Clean Slate Proclamations, The Jubilee, and Anti-Monopoly Laws *

Transcription

1 Clean Slae Proclaaions, The Jubilee, and Ani-Monopoly Laws Jacob Rosenberg a and Avi Weiss a,b Absrac In his paper we sugges a new view ha reas clean slae proclaaions, such as he Biblical Jubilee, as ani-onopoly laws. We deonsrae he appropriaeness of his approach by considering he insiuional deails of clean slae proclaaions in general, and of he Jubilee in paricular. We develop a odel ha deonsraes ha he requireen o reurn purchased agriculural land o is original owner can serve as a second-bes soluion o excessive arke concenraion in he presence of iperfec capial arkes. a Deparen of Econoics, Bar-Ilan Universiy, Raa-Gan, Israel b IZA, Bonn, Gerany We would like o hank Dennis W. Carlon, Jonas Prager, and paricipans in he Biblical Econoics conference in Jerusale, June 2000.

2 Inroducion A clean slae is a proclaaion, ade by a king, ruler or general, under which any land sold because of econoic disress is reurned o is original owners, anyone forced ino serviude by debs is liberaed, and back debs are cancelled. The os faous of hese proclaaions is he Jubilee as recorded in he Bible. However, such laws pre-dae he Bible, which, according o he Biblical ieable was given o Moses in he year 1313 BCE. According o Hudson (1999), he earlies clean slaes were proclaied over 1000 years earlier. The oldes surviving clean slae was proclaied by Eneena, who ruled he Suerian ciy-sae of Lagash fro abou 2404 o 2375 BCE, and abou 50 years laer, in 2350 BCE, by his successor, Urukagina. In abou 2200 BCE anoher Suerian ruler, Gudea, also reied debs and reurned ancesral land. A hundred years laer, Nau, he ruler of Ur issued a clean slae, as did his son, Shulgi. Beween 2000 and 1800 BCE clean slaes were proclaied by he Babylonian and Aorie dynasies in Isin and Larsa, and by wo Assyrian rulers. Haurabi proclaied clean slaes in 1792, 1780, 1771 and 1762 BCE, and six consecuive rulers of Haurabi's dynasy also cancelled debs during he following 166 year period. The Biblical Jubilee is believed by soe o have been decreed by King Zedekiah of Judah ( BCE) and by Neheia (444 BCE). The forgiving of deb laer becae a widespread phenoenon, and was even used as a acical device by Greek and Roan generals. These clean slaes were given soon afer conquering an area in order o win widespread suppor aong he peasans for he conquering forces. Finally, he Rosea sone, which is bes known for having given scieniss he key o unlocking hieroglyphics, is no ore han a clean slae proclaied by Poley V (Egyp, BCE). As discussed below, in os anners clean slaes and he Jubilee were quie siilar, boh wih respec o he deails of he proclaaions and wih respec o he circusances hey were ean o address. There is, however, one iporan disincion beween he Jubilee and oher clean slaes. Mos clean slaes were decreed by a ruler, wih boh he iing and he deails of he clean slae subjec o he ruler's whis. In he Jubilee, however, he iing and deails were predeerined, occurring exacly once every fify years. The econoic iplicaions of his difference will be

