The first of a two-part series: We have forgotten the difference between value and price
There was a moment on the brink of the financial collapse last summer so symbolic that it could almost be a commentary on our times. At the end of July 2008, Damien Hirst put a sculpture for sale at Sotheby’s. It sold for 10-and-a-half million pounds, one of the highest prices ever paid for the work of a living artist. Hirst called it “the Golden Calf”.
The irony was precise. What happened 33 centuries ago among the Israelites in the desert happened again in our time. People stopped regarding gold as a medium of exchange, and started seeing it as an object of worship. The result, on both occasions, was a collective madness. Adam bahul al mamono, said the sages, meaning, the pursuit of wealth can make us do irrational things.
It happened in the tulip craze in Holland at the end of the 16th century and the South Sea Bubble of 1720. The Florida real estate craze in the 1920s contributed to the Great Crash of 1929. Irrational expectation led to waves of investment, reinforced by rising prices, until the boom could no longer be sustained.
What happens at such times is that we forget the difference between the value of something and its price. Nowhere was this clearer in the latest boom-and-bust than in the case of houses. The value of a house is that it is home. Hebrew combines both ideas in a single word, bayit. It is where we belong and where, if we are lucky, we raise a family.
At a certain point, though, some began to think of a house less as a home than as a tax-free capital investment. Value began to take second place to price. House prices began to rise. Even people who had no thought of capital gain were forced to join the race. They sought to borrow more, and banks and building societies duly obliged, devising ways to leverage loans ever higher.
Borrowings lost all proportion to average earnings. People, contemplating what they would get if they put their houses on the market, thought they were getting richer, but in real terms they weren’t.
The value of a house is something altogether different from its price. This was bound to collapse. No one with a long memory doubted it. Even in biblical times, Joseph knew that the years of plenty would be followed by years of famine — the first recorded reference to trade cycles. Worship of a golden calf always ends in tears.
What is fascinating, though, is the Torah’s antidote. The story of the golden calf is immediately preceded and followed by a command, in both cases the command of Shabbat. The reason is profound.
Shabbat is when we celebrate the things that have value but no price. Husbands sing a song of praise to their wives. Parents bless their children. We take time to have a meal together with family and friends. In the synagogue, we renew our sense of community. People share their joys — a new child, a bar- or batmitzvah, an engagement, a forthcoming wedding — with others. Those saying kaddish find comfort for their grief.
Shabbat, when we can neither buy nor sell, forcibly reminds us of the wise words of Ben Zoma: Who is rich? One who rejoices in what he has. A consumer society is based on the opposite: constantly reminding us of what we do not have.
That is the reason for the paradox that affluence is not reflected in higher self-reported levels of happiness. True happiness means celebrating what God has given us, not what the market wants us to buy.
There is no minimising the pain of this recession. What is truly impressive about our community is that levels of giving remain high, and our welfare agencies are working hard to help people in need. The Jewish values of tzedakah and chessed are still strong, and being exercised daily.
The deep question about the financial and economic crisis is not, When will it end? but, How will we be changed by it? Judaism is not opposed to the market, but it has given us Shabbat to set a limit to our striving. Crises remind us of what really matters: family, friendship and faith, the things that have a value, not a price.
The Chief Rabbi’s books include ‘The Politics of Hope’