Kabbalah and Economics

In my last post, I compared Kabbalah to Haskell. It's only fitting that my next post compares Kabbalah to another topic I blog about frequently: economics. Heads up in advance that this post will be very revealing about my political/economic compass.

It's all about want

One of the first things you learn in economics is about wants. Human beings want things. Those things are scarce. Economics analyzes how these scarce things—food, water, cell phones, land, and more—are allocated, based on people's wants and preferences.

You would think that Jewish mysticism would have nothing to do with that. But instead, a core concept in Kabbalah is the ratzon lekabel, or desire to receive. God created the world out of a desire to give. In order to give, He needed something to receive. The essence of the created beings is this desire to receive. Or, putting other words to it, the core of creation is want.

The Kabbalistic story doesn't stop at desire to receive. We want to achieve affinity of form with God. Which means acquiring a nature of giving. This is incredibly difficult, because the core of our creation is the desire to receive. Kabbalah describes how to achieve this giving nature. We'll get to that a bit later.

But things aren't quite as simple as desire to receive vs desire to give. Within the Kabbalistic framing, we distinguish between the action and the intent. And we end up with four levels:

• Receiving (action) to receive (intent) This is a fully selfish form of receiving, and is our natural state. That doesn't mean "you're a bad person for being like this." It means it's the starting point. Think of a baby: all it does is eat because it wants to eat. That's quintessential receiving to receive.
• Giving (action) to receive (intent) You still desire to receive, your actions are geared towards receiving. However, your acts are now acts of giving. A lot of our actions in this world fall into this category. When I go to work, I'm rarely doing it out of purely altruistic motivation. I'm doing it to receive a paycheck.
• Giving (action) to give (intent) This is already beyond the level most of us achieve in this world. It's true altruism, true selflessness. One of the ways we get close to this is giving to our loved ones. But even there, there's generally at least some level of intent to receive: the happiness of seeing a loved one's appreciation, for example.
• Receiving (action) to give (intent) This is, perhaps surprisingly, the highest level we can achieve. Why it's greater than giving to give is because, unlike giving to give, this actually fulfills the purpose of creation (receiving). But this is a subtle point, and not really necessary for the economics comparison. So we'll focus on the first three levels instead.

At this point, we're going to veer away from strict Kabbalistic definitions, and instead use these receiving and giving terms in more economics-friendly ways.

Violence: receiving to receive

An extreme form of receiving to receive is violence. Theft, pillage, conquering, enslaving... all of these are an act of receiving, fully with the intent of receiving. There's no giving at all.

That's not to say that every form of receiving to receive necessitates violence. Receiving a gift from another person can be receiving to receive. But violence definitely falls into this category too.

Much of human history has lived under receiving to receive economic systems. These kinds of systems are destructive. They lead to lack of societal progress. People rarely advocate for such systems today.

Free markets: giving to receive

By free markets, I'm going to focus on idealized versions. By that, I mean a system where:

• No one is forced to participate in a trade
• All trade is fully voluntary
• Participants have full access to information to avoid being deceived
• Courts enforce laws and contracts fairly and equally
• Money is hard: it cannot be created by privileged parties cheaply

Under these assumptions, there's only one way to get money: offer someone with money something they value more than the money for trade. I'd describe that as a perfect example of giving to receive. If I sell you an apple for $2, I haven't coerced you into buying it, and you're well aware of your other options for buying food, then the trade means you value the apple more than the $2.

In this case, I'm giving you the apple. The act is one of giving. (Yes, it's also an act of receiving the money.) But the intent isn't altruistic. I'm not giving you the apple because I want to give you the apple. I'm doing it because I want the money. I want to receive. It just so happens that the economic system forces me to give in order to receive.

Becoming selfless under free markets

In practice, many people in free market systems do end up engaging in nominally selfless acts. They give charity, spend time volunteering, and so on. And far be it from me to criticize such actions! Those are wonderful things for people to do, and it's wonderful that free markets tend to encourage people in such directions.

But rarely, if ever, would these be truly "selfless" in the Kabbalistic sense. I already hinted at this above. There's usually a selfish ulterior motive associated with these things. That motive could be feeling good about yourself, wanting to avoid the negative feeling of the suffering of others, social pressure, social status, or tax write-offs.

Again, it's great that people give, even if the motivations aren't pure. But ultimately, free markets cannot, on their own, help us escape from selfishness. Free markets don't try to combat selfishness. Instead, they channel that selfishness, through incentives, towards productivity and wealth creation.