3 2 discussed below. Despie he fac ha any scholars believe ha he Jubilee was never carried ou, 1 we neverheless use he specific deails of he Jubilee o ry o shed ligh on he raison d êre of clean slae proclaaions. Our analysis focuses specifically on he Jubilee for wo reasons. Firs, he Jubilee is he clean slae abou which he os insiuional inforaion is available, and since, fro he inforaion available, hese insiuions see no o be grealy differen in oher clean slaes, he resuls should be represenaive. Second, we view he 50-year rule of he Jubilee as he deerinaion of a fundaenal radeoff beween fixed and variable inervals beween proclaaions. In paricular, while a variable inerval allows flexibiliy, i leads o uncerainy on he par of sellers and buyers. Given ha, as enioned above, he Jubilee was enaced ore han a illeniu afer he iniial incepion of clean slaes, we believe ha a fixed period beween clean slaes was chosen for he Jubilee because he uncerainy in previous clean slaes resuled in oo uch inefficiency. Our conenion in his paper is ha he exising jusificaions for clean slaes and he Jubilee are insufficien o explain soe of he anoalies of he decrees. If, however, we consider he prospec ha hese proclaaions serve also as anionopoly laws, soe of he deails of he proclaaions are beer undersood, and a clean slae is hen seen o be a fiing response o he econoic dearh of ha period. 2 The paper proceeds as follows. In Secion I we presen he ain edics of clean slaes proclaaions and Jubilee laws. Secion II presens he various jusificaions ha have been given for he enacen of such laws, and presens he new jusificaion ha ies hese laws o arke concenraion concerns. Secion III conains a general descripion of he ani-onopoly approach, and Secion IV odels his approach. Secion V presens a nuerical exaple in which we derive he expeced opial lengh of ie beween clean slae proclaaions. Secion VI concludes. I. Clean Slaes and Jubilee Laws Consider he econoic siuaion ha exised hroughou os of he pos- Neolihic hisory of ankind. Unil he indusrial revoluion, sociey was, for he os par, agrarian. The producion of food ook up os of he world's resources, wih nuerous periods when even hese resources were grossly insufficien. Land was he 1 See, for exaple, Wesbrook (1991) and Fager (1993).

4 3 predoinan facor of producion, and as such was unparalleled in is iporance for he econoy. For culural, econoic and poliical reasons, owning land was of he uos iporance, and ownership was generally widely dispersed. However, levels of producion on land were highly unsable, and os of he populaion lived close o subsisence levels. Landowners who experienced slack producion could find heselves in desiuion, and could be lef wih no choice bu o sell heir lands o avoid deb. A ies hings becae so desperae ha hey even sold heselves or faily ebers ino serviude because of heavy debs. Thus, as described in he Bible, land was sold priarily when he landowner becae desiue (as explained in Milgro, 1999). Over ie a high degree of concenraion in land-ownership ensued because here were few who were sufficienly wealhy o purchase land and slaves. This concenraion had dire effecs on he econoy, wih he ajoriy of he populaion becoing dependen on a sall inoriy of people. This was paricularly rue because he cos o rade os agriculural goods inernaionally was prohibiive, leading o local arke segenaion. This led o a lack of boh econoic and poliical freedo for os of he populaion, as he few deerined prices, wages and saus as a direc resul of heir conrolling he producive resources, and no siply as a resul of heir being rich. Even if ies iproved, he new owners had no incenive o sell hese lands back o heir original owners. Consider now he Jubilee, or he clean slae proclaaions discussed above. One of he ain decrees of he Jubilee is ha land sold during he previous 50 years us be reurned o is original owners, wihou any copensaion. 3 Thus, he Bible saes: "When your broher becoes ipoverished and has o sell his holding, his closes redeeer shall coe and redee he sold propery of his broher If he does no acquire sufficien eans o recover i, his sold propery shall reain wih is buyer unil he Jubilee year; i shall be released in he Jubilee, and he shall reurn o his holding." (Leviicus, 25, 25-28). However, no all land falls under his decree only agriculural lands are reurned during he Jubilee. Real esae and propery held in ciies, for insance, was no reurned o is original owner he purchaser was peried o hold on o i for eerniy. This, according o Hudson (1999) was rue also of oher clean slae 2 A siple exposiion of his concep was developed in Rosenberg and Weiss (1999). 3 As will be discussed below, since he dae of he reurn of he land is known fro he sar, purchasers are no hared by his decree, since his is aken ino accoun in he purchase price of he land.

