Volume 16 Number 23
Produced: Mon Oct 31 8:25:21 1994
Subjects Discussed In This Issue:
Ona'ah, Responses and Explanations
[Seth Weissman]
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From: <SWeissman_at_BC-Faculty@...> (Seth Weissman)
Date: Tue, 11 Oct 94 14:31:11 EDT
Subject: Ona'ah, Responses and Explanations
This is the third part of my answer to the responses to my questions.
Jeff Mandin quoted Bava Metzia 61a's comparison of interest and onaah.
The gemara compares these prohibitions with robbery and determines that
specific prohibitions for all three are necessary because no one can be
derived from any one or two of the others. This implies that the three
are distinct laws.
My B case (Shimon underpaying Miriam for her ring but telling her how
much it is worth) is not dealt with in the mishna, but is found in the
gemara in the 4th perek of Bava Metzia, as well as in the Shulchan
Arukh.
Jeff then quotes the vort of R. Chaim on BM 61a. R. Chaim views the
overcharged amount as equivalent to stealing.
To view the overcharged amount as stealing, how must we understand
ona'ah?
If I buy something worth $100, and not knowing its true value, pay $200,
then I am paying the seller $100 for the object (I have given the seller
$100 in consideration for the object which is worth $100), and a second
$100 which is the overpayment. What interpretation or understanding of
transactions and sales leads us to view this extra $100 as stolen?
First, lets explore another way of understanding transactions. When I
buy something, and overpay for it, I am saying that the object is worth
(to me) the amount that I paid for it. Forgetting about purchases for
the purpose of speculation and investment, when I buy something for my
own use, I will never pay more for it than the value of its use to me.
For example, if the pleasure I get from a drink of water is worth $1.00,
I would not pay more than a dollar for a glass of water. (In the
desert, the value of a glass of water is higher than it is near a well,
but I would never pay more than the new value of the water, whatever
that might be.)
So, given that the plaintiff freely (and not under duress) agreed to pay
a high price, one approach might be that the extra $100 is not stolen.
Ona'ah is a new issur, unrelated to theft, and analogous to the modern
concept of insider trading.
There are indications that while chazzal didn't entirely buy this
interpretation, they didn't reject it entirely. For example, the 1/6
border for ona'ah is not found in either robbery or burglary law. There
are other ways to view the 1/6 (i.e.; a risk-sharing scheme, analogous
to insurance deductibles, or as a mechanism for price limits, but these
are side points right now), but the fact that within 1/6, it isn't
remediable distinguishes ona'ah from theft. For now, though, let's
return to theft.
Well, before we start exploring the relationship between ona'ah and
theft, let us be precise in our use of terminology. By stealing, we can
either mean armed theft (robbery or gezala), or covert theft (burglary
or genava). Common law and Jewish law distinguish between the two. The
laws of mekach umemchar (sales) already deal with forced sales in Bava
Basara, and the close reading of the ona'ah laws imply that ona'ah is
dealing with the plaintiff's overpaying or undercharging because of a
lack of information concerning the true value of the object being sold.
This places ona'ah (if it can be categorized as stealing) into the realm
of burglary (genava).
To illustrate the last point, lets review some of the laws of ona'ah.
1. The mishna in Bava Metzia places a statute of limitations on ona'ah
claims. The limit depends upon whether the plaintiff was the buyer or
the seller, but in effect depends on how long the plaintiff needs to
obtain information about the true value of the object. Since plaintiff
buyers can more easily acquire information (being in possession of the
object), sellers are granted a longer time period to register a
complaint.
2. Case b of my initial posting is permissible. If the defendant
informs the plaintiff at the time of the transaction that the plaintiff
is being overcharged or underpaid, and includes in that admission the
amount being extracted, the plaintiff's claim goes unrewarded. If the
ona'ah (overpayment/underpayment) was not related to a lack of
information on the part of the victim, no ona'ah claim can be made.
OK, it seems that ona'ah can be compared with genava and not gezala.
This then is what we should expect to find in the achronim. But, a
survey of the literature reveals that R. Chaim (as well as R. Grusman)
compare ona'ah to gezala. Given the similarities between ona'ah and
genava, and the differences between ona'ah and gezala, their comparing
the two is puzzling.