It's a great way to create a productive, modern world. It's not a great way to fulfill the purpose of Creation.

Socialism: the shortcut to giving?

If we truly want to evolve to selflessness and a world of giving, capitalism and free markets appear to be a dead end. And to be fair, many free market advocates would argue that selflessness isn't a good goal to strive for anyway. Selfishness makes the world go round.

But let's say you want to live in a world of selfless giving. Free markets are greedy by nature. Instead of "free exchange of goods between willing partners," you base your economic philosophy around:

From each according to his ability, to each according to his need

The system gives. It gives people what they need. Selfish wants disappear. All needs are met. People selflessly give.

Except, of course, for the fact that this has never happened. Not in one example of socialism did the system work out as I just described.

• There's never enough wealth to fulfill the wants of every person. Scarcity hasn't been defeated.
• Defining "need" is complex. Do you need to take a shower every day? Or are you just wasting water?
• People don't selflessly give. They give at gunpoint.
• When the connection between production and reward is weakened, the incentive to produce weakens too.
• People find other, non-monetary ways to compete for reward, status, and power.

I'm sure many readers are strongly disagreeing with this point. (Or rather, if anyone with socialist leanings got through the previous section without rage quitting, they're disagreeing.) Maybe you truly believe there's a way to fix all these problems somehow.

My Kabbalistic response is: you can't. You can't uproot the desire to receive like this. It's the core of who and what we are. Trying to take the shortcut to a world of giving, at the end of the barrel of a gun, will never work.

In my opinion, socialism has the right goal, but achieves the exact opposite of its intent. Using the Kabbalistic framing:

• Capitalism/free markets sit squarely in the giving to receive world, and can never naturally improve beyond that.
• Advocates of socialism want to push us into a world of giving to give (the right goal).
• But in practice, by doing so through force, they aren't encouraging people to selflessly give. They're using force to take from some people and redistribute to others, while calling the resulting transfer an act of giving. In other words, socialism is a reversion back to the realm of receiving to receive.

The Kabbalistic answer

So how do you become selfless? It's not at gunpoint. It's not through coercion. The Kabbalistic answer is to do acts of giving, with the intention of becoming a giving person.

There's far more to that story than I've just said. In Rav Ashlag's framework, this is deeply connected with learning Torah and performing mitzvot (commandments) for the sake of heaven. The relationship between that and "giving with the intent of becoming a giving person" is a somewhat shocking revelation. It's not something I'll dive into further here, but if you're interested in the topic, Kuntres Matan Torah is a good starting point.

But there's a form of that answer I can give here that's far more readily adaptable by most. The way to start giving with pure intent is to give, at the small scale, with as much love as you can. The simplest is to start with your spouse, your children, and your close friends. The goal isn't perfection in intent. The goal is to begin the process of refining your will from one of pure egoistic desire to love of your fellow.

I don't think we're ready for socialism. We're not ready for large-scale selflessness-based systems. We need to let the engine of selfishness run the macro, while the core of selflessness can develop in the micro.

Low time preference

And this is my final parting thought. One of the central ideas in Kabbalah is the masach, or screen. It's a complex topic that I won't fully explain here. But I will give a simple if incomplete analogy. The screen says: I won't immediately and automatically receive the thing I want right now. I will push it away, and receive it in a more refined form.

That description, while not the literal one of a masach, sounds remarkably like the economic concept of low time preference. Low time preference means: instead of wanting to consume everything immediately, I'm willing to defer my consumption, invest in the future, save my money, and consume in the future.

Putting money in an interest-bearing account would be an example of low time preference behavior.

Saving money so I can use it in the future is not a selfless act. It's remarkably selfish, in fact! But it still has the same shape as developing towards selflessness: being willing to forgo my immediate wants. One way of looking at it, if a bit stretched, is that I am selflessly giving to my future self.

One of the complaints I (and many others) have about the modern financial world is that its inflationary nature necessarily reduces the incentive to behave in a low time preference way. Said another way: the fact that $10 in five years will buy less than $10 buys today pushes the incentive somewhat toward consuming that $10 sooner, acting more selfishly, focusing on my immediate needs, and bypassing the masach or screen concept. Inflation can also encourage investment instead of consumption, but it clearly discourages simply holding cash.

Maybe, just maybe, moving towards a hard money system is one way the world can evolve to one of selflessness. But don't worry, this post is long enough already, I won't turn it into a Bitcoin advocacy bit. And I'm definitely not claiming that Bitcoin is a sign of the redemption... that would be crazy!