5 4 proclaaions. In oher words, i is he producive aspec of he land ha was of concern, and no ownership per-se. A closer look a he laws of he Jubilee, as discussed below, srenghens he percepion ha clean slaes deal priarily wih facors of producion. The ajor biblical decrees peraining o he Jubilee are: 1. Any agriculural land us be reurned o is original owner; even if he land has passed hrough several hands i is reurned o he firs owner. 4 If, however, he land was donaed for he use of he sancuary, i is no reurned o is original owner. In addiion, if he sancuary hen sold he land, i reurns o he sancuary during he Jubilee. Also, agriculural lands could be redeeed by heir original owners a any ie for a price equal o he expeced producion unil he Jubilee. 2. Houses on agriculural land are reaed in he sae anner as he land. Houses in walled ciies, however, are no reaed such; 5 raher he original owner has one year wihin which o redee his house. If he house is no redeeed wihin a year, i is no reurned o he owner. 3. All Jewish slaves are released. 6 II. Jusificaions for he Jubilee and oher clean slaes I is generally believed ha he ain goal of he Jubilee was sociological o achieve a cerain degree of equaliy aong people. 7,8 In he case of clean slaes oher han he Jubilee, suppleenary jusificaions are ofen given. These range fro a benevolen ruler, ineresed in helping he poor asses devasaed by he cruely of 4 According o Hudson (1999), in oher clean slaes []hey resored he crop righs of indebed culivaors who had forfeied or sold heir usufruc righs under econoic disress. 5 This is alos idenical o wha occurred in oher clean slaes, in which, according o Hudson (1999) os houses in owns were in a differen caegory. Urban houses and orchards in he coercial sphere were exep fro hese royal edics, which were priarily inended o proec he basic selfsufficiency of sall landholders. 6 According o Hudson (1999), in oher clean slaes only bond servans were released, while ourigh slaves, osly woen and girls who had been capured by force, were no freed; hey were reurned o he debors who had pledged or forfeied he, along wih he debors' wives, daughers and sons. Failies were hus reunied, slaves and kin ogeher. This is siilar o releasing only Jewish slaves raher han all slaves in he Jubilee. 7 Anoher view, applicable o he Jubilee alone, is ha he Jubilee is a reinder ha he world was creaed by, and hus belongs o, G-d. Since his is so, he division of land o he differen ribes should reain as divided by Joshua: slaves should be freed since we are all slaves o G-d and no slaves o slaves (of G-d); and he land should be resed during each sevenh year, jus as he Lord resed on he sevenh day of creaion. This explanaion suffers fro any of he sae shorcoings as does he sociological explanaion, as discussed in he ex.

6 5 naure, 9 o sraegic ipleenaion in order o appease residens of a conquered land 10 or o lii he poliical srengh of wealhy landowners. 11 In considering he sociological view (or he heological view of he Jubilee discussed in foonoe 6) several difficulies arise. Why differeniae beween land and houses? Why differeniae beween houses in ciies and hose ouside of ciies? In fac, why no deand he reurn of all durable goods sold? Why don sancified lands reurn o heir original owners? The ancillary jusificaions suggesed above ay have eri on a case by case basis, bu hey surely canno help us undersand he general and widespread phenoena, and are cerainly irrelevan when considering he Jubilee. In his paper we ake a differen view, which should be perceived as copleenary o he oher explanaions, and which can be useful in undersanding soe of he anoalies. We believe ha soe of he aspecs of he clean slae proclaaions, and paricularly he Jubilee laws, are bes undersood when perceived as analogous o curren-day anirus laws. 12 Two alernaives o his approach can be aken. The firs alernaive is o say ha he 50-year decree of he Jubilee is siply a Biblical esiaion of how uch ie should be allowed o pass before acion is aken. Under his inerpreaion, he econoic daage fro increasing concenraion is expeced o becoe dire enough o warran inervenion afer fify years. However, consideraion of he facs leads us o anoher possibiliy. 8 Noe ha he Jubilee is no seen as a eans of keeping he disribuion of lands beween he welve ribes of Israel consan, because, if his were he goal of he Jubilee, here would be no reason o reurn he land when sold o soeone wihin he sae ribe. 9 Thus, Hudson (1999) saes ha [d]eb arising fro econoic disress crop failure, drough and oher "acs of God" creaed aniquiy's os serious econoic disorions because of he ineres charges ha hey accrued As deb clais grew ore rapidly han herds, barley oupu or oher econoic aciviy, usury becae he ajor lever by which absenee owners onopolized he land, drove off is inhabians and reduced any o bondage Rulers sough o couner corrosive effecs of deb I was recognized as inherenly necessary, a leas occasionally, o enable culivaors who lived on he argin of subsisence o bridge he gap beween incoe and expendiure In su, hese royal edics did no cause probles, hey solved he by resoring he presuably noral pre-deb sae of affairs. They preserved widespread self-sufficiency on he land for is cusoary holders. He also clais ha hese edics were upheld, and ha here are records of lawsuis brough by forer landholders agains crediors who refused o hand back he subsisence plos ha were supposed o be reurned o heir original, pre-deb owners. 10 According o Hudson (1999) (Tacicus) recoended ha a general who was aacking a own should proise o cancel debs owed by is inhabians if hey defeced o his side, and In early Roe Coriolanus proised o cancel he debs of en who joined hi in defending he ciy. 11 As Hudson (1999) saes They rendered forfeiure of land and faily ebers only eporary, recognizing ha irreversible ransfers would have allowed absenee landlords o evolve ino a peranen wealhy arisocracy. 12 Noe ha our heory deals wih he reurn of facors of producion only, and no wih respec o oher Jubilee decrees, such as deb forgiveness. Thus, for insance, we do no discuss Hillel's Prozbul, which was insiued as a way of bypassing he deb forgiveness edics of he Jubilee.