One explanation for their view comes from the fifth chapter of Bava
Metzia. On BM 61a, when the gemara attempts to derive interest, ona'ah,
and stealing from common sources, the type of theft compared to ona'ah
is gezala. This is incompatible with our understanding of ona'ah, but
fits in nicely with their view of interest.
So, where did a comparison of ona'ah and gezala come from? Well, the
gemara was investigating the possibility that ona'ah and gezara can be
derived from the same source. While they addressed the issue from a
logical perspective, lets look at the basic source for ona'ah, the
psukkim. In Leviticus 25, we find the source for ona'ah and one of the
sources for interest. My hypothesis is that pshat in the passuk is at
variance with the drash (upon which the law is based). In other words,
pshat is: don't take advantage of asymmetric bargaining power (my
ability to make you an offer that you cannot refuse). This is similar
to gezala. The halacha comes from the drash, or non-literal
interpretation of the p'sukkim.
Let me note that the passuk does not say "yamuckh achichah" (when your
friend or brother suffers from hardship, implying that ona'ah pertains
to bargaining power) by ona'ah. I still think that this is p'shat in
the passuk because the the parsha deals with the following issues:
1. the jubilee/yovel
2. the return of land with yovel
3. since land returns with the yovel, don't overcharge and don't
undercharge (this is ona'ah)
4. when your brother sells his land (ki yamuckh) because of hardship,
the family can help him redeem it before yovel.
5. the same as 4, dealing with cities and levite holdings in the cities
designated for leviim. (ki yamuckh is repeated)
6. prohibition of interest, introduced with ki yomukh
7. redemption of slaves sold to non-jews, introduced with the phrase ki
yomuckh.
I think the entire parsha (in Behar, Leviticus 25) is dealing, on the
p'shat level with asymmetric bargaining power. The fact that 3 (ona'ah)
does not include this statement is not important because in 4, we see
why the land was sold in 3. It is understood that in an agricultural
society, land and farm equipment is not sold unless the seller is
suffering from extreme hardship. By selling your land, you sell your
livelihood and in effect your future. Without land, you cannot produce
for yourself, so land, like slaves can be redeemed. Selling one's land
is similar to selling one's self.
If your not convinced by the above argument that ona'ah (in the psukim)
is asymmetric bargaining power, then try the following: try to fit
asymmetric information into the p'shat of the passuk.
Skipping to the end of the perek, in number 7, we see the following law:
When you redeem a slave, pay by the number of years remaining to the
yovel, not more and not less.
This verse parallels the verse of ona'ah (Lev. 25:14), just 25 or so
verses earlier. Just what percent of slaves could not be interested in
knowing how many years of service remained on ytheir contract? The same
applies to land rentals. If the farmer don't know, it's not hard to
find out when yovel is. Just ask the local Rabbi. If he (the ignorant,
uneducated, illiterate farmer can't count and divide by 50, his Rabbi
can.) So, ona'ah isn't dealing with asymmetric information, because if
it were, a better case would have been used.
If your still not convinced that the law doesn't follow the p'shat of
the passuk, how do you explain this?
The passuk's ona'ah hypothetical deals with a land sale. The mishna in
Bava Metzia, chapter 4 says that ona'ah does not apply to land and salve
transactions (among other things). There are various explanations for
why, and Rabbi Elazar (the amorah) argues in the Yurshalmi that it does
apply (in more limited circumstances). Granting all that, it's obvious
that we don't learn the psukim literally.
OK, so how do we learn ona'ah? Now, the halacha in the mishna, gemara,
and on interpret the passukim of ona'ah out of context of the parsha as
regarding asymmetric information. In other words, they interpret the
p'sukim using drash, not p'shat.
Why?
Note that I started with the mishna. We have no sources detailing how
ona'ah was applied prior to the mishna. My guess is that the Rabbis saw
policies and laws preventing abuses of asymmetric information and
asymmetric bargaining power as mutually exclusive.
With respect to interest, in a non-commercial economy, where during
bayit shayni and post destruction, most of the people were poor farmers,
where most transactions were barter transactions, interest issues were
not asymmetric information issues. So the prohibited interest
(interpreting the psukkim literally).
