political process, to take as an ideal a state run by well-meaning people for the benefit of their fellow men?

7.   Op. cit.,p. 197.

8.   Op. cit., pp. 153,205, 209.

9.   Ibid., pp. 216, 221,222, 248.

10.   Nathan Glazer, American Judaism, pp, 135, 136, 139.

11.   The Social Basis of American Communism. pp. 166-167.

12.   Op. cit., g. 249.

13.   However, according to Abba Eban, “Jews were refused admittance into Massachusetts and Connecticut by the Puritans whose idea of religious liberty was linked to their own brand of faith. However, in liberal Maryland and in Rhode Island, where freedom of conscience was an unshakable principle, they found acceptance.” My People (New York: Behrman House, Inc., 1968).

14.   Jeremy Bentham, In Defense of Usury (1787).

Milton Friedman, recipient of the 1976 Nobel Memorial Prize in Economic Science, is a Senior Research Fellow at the Hoover Institution. This article is reprinted with the permission of Encounter and The Fraser Institute.

“Capitalism and the Jews” was originally presented as a lecture before the Mont Pelerin Society in 1972. It subsequently was published in England and Canada and appears here without significant revision.

Freedom of Entry and Jewish Representation

 Moreover, within those countries, Jews have flourished most in the sectors that have the freest entry and are in that sense most competitive. Compare the experience of the Jews in banking, that I have referred to, with their experience in retail trade, which has been almost a prototype of the textbook image of perfect competition and free entry. Or compare their minor role in large industry with their prominence in the professions such as law, medicine, accountancy and the like.^[4] Though there are barriers to entry in the professions, too, once past the initial barriers, there is a large measure of free competition for custom. Even the differences within the professions illustrate my theme. In the U.S., for which I know the details, there was for a long time a major difference between medicine and law in the extent to which state licensure was an effective bar to entry. For reasons that are not relevant here, there was significant restriction of entry in medicine, relatively little in law. And Jews were proportionately much more numerous in law than in medicine.

 The movie industry in the U.S. was a new industry and for that reason open to all. Jews became a major factor and this carried over to radio and television when they came on the scene. But now that government control and regulation has become more and more important, I am under the impression that the Jewish role in radio and T.V. is declining.

Capitalism and Israel

 A rather different example of the benefits Jews have derived from competitive capitalism is provided by Israel, and this in a dual sense. 

First, Israel would hardly have been viable without the massive contributions that it received from world Jewry, primarily from the U.S., secondarily from Britain and other Western capitalist countries. Suppose these countries had been socialist. The hypothetical socialist countries might conceivably have contributed, but if so they would have done so for very different reasons and with very different conditions attached. Compare Soviet aid to Egypt or official U.S. aid to Israel with private contributions. In a capitalist system, any group, however small a minority, can use its own resources as it wishes, without seeking or getting the permission of the majority. 

Second, within Israel, despite all the talk of central control, the reality is that rapid development has been primarily the product of private initiative. After my first extended visit to Israel two decades ago, I concluded that two traditions were at work in Israel: an ancient one, going back nearly two thousand years, of finding ways around governmental restrictions; a modern one, going back a century, of belief in “democratic socialism” and “central planning.” Fortunately for Israel, the first tradition has proved far more potent than the second. 

To summarize: Except for the sporadic protection of individual monarchs to whom they were useful, Jews have seldom benefited from governmental intervention on their behalf. They have flourished when and only when there has been a widespread acceptance by the public at large of the general doctrine of non-intervention, so that a large measure of competitive capitalism and of tolerance for all groups has prevailed. They have flourished then despite continued widespread anti-Semitic prejudice because the general belief in non-intervention was more powerful than the specific urge to discriminate against the Jews.

III. The Anti-capitalist Mentality of the Jews

Despite this record, for the past century, the Jews have been a stronghold of anti-capitalist sentiment. From Karl Marx through Leon Trotsky to Herbert Marcuse, a sizable fraction of the revolutionary anti-capitalist literature has been authored by Jews. Communist parties in all countries, including the patty that achieved revolution in Russia but also present-day Communist parties in Western countries, and especially in the U.S.,^[5] have been run and manned to a disproportionate extent by Jews—though I hasten to add that only a tiny fraction of Jews have ever been members of the Communist party. Jews have been equally active in the less- revolutionary socialist movements in all countries, as intellectuals generating socialist literature, as active participants in leadership, and as members. 

Coming still closer to the center, in Britain the Jewish vote and participation is predominantly in the Labor party, in the U.S., in the left wing of the Democratic party. The party programs of the so-called right-wing parties in Israel would be regarded as “liberal,” in the modern sense, almost everywhere else. These phenomena are so well known that they require little elaboration or documentation.^[6]

Milton Friedman, recipient of the 1976 Nobel Memorial Prize in Economic Science, is a Senior Research Fellow at the Hoover Institution. This article is reprinted with the permission of Encounter and The Fraser Institute.

“Capitalism and the Jews” was originally presented as a lecture before the Mont Pelerin Society in 1972. It subsequently was published in England and Canada and appears here without significant revision.