More than six decades after the annihilation of European Jews and in a time of reviving anti-Semitism, the historian Jerry Z. Muller, a professor at the Catholic University of America in Washington, DC, investigates the role of the Jews in modern capitalism. His book is an essay collection that consists of four chapters which were written during the last two decades. The book convincingly outlines the role of Jewish cultural capital as a factor for economic survival. While not based on archival research, the book makes use of the standard literature on the topic in English, German, and French.
The first essay is entitled “The Long Shadow of Usury”. Here, Muller explains that many anti-Jewish stereotypes can be attributed to a conscious and constant exaggeration of the role of the Jews in economics and trade. Since lending at interest was generally forbidden for Christians in medieval Europe, while Jews were permitted to charge interest, it was thought that anyone who extracted money from money alone must be “regarded as outside the community of shared values” (p. 15). Modern capitalism made the specific economic role of money-lending Jews superfluous, since that kind of financial activity now characterized Jewish and Gentile capitalists. Capitalism, with its competitive character, created winners, but also many losers. This provided a breeding ground for widespread dissatisfaction.
Jews indeed tended to be successful in a capitalist economy, particularly in banking. Their cultural predisposition and economic expertise helped them to adapt to new conditions precisely when, after the French Revolution, the principle of equality before the law was granted. But a large non-Jewish commercial class also emerged rapidly in all areas where industrialization succeeded. It was from here that anti-Semitic attacks were directed against Jews as an easily identifiable part of the capitalist class. Such attacks were used by anti-capitalist critics, as Muller points out. Occasionally, but not always, he underrates the extent in which Gentile capitalists and their followers used anti-Semitic prejudices as a tool in commercial and political struggle.
To take the German example: anti-Jewish sentiments were popular among the supporters and financiers of the Pan-German League before World War I, the short-lived Deutsche Vaterlandspartei in 1917–1918, and the Stahlhelm, Germany’s right-wing paramilitary organization that was closely linked with the Deutschnationale Volkspartei during the Weimar Republic. However, the stereotype of the “Jewish financier” could only become popular because economic anti-Semitism became closely linked with nationalism and with pseudo-scientific theories of racial purity. It was this historical context in which pre-fascist and fascist propaganda, and finally Nazism, could work. This propaganda described usury as a biological characteristic of the Jews and made a distinction between capital which was purely the product of creative labour and capital which was exclusively the result of financial speculation.
The second chapter is entitled “The Jewish Response to Capitalism: Milton Friedman’s Paradox Reconsidered”. It deals with Friedman’s assertion that the element of capitalism that has most benefited the Jews is free-market competition. According to Friedman, this counteracts the forces of anti-Semitic prejudices. For under these conditions, ethnic or religious discrimination puts the discriminator at a competitive disadvantage. In Friedman’s view an unbound market economy encourages racial, ethnic, and religious tolerance, while supporting a plurality of diverse lifestyles and customs. Socialist or even regulated capitalist economies, in contrast, tend to breed intolerance and ethnic persecution.
Unlike Friedman, Muller does not blame those Jews who were critics of capitalism and pleads for “a more nuanced reconstruction of Jewish responses to capitalism” (p. 132). He argues that in many cases it was only the labour movement (and the liberal intelligentsia) that offered Jews the prospect of equal social acceptance. Only in areas where Jews were treated on equal terms did they move into the mainstream of bourgeois life. But even in the West the anti-Semitic notion of trade and money-lending as unproductive was often expressed in images of parasitism that continued even when the influence of Christian theology waned. Henry Ford denounced the Jew as “a mere huckster, a trader who doesn’t want to produce, but to make something out of what somebody else produced” (p. 118). The socialist and communist project to create a new society which moved people away from capitalist business into productive work in the service of mankind found positive response among those Jews who regarded the Jews’ concentration in trade as “economically and physically toxic” (ibid.). Much of Labour Zionism was based upon the premise that Jews needed to dissociate themselves from capitalist commerce. It was the integration of the state of Israel into the Western world that led to a “speeded-up version” of the economic history of capitalism (p. 122).
Chapter 3 is entitled “Radical Anti-Capitalism: The Jew as Communist”. One of the most popular anti-Semitic ideas was that Jewish capitalists and Jewish communists had joined forces in their quest to dominate the world. Such beliefs were much intensified in 1917–1919, when the Bolsheviks came to power in Russia and the German November Revolution was suppressed. In both revolutions the role of Jewish activists was significant, although it was not the German communist leadership “that called for an armed uprising in January 1919”, as Muller mistakenly states (p. 148). The murderers of Walter Rathenau, the liberal Jewish capitalist and German foreign minister, were obsessed by the idea that he was a key figure in a conspiracy that would deliver Germany into the hands of “International Judaism”, of which Bolshevism and Western capitalism were two sides of the same coin. “While the identification by anti-Semites of Jews with capitalism was based upon an exaggeration, the identification of Jews with Communism was based upon a distortion. […] The identification of Jews with Communism was grounded in the fact that while few Jews were in fact Communists, men and women of Jewish origin were particularly salient in Communist movements. ‘Judeo-Bolshevism’ was a myth. But like many myths it had just enough connection to reality to make it a plausible spectre” (p. 135).
Muller points out that “most Russian Jews welcomed the fall of the Czarist regime, which had abetted anti-Semitism, confined most Jews to the ‘Pale of Settlement’, and radically restricted their access to higher education” (p. 139). But he explains that the preponderance of Jews in the early Bolshevik leadership must not be confused with the minor role of the communists within the Jewish labour movement at this time. Part of the attraction of communism and the labour movement in general lay in the Jewish desire to escape the ghetto. But it was mainly their desperate situation during the Russian Civil War in which the Jews saw their sole hope for salvation in the Red Army, since the Whites used anti-Semitism as a political weapon when they killed approximately 120,000 Russian and Ukrainian Jews.
Of equal interest is the sub-chapter on Hungarian communism and the Jews. Muller shows that it was the experience of World War I as a seminal catastrophe that brought a significant part of the young Jewish intelligentsia of Budapest to the communist camp. These Jewish radicals played a prominent role in the short-lived Council Republic of 1919. But there was much resentment across the countryside of this supposed Jewish endeavour. There, as in other rural areas in central-eastern Europe, the Jewish peddler and money-lender had continued to perform his traditional function. Jews still represented the market economy amidst people living in a mere natural economy. It was, as we now know, the association of the Jews with modernism that was partly responsible for the Schadenfreude or indifference with which a part of the eastern European populace witnessed the Holocaust. The most recent political developments in Hungary, with the dramatic rise of neo-fascism, must be seen in the context of persistent anti-Semitic prejudices that blamed Jews for communism as well as for the widespread economic problems of the new capitalist society.
The last and shortest chapter of the book includes some reflections on “The Economics of Nationalism and the Fate of the Jews in Twentieth-Century Europe”. Based on the works of diverse sociologists from Ber Borokhov to Ernest Gellner, Muller again explains that under conditions of legally free economic competition the cultural capital of minority groups, namely the Jews, makes them perform more successfully than the majority of their rivals. But it was precisely this relative success that made the Jews extremely vulnerable to the nationalism and racism which culminated in the Holocaust. Their business experience and cultural capital as well as their commitment to communism as a desired alternative to anti-Semitism made the Jews both desirable and hated. They were slandered as unscrupulous capitalists and simultaneously as fanatical communists and “the way in which modern, non-Jewish intellectuals thought about capitalism was often related to how they thought about Jews” (p. 5).
