What does matzah have to do with business ethics?

“Bread of poor people? This matzah is what’s making us poor!” I’d guess that everyone who has attended a Passover seder in this century has heard this line, but my interest in the price of matzah does not stem merely from the desire to avoid this joke or to save money during this expensive holiday.  I started thinking about this after I gave a lecture series on Jewish business ethics, in which we discussed the underlying values of the Jewish laws of trade, contracts, and business dealings.  We explored the Torah and Rabbinic views of setting up a business environment which both encourages competition and growth while protecting individuals.

One area of Jewish business ethics which comes to mind in the matzah price discussion is Ona’ah, literally translated as misrepresentation or misappropriation.  The rabbinic obligations are (in abbreviated form) not to buy or sell an item for 1/6 more or less than its market price, if either the buyer or seller is unaware of the value of the goods.  The contemporary implications of this law are minimal, since every person can be considered a price expert with the help of a smartphone, so it is unlikely that someone will unknowingly pay well above market price.

However even if the practical implications of Ona’ah are lost in our modern era, the values implicit in these laws are still relevant.  One view of Ona’ah sees the problem in overcharging as a matter of deception – pretending that the item is worth more than its true value.  These laws teach that even if you have leverage, you should not utilize it to deceive the other party.

Another way to view Ona’ah is as a requirement to uphold fair and reasonable market standards, even in a place or industry for which regular markets do not apply.  In a competitive market, price is determined through a combination of supply and demand. For inelastic goods (items which people are willing to buy at any price) the price is determined by supply costs.  In these circumstances, even a hint of monopoly or oligopoly will cause the price to skyrocket.  This seems to be what has happened with handmade shmurah matzah prices.  Because demand is inelastic, the parties producing matzah can charge well above their production costs.  What Ona’ah tells us is that in such a circumstance producers should not simply charge as much as people are willing to pay, but should consider market pricing as if there existed a competitive market for this good.

One of the unusual aspects of Ona’ah is that the buyer and seller are both obligated to maintain market prices – the buyer is not allowed to knowingly overpay and the seller may not undercharge.  By paying more than what a fair market price would be, the consumer contributes to the abuse of the competitive market. The law requires that all parties involved in a transaction ensure that it is completed with Torah values intact.

I’m not calling for a boycott of handmade shmurah matza; this is only one aspect of one side of this discussion.  My intention is to take this opportunity to make ourselves aware of the concept of Ona’ah and what it implies for our contemporary brotherhood of Jewish market life.