7 6 Considering ha i is he rich who are acquiring he land, i is quie plausible ha he purchasers are able o pu he land o beer use han he sellers, siply because hey have he resources o work he land and inves in he land in a ore efficien anner. Under his assupion, we deonsrae ha he requireen o reurn purchased agriculural land o he large nuber of original owners in he Jubilee can be viewed as a second-bes soluion o excessive arke concenraion in he presence of iperfec capial arkes. 13 Whichever of hese ani-onopoly alernaives one adops, hese proclaaions are hen given he inerpreaion of being concerned wih he size of he pie raher han erely wih he disribuion of he pie. In oher words, he law ay be concerned wih efficiency raher han equiy, as per he approach aken in econoic analyses of he law (see, for insance, Posner, 1992). The key o eiher ani-onopoly approach lies in he fac ha he laws are concenraed around he key producive resources only - agriculural land (and he houses ha service he) and workers (slaves). The reason houses in walled ciies are no included is because hese are no used for agriculural producion, and herefore he houses heselves and he aciviies carried ou wihin hese houses are of less concern in he predoinanly agrarian sociey. Siilarly, oher durable goods are of no concern since he ajor facors of producion were, a ha ie, land and labor. Sancified lands, on he oher hand, are aken ou of privae hands and given over o he governen. While, fro an econoic sandpoin, privae ownership is o be preferred o public ownership, here is lile concern ha he governen will ry o abuse a onopolisic posiion. Thus, such lands ay reain in governen ownership even afer he Jubilee. III. Produciviy-onopoly radeoff In wha follows we consider he second ani-onopoly alernaive given above, i.e., ha he rich purchasers are able o realize efficiencies no available o he poor sellers. Consider, hen, a predoinanly agrarian sociey. Land is iniially divided evenly aong all ebers of sociey, alhough accuulaed oal wealh ay differ across individuals. In each period here is he possibiliy of saving coss by aking an invesen in he land (or in he faring process), however, he cos of he invesen us be borne during he planing season, and is fruis are reaped only 13 Noe ha he lack of capial arkes exends also o a lack of insurance arkes.

