Adam Smith and Judicial Categories

So we had previously discussed the question of why the Gemara in Sanhedrin considers Theft and Damages(גזילות וחבלות) to be a separate category from Admissions and Loans(הודאות והלוות).

Rav Marcus gave two possible reasons then:

1. Theft and Damages usually involve violence or threat of violence, while Admissions and Loans usually involve trickery or misunderstanding
2. Theft and Damages started with an illicit act, while Admissions and Loans start with a perfectly legal arrangement and only become a problem later on

I'd like to suggest some other possible answers(I actually made a previous attempt at this, which to my mind wasn't very successful), but to get there we'll need to take a detour to the 18th century in the still young United Kingdom...

Adam Smith on Robbery and Contracts

Vernon Smith’s recently discussed Adam Smith’s “The Theory of Moral Sentiments” on Econtalk. One of his points was Smith's theory of the relative severity of different legal categories:

Vernon: And he also points out that, in that development, that theft and robbery carry a greater punishment than a violation of promises. In other words, contracts. And he says, Why? He says, because robbery and theft take from us what we have already acquired. Violation of contract merely frustrates our expectation of gain. Okay? And he says that's different. And indeed, theft and robbery are criminal offenses. Violation of contract are only civil offenses. You can get redress, of course, but they are considered less serious. And he gets that from another fundamental proposition in Adam Smith, and that's the asymmetry between gains and losses.

Russ: It's incredible.

Guest: He says, we suffer, and I can tell you this one almost verbatim: He says, 'We suffer more when we fall from a better to a worse state than we ever gain when we arise from a worse to a better.' And he goes on, explains this, that it's loss of fortune, of reputation, of esteem. I mean, it isn't just money and fortune. He mentions, as I recall, three other things, but they have to do with our rank, our status

Russ: People don't pay as much attention to us. And that's a huge factor for Smith.

Guest: Yes. And we will be very careful to avoid that. And so this notion of the asymmetry between gains and losses is not only clearly stated more than one place in Adam Smith, but it's actually used to derive some of his results.

Smith distinguishes between theft and contract violation based on the severity of suffering imposed on the victim:

• Theft takes away what a person has—diminishing their status, which has a profound effect on a person socially/psychologically
• Violations of contract take away expected gains—also no fun, but at least the person’s current status is preserved

We can formulate a similar distinction with regard to our Sugya, focused on the effect on the victim:

• Theft and Damages- take away what a person has, causing them great suffering
• Admissions and Loans- take away property they expected to gain or, in the case of loans, money that they regarded to some degree as “extra” because they were willing to loan it out at zero interest as the Torah proscribes. This presumably causes them a lesser degree of suffering.

An Anthropological Explanation

So this is an interesting distinction, but I think we can delve a bit deeper. There is something just more basic about cases of Theft and Damages than Admissions and Loans(and Theft vs. Contract Violations too, for that matter). Here I'd like to draw on a distinction Professor Roberts makes in his book "How Adam Smith Can Change Your Life":

Before Einstein discovered relativity, before Rodin sculpted The Burghers of Calais, before the Eiffel Tower and the Chrysler Building, before Brutus of Troy founded Lon­don, before the first human being realized you could plant a seed and wait for it to grow, before the ambition deep within us caused all these changes in the human condition, we were, it appears, hunters and gatherers in small bands and clans. Subsistence was the most one could hope for, and it was not easy to achieve. Life was fragile; death came early and often.

In such a world, how we interacted with those around us made the difference between life  and death. There was no insurance company to insure your spear. There was no government to provide disability payments if you broke your leg chasing dinner. People must have leaned  heavily on each other. Trust was essential. Failure to chip in, to help out, to do your share must have been punished relentlessly and cheaply, through shame and anger the first time, but eventually with expulsion and exile if such behavior contin­ued. Every family, every extended family, and maybe every band and clan shared what they had with each other out of necessity.

The point is that some of our societal rules are conventions that evolved to cooperate better as part of human culture. To put it bluntly, a young child, or even an ape, understands the concept of Theft and Damages. One individual takes something from another or hits another--we understand that as wrong institutionally at the most basic of levels.

Admissions and Loans, on the other hand, are another story. Our child or primate would be hard put indeed to understand the obligatory power behind a verbal commitment or the obligation to return a loan once it's been given. As Jonathan Haidt's quote of primate expert Michael Tomasello goes:

It is inconceivable that you would ever see two chimpanzees carrying a log together.

Our unique Human ability to cooperate with one another by means of complex social conversions is something that belongs more to the realm of Culture than to the realm of Instinct(though Haidt argues there is also an innate component). Admissions and Loans belong to this category. Theft and Damages are a more basic part of our psychology, that because they are wrong in a more universal sense.