With regards to ona'ah, they looked at the internationalization of the
Judean economy (under the Hasmonean dynasty, trade expanded dramatically
with the rebuilding of the post of Yafo, and later, under Roman
occupation, with the building of Cesearia, and the Roman road network.
The universally accepted Roman currency helped commerce as well.) This
increased the information problems as poor farmers didn't know the value
of goods purchased from anonymous merchants at the biweekly markets. In
these markets, asymmetric information was a major problem. Bargaining
power problems may have been less of a concern by nature of the mobility
of the merchants. They needed to sell their stuff because
transportation costs were high, produce was perishable, and so on. The
relative bargaining power of the rich merchant may not have exceeded the
farmer by that much.
Within the farming communities, bargaining power problems were not as
severe as the information problems between the communities and the
merchants. Within the farming communities, social forces were stronger.
The personal nature of village life and barter economies may have
prevented those with bargaining power from advantaging from it. Social
pressure reduced the inefficiency producing effects of bargaining power
asymmetry.
In short, the economic institutions were such that the efficiency losses
from asymmetric information exceeded those from asymmetric bargaining
power. If the respective solutions to the two problems were mutually
exclusive, efficiency dictated solving the information problem instead
of the bargaining power problem.
Evidence that the two are mutually exclusive can be found from the fact
that option 4 is permitted. Complete revelation of information permits
overcharging, and only parties with relatively, very weak bargaining
positions will agree to overpay by a large amount (more than 1/6), or
accept an underpayment of more than 1/6. See Bava Metzia 4, the Rambam,
and the Shulcan Oruch.
OK, that's a relatively long answer, but the question is a deep one.
So, let's sum up:
1. The halacha of ona'ah refers to information (meaning that
conceptually, if ona'ah can be compared with theft, it can only be
compared with burglary, not robbery).
2. The achromim compare ona'ah to robbery. This comes from the gemara,
but leaves unexplained where the gemara got it.
3. The pshat of the psukkim dealing with onaah relate to bargaining
power problems, analogous to robbery, not burglary. This explains why
the gemara asks is onaah can be learned from robbery or vice versa.
4. Historical analysis demonstrates that social and economic conditions
led to a situation where information problems were worse than bargaining
problems.
5. The Rabbis responded to the pressure of the institutional structure
of their society and developed and implemented policies to respond to
the problems of their day.
Number 5 opens the question of how could this have happened within a
halachic system. Well, hefker bet din hefker allows bet din freedom in
monetary and economic issues that is unmatched anywhere within halachah.
How this fits into the understanding of the halachich economic system as
a utopian/optimal set of economic policies is clear.
Shabbat and kosher, for example, exists as absolute laws. These laws
do, however affect the economy. Kosher restrictions lower the
profitability of lobster fishing, and shabbat raises worker morale.
That's not the purpose of shabbat and kosher, but no one can deny that
these are some of the economic consequences of these halachot. These
laws, as well as social, cultural, and political phenomenon fall under
the category of economic institutions.
OK, now, economic policies only make sense in a given framework, so if
the economic institutions are different, the policy recommendations
would be different. For example, during a recession, cuts in the money
supply growth rate (exacerbating the recession's effects) might be a
very bad idea. But, in an expansionary period, often, cutting the money
supply growth rate is the appropriate policy.
So, the concept of hefker bet din hefker affords bet din complete
freedom in setting economic policy. Why? Precisely because there is no
optimal set of policies that deal with every situation. The world keeps
changing, technology advances, and economic policies must be flexible in
response to the changing conditions that they must correct for.
I must admit that there is no evidence that the law of ona'ah was
different before the Roman occupation (pre-mishna). We have no mention
of ona'ah until that time. So, intellectual honesty forces me to
categorize my above argument as speculation. I do not argue that the
law of ona'ah changed; only that market conditions that ona'ah responds
to had changed. Under the new market conditions the law of ona'ah (as
we understand it) makes economic sense, under the prior set of economic
conditions, it would have made no sense. Additionally, I defend my
hypothesis by pointing to the difference between the p'shat of ona'ah
and the drash of ona'ah, and the fact that within a halachic framework,
the rabbis had the freedom of action to choose which interpretation of
ona'ah best responded to the pressures of their times.
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End of Volume 16 Issue 23