8 7 afer harves. In he presence of perfec capial arkes all landowners would ake such invesens. However, capial arkes are no perfec, and only hose wih sufficien wealh o bear he up-fron cos ake such invesens. Those incapable of raising he capial necessary o inves in heir land sill plan and harves, bu profi less. The yield aained in any given year is a rando variable, and each year soe proporion of he populaion finds iself in dire srais, and is forced o sell is land. Since he value of he land is greaer o one who can afford o inves in he land han o one who canno, hose wih greaer accuulaed wealh will purchase such lands. Efficiency will be enhanced, since cos-saving invesens are being ade under he ownership of he rich, while hey were no ade when he poor owned he land. However, over ie, as ore poor landowners are forced o sell heir holdings, landownership becoes increasingly concenraed in he hands of he few, and ay lead o excessive arke power and o increased prices and resriced producion. If his occurs, here exiss a radeoff beween greaer efficiency in producion and a decrease in producion resuling fro onopoly power. Wih odern-day legislaive abiliies, he accuulaion of arke power (eiher wih or wihou he invesen consideraion) igh be handled by creaing a coission ha would be in charge of onioring producer behavior. This coission could lii he aoun of land owned by a single individual, prohibi cooperaion beween horizonally copeiive firs, or regulae he price a which such goods could be sold. However, such ehods were no available, and ay no have been feasible given he sae of inforaion gahering and record keeping in exisence. Sill, a general, highly siplified, and highly visible decree could be upheld. Thus, for insance, a law saing ha i is illegal o sell land igh be enforceable, bu i would be inefficien, and igh lead o widespread sarvaion. We believe ha a decree ha lands be reurned o heir previous owners is also such a siple, racable rule. When invesen aciviy is iporan, i ay also be a secondbes way o balance beween he desire for efficiency and he fear of accuulaed arke power. 14 The ain idea is o allow he accuulaion of lands while he arke 14 In soe ways, a decree requiring he reurn of land is sipler o uphold han forbidding he sale of land, since wih he sale of land boh he buyer and seller have an ineres in having he ransacion copleed, and so are unlikely o repor ransgressions, while wih he reurn of land in he Jubilee, he ineress of he buyer and seller are diaerically opposed once he Jubilee arrives, so ransgressions are sure o be revealed.

9 8 reains relaively unconcenraed, bu o reurn he lands o heir original owners (a corporae breakup) before concenraion becoes oo high and social welfare is hared. This reurn of he land has he resul of decreasing concenraion, bu also of decreasing welfare-enhancing invesens. There are wo ways he liiing of concenraion can be carried ou. I can be decided and enaced upon a any poin in ie, as in he clean slae proclaaions discussed above. Thus, when he ruler sees ha hings have goen ou of hand, he declares a clean slae in order o lessen concenraion of econoic power. The upside fro such a syse is ha i allows axiu flexibiliy, so ha in paricularly difficul periods clean slaes can be proclaied ore frequenly, while in good ies hey can be ore infrequen. The downside fro his syse is ha i creaes uncerainy, and requires significan poliical power since i is likely o coe under aack by he wealhy landowners, who are hared by his edic. The uncerainy, in paricular, ay be crippling, since poenial buyers ay fear he oncoing of a clean slae proclaaion, and will hen be less prepared o purchase land fro he desiue. Since he supply of he desiue is likely o be relaively inelasic, his will have he probable effec of driving ransacion prices down, o he derien of he poor. The alernaive, as per he Jubilee, is o predeerine he ie a which he clean slae will be graned, losing flexibiliy, bu gaining ceriude. Noe ha since he dae of he reurn of he land is known fro he sar, purchasers are no hared, since his is aken ino accoun in he purchase price of he land (Raskovich, 1999). This is explicily aken ino consideraion in he Bible, which saes ha: When you ake a sale o your fellow or ake a purchase fro he hand of your fellow, do no aggrieve one anoher. According o he nuber of years afer he Jubilee year shall you buy fro your fellow, according o he nuber of crop years shall he sell o you. According o he greaer nuber of years shall you increase is price and according o he lesser nuber of years shall you decrease is price for he is selling you he nuber of crops. (Leviicus, 25, 14-16). And wih respec o buying back he land once sold: Then he shall reckon he years of his sale and reurn he reainder o he an o who he had sold i and he shall reurn o his ancesral heriage. (Leviicus, 25, 27). IV. The Model We deonsrae he radeoff discussed in he las secion wih a siple bu illusraive odel. Consider an econoy wih n idenical parcels of land, each owned

