Of biblical interest, brotherhood and charity

Abstract

Historically restrictions on interest rates are one of the most common examples of intervention in the market. It has recently been suggested that the biblical prohibition of interest was a primitive form of social insurance. This paper rejects this approach and argues that a better understanding of the prohibition of interest in the Pentateuch is that the goal was to limit the power of the creditor with regard to the debtor. This reduced the level of inequality in society, which was considered a greater benefit than the economic inefficiencies that resulted from the reduction in the available supply of funds. This understanding of the prohibition of interest is integrated into the biblical system of charity and some examples are provided of the applicability of the biblical laws of lending to present day issues.