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I am wondering how does one figure out what parts of the Bible are figurative, and what parts are actual events? From what I know, there are those who debate if such stories such as the world’s creation, Adam’s sin, and the Exodus really occurred as described. Is there any way to determine when the Torah is and is not meant to be taken literally?
It is a very good and important question. Before all, I should state that our tradition teaches us that every word of the Torah is the precise word of God, as dictated to Moses (Talmud Sanhedrin 99a, Maimonides Laws of Repentance 3:8). The Torah is referred to as “the Torah of truth” (e.g. Malachi 2:6, Yigdal prayer). Thus, our question, correctly stated, is not if parts of our Torah should not be taken as factual or accurate. The Torah is entirely “true” – the precise words of the God of truth. The question is only if God intended His words to be understood as literal truth or at times more figuratively.
A second general point I should make is that generally speaking, this is not something we need to figure out on our own. When God gave Moses the Torah, He also gave him the Oral Law, explaining how the Written Torah was to be understood. (See here for more details on this.) The Oral Law tells us when laws and episodes of the Torah are to be understood literally and when more figuratively.
With these introductions, I think the general pattern we find in the Torah is that the vast majority of it is taken as literal truth. Certainly entire episodes such as the Flood and the Exodus occurred more or less as described.
(One possible exception is the Book of Job, which according to one opinion in the Talmud is a parable - a fictional backdrop for discussing the dilemma of why bad things happen to good people and not an actual occurrence. Although this opinion is rejected by the Talmud (Baba Batra 15a), it does bear mention. See this past response for a fuller treatment.)
Even so, there are many examples of specific events, details or laws which our tradition teaches us are not to be taken entirely literally. They are “true,” to be sure, but not true in a literal sense.
Perhaps the most salient example of this is the story of Creation. The Torah describes the creation as a simple process occurring in six days, yet clearly much more is involved than the simple reading of the Torah implies. The Talmud considers the story of creation to contain some of the deepest secrets of Kabbalah, which may be taught only to a single student at a time (Mishna Hagigah 2:1).
Further, the Sages clearly exclude the first days of Genesis – before Adam’s creation – from our regular calendar. The current count of 5775 years from Creation actually counts from the first day of Adam’s life (on Rosh Hashanah), not the first day of creation. The earlier days, before the world’s first Rosh Hashanah, are described as part of the “year of tohu (emptiness, chaos).” It is thus entirely possible that the “days” referred to in the story of Creation do not mean 24-hour days but epochs. (See this article which discusses this at length.)
Another good example is Genesis 35:22 which states that Reuben slept with Rachel's handmaid Bilhah. The Talmud (Shabbat 55b) explains that he did not literally do so. Rather, he moved his father's bed from one tent to another (as a protest that after Rachel's death he moved in with Rachel's maid rather than with Leah). Even so, the Torah equated his action – taking liberties with his father's personal life – to actually committing the offense.
Below I cite some other well-known examples.
(a) The Torah appears to prescribe the punishment for certain offenses as 40 lashes (Deut. 25:3), while the Talmud teaches us that the verses should be read in a way which implies 39 (Mishna Makkot 3:10).
(b) The Torah’s justice demands “an eye for an eye” (Exodus 21:24) while the Talmud teaches us that the punishment is actually monetary. The meaning of the verse is that such is true justice – what the aggressor truly deserves. Yet in practice, the courts may not administer such a punishment – in part because knocking out the assailant’s eye may kill him, giving him more than he deserves. The Torah’s statement is true, yet not implementable in practice. (See here for a more detailed discussion.)
(c) The Torah appears to require that we place the head Tefillin between our eyes (Deut. 6:8), while that phrase is interpreted by the Talmud to mean the front part of the head (Menachot 37b based on Deut. 14:1).
(d) Adam was told that on the day he eats of the fruit of the Tree of Knowledge he would die, yet he lived another 930 years. According to the Midrash, he did die on that “day” – for 1000 years is a day in God’s eyes (based on Psalms 90:4). See here.
(e) There are verses which clearly use terms poetically, such as the “four corners of the earth” of Isaiah 11:12.
Thus, in general, we will not find entire episodes in the Torah explained away as allegory. Yet, there is some degree of leeway in the interpretation of particular verses. Almost invariably, the classic sources guide us as to when the Torah’s intent is more and less literal.