10 9 by a differen individual. There are wo ypes of landowners. Mos landowners are poor, and use he land hey own o subsis. There are a few, however, who are relaively rich, and have sufficien capial o engage in addiional econoic aciviies. Each landowner produces goods, which can be sold in a copeiive arke (or consued, wih any excess supply sold on he arke). Toal deand for he produc is given by Q Q ( P) d = d. The cos of producing he produc is idenical for all individual landowners, C = C q ), wih C > 0, and C > 0, he las because of ( i diinishing reurns. However, an invesen can be ade a he sar of he planing season ha will lower oal coss (including he cos of he invesen) by hq i. We assue for sipliciy ha his invesen canno be ade by he poor landowners because of a liquidiy consrain and an iperfec capial arke. Rich landowners, however, have sufficien capial o ake hese invesens. The aoun produced by a copeiive landowner is found by seing arginal cos equal o he expeced price, and i is assued o be sochasic due o ouside 2 influences (weaher, diseases, ec.). Thus, we wrie qi = qi (P) + ε, ε ~ ( 0, σ ). For sipliciy, we assue ha shocks are i.i.d. across landowners each period. 15 Define a subsisence level of consupion by q. In each period all landowners realize a cerain level of producion, wih any poor landowner receiving q i < q being forced o sell his land in order o survive. In each period, hen, an expeced proporion φ = Pr( q i < q) of he lands owned by he poor are sold, so ha years afer he clean slae, a proporion ( 1 φ ) of lands are sill held by poor individuals. The expeced supply of goods by hese privae landowners in ie is hen given by Q ( φ ) nq ( P) f = 1. We assue ha he lands sold are all purchased by a relaively sall group of wealhy individuals. 16 We also assue ha ebers of his group are sufficienly few and well organized o be able o coslessly enforce a carel agreeen (paricularly i 15 This assupion is no necessary. Shocks could be correlaed during any period across failies due o, for insance, weaher condiions. In his case, here will be years in which he rich buy ore land and years in which hey buy less. Accuulaion of landownership over ie would hen depend on he shocks, so ha he calculaions we ake would only be correc for he average experience. However, since he Jubilee is a repeiive process, and weaher condiions canno be expeced o repea heselves exacly once every fify years, using his average is appropriae. For oher clean slaes, proclaaion will occur ore ofen during econoic downswings.

11 10 since here are no laws forbidding such unions). Under hese condiions, his group will ac like a carel wih a copeiive fringe, i.e., he rich landowners cooperae o behave like a price leader, ha akes he presence of ouside copeiive firs ino consideraion when seing heir policy. 17 The residual deand facing his group is: Q r ( P) ( φ ) nq ( P) = Q Q = Q 1 (1) d f d Since arginal cos is increasing (and here are no fixed coss involved in using a field), he carel will always produce idenical quaniies in each field. In addiion, i will always ake cos-reducing invesens. Hence, invering (1), he objecive funcion of he carel is: where for he carel: Maxπ Q Q replaces P Q ( ) ( ) Q ( 1 φ ) i 1 nc, (2) Q ( ( ) ) + hq 1 1 φ n = Q r in (1). This opiizaion yields an opial producion level ( φ,, n, h, C( q ) Q ( P) ) Q = Q i, d. (3) While his er canno be solved for explicily a his level of generaliy, coparaive saics are possible using he iplici funcion heore. Thus, for exaple, 2 Q π Q φ =. (4) 2 φ π Q 2 Since he denoinaor is negaive (second order condiion): 2 Q π C Q sign = sign = φ Q φ ( 1 φ ) ( 1 φ ) ( 1 ) 1 2 > 0. (5) Siilarly, i is sraighforward o show ha he aoun produced by he carel will increase if, n or h increases. Changes in he deand curve and cos curve would have o be furher specified in order o deerine heir signs. Replacing (3) in (1) will yield he price: P ( φ,, n, h, C( q ) Q ( P) ) = P. (6) i, d The coparaive saics of he price canno all be deerined, bu an increase in h (he cos savings fro he invesen) will lead o a decrease in he price. Replacing (6) in 16 The price paid for he land is no an issue here, bu will be beween he value placed on he land by he seller, and he value of he land o he buyer. In he case under consideraion, he buyer is likely o have far ore bargaining power han he seller is. 17 See e.g., Carlon and Perloff, 2000.

