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External Benefits as Treated in Jewish Law*

Published online by Cambridge University Press:  12 February 2016

Aaron Levine
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Extract

Neoclassical economic theory views man in his economic activities as a monetary maximizer. Efficient pursuit of economic gain requires an economic unit to evaluate his market alternatives by balancing anticipated marginal gains against anticipated marginal losses. Relevant for the initiating agent in this calculation is the amount of benefits he can anticipate to capture against the costs society's legal system force him to take into account. Benefits and costs generated by his actions to other parties, but not falling within this calculus, called external benefits and external costs, are assumed to play no motivational role in his market conduct. To the extent that society's legal system fails to provide adequate incentives to allow the initiating agent to be compensated for the full extent of the benefits his actions generate and fails to charge economic actors for the full extent of the detriment their actions impose on others, a misallocation of economic resources will occur. From a social standpoint, too much will be produced by enterprises involving external costs, while less than the optimal amount will be produced by industries involving external benefits.

Type
Articles
Information
Israel Law Review , Volume 14 , Issue 2 , April 1979 , pp. 184 - 194
Copyright
Copyright © Cambridge University Press and The Faculty of Law, The Hebrew University of Jerusalem 1979

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References

1 For a general discussion of the misallocative effects of negative and positive externalities, cf., Baumol, William J., Economic Theory and Operations Analysis (Englewood Cliffs, N.J., Prentice Hall, 4th ed., 1977) 517–22Google Scholar; Herber, Bernard P., Modern Public Finance (Homewood, Ill., Richard D. Irwin, 3rd ed., 1975) 36–41.Google Scholar

2 Coase, Ronald H., “The Problem of Social Cost” (Oct., 1960) Journal of Law and Economics 1–45.CrossRefGoogle Scholar

3 Baba Metzia 101b; Maimonides (1135–1204), Yad, Gezalah X:5, on interpretation of R. Joseph Chabib (14th cen.); R. Meir Abulafia (1170–1244) quoted by R. Jacob b. Asher (1270–c. 1343), Tur, Choshen haMishpat 375:1; R. Asher b. Jechiel (1250–1327), Baba Metzia VIII:22; R. Joseph Caro (1488–1575), Beit Yosef, Tur, Choshen ha-Mishpat 375:1. For a variant opinion v. R. Solomon b. Adret (1235–1319), Rashba, Baba Metzia 101 b; Nachmanides (1194–1270), Ramban Baba Metzia 101b; Maimonides, Yad, Gezalah X:5 on interpretation of R. Yom Tov Vidal (14th cen.), Maggia Mishneh ad locum.

4 Maggia Mishneh, Yad, Shekhenim III:3; Beit Yosef, Tur, op. cit. 155:13.

5 R. Jacob b. Boses Loeberbaum, N'tivot ha-Mishpat, Shulchan Arukh, Choshen ha-Mishpat 375, note 2.

6 R. Abraham I Karelitz, Chazon Ish Baba Bathra, chapter 2.

7 Baba Kamma 21a; Yad, Gezalah III:9; Rosh Baba Kamma 11:6; Tur, op. cit. 363:6; Caro, R. Roseph, Shulchan Arukh Choshen ha-Mishpat 363:6Google Scholar; Epstein, R. Jechiel Michael (1829–1908), Arukh ha-Shulchan, Choshen ha-Mishpat 363:15.Google Scholar

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9 Designation of scholars active in the 11th to the middle of the 16th centuries.

10 R. Ephraim Nabon, Machneh Ephraim, Gezalah, Chap. 13.

11 R. Joseph b. Meir Ibin MiGash (1077–1141), Ri MiGash Baba Bathra 5a.

12 R. Meir b. Baruch of Rothenburg, Responsa Maharam, No. 39.

13 Tosafot Baba Kamma 101a; Rosh Baba Kamma IX:17.

14 Yad, Gezalah 111:9; Rosh Baba Kamma 11:6; Tur, op. cit. 363:6; Sh. Ar., op. cit. 363:6; Ar. haSh., op. cit. 363:15.

15 Tosafot, op. cit.; Rosh, op. cit.

16 Machneh Ephraim, Nizkei Mamon, Chap. 2; R. Chayyim Soloveichik quoted by R. Baruch Ber Leibowitz (1866–1939), in Birkat Shemie'el Baba Metzia, p. 54; R. Shimon Shkop (1860–1940), Novalae R. Shimon Baba Kamma, Chap. 19; R. Ahron Kotier (1892–1962), Mishnat Rabbi Ahron, Vol. 1, pp. 56–66, p. 121.

17 Novalae R. Shimon, op. cit.

18 R. Solomon b. Isac (1040–1105), Rasili Baba Metzia 101a; Yad, op. cit. X:4 on interpretation of R. Yom Tov Vidal ad locum; Beit Yosef, op. cit., 375:2. For variant opinions v. R. Isac b. Jacob Aliasi (1013–1103), Rif, Baba Metzia 101a; R. Zechariah b. Isac ha-Levi of Sarragossa (late 14th cen.), Hamaor, Baba Metzia 101a.

19 R. Abram b. David of Posquie'res quoted by R. Nissim Gerondi (1488–1575), in Ran, Kethuboth 80a.

20 Meir, R. Shabbetai b., Siftei Kohen, Sh. Ar., Choshen ha-Mishpat 391:2.Google Scholar

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22 Baba Bathra 4b.

23 Rashi, Baba Bathra 4b; V.R. Menachem b. Solomon (1249–1316), Meiri, Baba Bathra 4b.

24 Yad, Shekhenim III:3–4.

25 R. Abram b. David of Posquie'res ad locum.

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29 Mishnat Rabbi Ahron, Vol. I, pp. 56–66, 121.

30 Tosafot Baba Bathra, 4b; Ramban, op. cit.

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32 Novalae R. Shimon, op. cit.

33 R. Meir Abulafia (1170–1244) quoted in Tur, op. cit., 158:14. Interpretation of R. Meir Abulafia's view presented in the text represents renditions of R. Moishe Sofer (1762–1839), Chatam Sofer, Baba Bathra 4b; and Karelitz, R. Abraham I., Chazon Ish Baba Bathra 4b.Google Scholar For a variant interpretation of R.

Meir Abulafia's view v. R. Joel Sirkes (1561–1640), Bach, Tur, Sh. Ar., ad locum.

34 D'brot Moishe Baba Bathra, Vol. I, p. 25.

35 Ramban, op. cit.