12 Q f and adding i o Q 11 Q, we ge he oal quaniy produced: ( φ,, n, h, C( q ) Q ( P) ) = Q. (7) i, d Once again, os coparaive saics are indeerinae, bu an increase in h will lead o an increase in oal producion. In wha follows, we assue ha he crux of he proclaaion is o axiize socieal welfare. Consuer surplus will equal: = P ( P) CS Q dp (8) d Usually his would sricly decrease wih increases in he size of he carel. Bu, as deonsraed in Carlon and Perloff (2000, Chaper 5) he decrease would no be linear. Raher, he daage is a firs sall, bu i increases a an increasing rae as he carel gains conrol over ore resources. In our case consuer surplus will acually rise iniially wih increases in carel size because of he increase in cos saving invesens. Once consuer surplus begins o decrease i will exhibi he usual paern jus described. This will be deonsraed in he exaple in he nex Secion. Producer surplus will equal: ( ) nc( q ( P ) ( 1 ( 1 φ ) ) Q PS = P Q 1 φ i nc + hq ( 1 ( 1 ) ) n. (9) φ The firs er in (9) is he incoe, he second he cos of he fringe firs, he hird he cos of he carel firs, and he las er is cos savings fro he invesen. Noe ha he savings fro he invesen are realized even when he carel is very sall ( PS Q = h), bu he derivaive of he oher hree ers wih respec o Q approaches zero as approaches zero. Thus, we are guaraneed ha for sufficienly sall values of welfare will be enhanced by increased concenraion. The oal effec will hus be o iniially increase welfare as ore lands are being purchased. Welfare will coninue o increase, bu ay a soe poin fall. This will occur if, as a resul of increased prices, he gain fro cos savings becoes ouweighed by he fall in consuer surplus. This relaionship is deonsraed in Figure 1. In his figure, as in he odel, ie is a proxy for he porion of he asses held by he carel. Welfare increases unil period 1, and hen decreases. The firs-bes soluion would be o lii he concenraion of land ownership o he level ha exiss

13 12 iniially (resuling in copeiive pricing (no carel)), and a he sae ie, o have invesens ade by all landowners. However, he firs-bes soluion is no aainable. The alernaive ha suggess iself fro Figure 1 is o have he clean slae coincide wih period 1. This, however is no he opial, because once a clean slae is declared, welfare reurns o he copeiive level, clean slae is no decreed, welfare reains above W c, and, as seen in he figure, if a W c unil period 2. Thus, we sugges, he declaraion of he clean slae should coincide wih period 2. The difference beween a clean slae and he Jubilee is ha in he forer a clean slae will be proclaied if and when 2 is reached, and so can be based on econoic developens, while in he laer i is predeerined, and hus us be based on expecaions. V. An Exaple To illusrae he odel, we presen he following exaple, which considers a Jubilee ype (fixed iing) declaraion. The exaple could as easily be hough of as an exaple of he expeced opial iing of a clean slae proclaaion. The exaple has been fixed o yield he righ resul (a Jubilee once every fify years). I is no our conenion o posi ha fify is he opial nuber of years beween proclaaions. Raher, our poin is o deonsrae ha he Jubilee can help balance beween decreased copeiion on he one hand, and he abiliy o ake opial invesens on he oher hand, and as such allows he econoy o approach he opial soluion. Assue a deand curve Q d = P, a cos funcion C = 20q i + 10qi, 2 and 1000 parcels of land. In addiion, assue he invesen lowers arginal cos by 1.85 per uni, and ha wo percen of he (reaining) privae landowners us sell heir land each year. Under hese condiions, producion levels and price will be se as follows: Q M ( )( ) =, (8) Q M P =, and (9) ( P 20) 0.98 Q f = (10) 20 Table 1 deonsraes he resuling siuaion. The firs row shows he oucoe

14 13 if he firs-bes were aained i.e., if invesens could be ade by all landowners, so ha no lands were sold. However, since his resul is no aainable, we show how he key variables change over ie under a Jubilee regie. This able shows how he econoy progresses as he Jubilee year approaches. The criical variable fro our perspecive appears in he las colun - oal welfare. Noe ha oal welfare is axiized in year 23, during which ie 37.2 percen of he land is owned by he carel (which accouns for 31.6 percen of producion). However, even afer his dae welfare reains above ha in year zero, which is wha is aained when lands are reurned o heir iniial owners in he Jubilee year. Thus, i is no opial o declare he Jubilee a his poin; raher he reurn of lands should be done when welfare falls below he level wih copeiion. This occurs, in our siplified exaple, in year 50. Noe also in he able ha, as discussed above, consuer surplus iniially rises wih increased purchases by he carel, and, concurrenly, prices fall. This occurs because he negaive effecs of a carel approach zero when he size of he carel approaches zero, and hen increase ore han proporionally wih carel size. The benefi fro he invesen, however, is obained iediaely. Consuer surplus, in our exaple, is axiized 4 years afer axiu diffusion of lands is aained following he Jubilee proclaaion. VI. Suary In his paper we sugges a new view ha reas clean slae proclaaions, such as he Biblical Jubilee, as ani-onopoly laws. This reaen is suppored by he fac ha he edics revolved around he predoinan facors of producion alone, and were unconcerned wih oher issues of equiy and inequaliy. Thus, for insance, one of he edics is ha land for culivaion us be reurned o is original owner, while land for consupion purposes are no reurned. While clean slaes and he Jubilee share os characerisics, one ajor difference exiss - while clean slae laws were decreed by rulers and a he discreion of hese rulers, he Jubilee se a fixed ie period beween proclaaions (50 years). Given ha he Jubilee was enaced afer he incepion of clean slaes, we view his choice as he deerinaion of a fundaenal radeoff beween fixed and variable inervals beween proclaaions. In paricular, while a variable inerval allows

15 14 flexibiliy, i leads o uncerainy on he par of sellers and buyers. In our view, a fixed period beween clean slaes was chosen for he Jubilee because he uncerainy in previous clean slaes resuled in oo uch inefficiency. Two alernaives o he ani-onopoly approach can be aken. The firs alernaive is o say ha he 50-year decree of he Jubilee is siply a Biblical esiaion of how uch ie should be allowed o pass before acion is aken. The second alernaive ses fro he observaion ha i is he rich who are, in general, acquiring he land, and ha i is herefore quie plausible ha he purchasers are able o pu he land o beer use han he sellers, siply because hey have he resources o work he land and inves in he land in a ore efficien anner. In he odel we develop his second alernaive, and deonsrae ha he requireen o reurn purchased land o is original owner can be a second-bes soluion o excessive arke concenraion in he presence of iperfec capial arkes. There are wo opposing forces in effec. Efficiency requires allowing goods o be freely ransferred o he people ha value he os. In a siuaion in which aaining hese cos savings requires an invesen, poor land-owners ay be incapable of raising he capial necessary o inves in heir land because of iperfecions in he capial arkes. In his insance, hese lands will be ore valuable o sociey if hey are owned by he rich, since sale of he land o he rich allows invesens o be ade and cos savings o be realized. On he oher hand, accuulaion of lands in he hands of he few allows unreasonable arke power in an econoy based predoinanly on agriculure. Clean slae proclaaions, hen, play he role of odern day anirus law allowing for welfare enhancing invesens o be ade, bu liiing onopoly power.

16 15 References Carlon, D.W. and Perloff, J.M., Modern Indusrial Organizaion. Third ediion. Addison Wesley Longan, Inc.: Reading, Massacusses. Fager, Jeffrey A., Land Tenure and The Biblical Jubilee. Sheffield: Sheffield Acadeic Press, Ld. Hudson, M., February The Econoic Roos of he Jubilee, Bible Review, pp Milgro, J., Soe Posulaes of he Jubilee: A Pragaic Soluion o Universal Inequiies, Finance & Bien Coun/Coon Good Suppleen No. 1, Jean-Michel Bonvin ed. Deb and he Jubilee: Pacing he Econoy, pp Posner, R.A The Econoic Analysis of Law 4 h ediion. Lile Brown. Raskovich, A., June The Econoics of Release, Bible Review, p. 8. Rosenberg, J. and Weiss, A., The Jubilee as Anirus Legislaion, Finance & Bien Coun/Coon Good Suppleen No. 1, Jean-Michel Bonvin ed. Deb and he Jubilee: Pacing he Econoy, pp Wesbrook, Rayond, Propery and he Faily in Biblical Law. JSOTSup 113. Sheffield: Sheffield Acadeic Press, Ld.

17 16 Figure 1 welfare W c 1 2 ie Table 1 Year Non-Carel Price Carel Non-Carel Toal Consuer Producer Welfare Firs Producion Producion Quaniy Surplus Surplus Firsbes