Israel’s political economy can be conceptualized as the process of domestic capitalist development which is increasingly interconnected with, and embedded in the broader context of global and regional change. One of the most notable components of this process is differential accumulation. 1 This component entails the consolidation and rise of the ruling class in Israel, the most dominant capital groups under the control of this ruling class, and the relationship between them with the changing nature of world capitalism. This relationship can be either reinforcing or conflictual. Given the ongoing changes in capitalism both locally and globally, there is a need for the ruling class in Israel to make a shift in their approach to nationalism. This is from Zionist nationalism to one that entails regional integration and openness. 2 3 For a long time, Israel’s capitalism functioned as part of the broader context of superpower confrontation. It also operated under conditions of stagnation, inflation, and war economy. These conditions necessitated the need for a strong nationalist ideology and an emphasis on ethnicity among other factors. This approach to accumulation was not sustainable and encountered various challenges. The continuous globalization of investment and trade, challenges of inflation and stagnation, and such issues as the Palestinian uprising have necessitated the need for an alternative regime in Israel. 4 This regime has been characterized by transnational accumulation and the increased integration of local capital into the global ownership circuits. 5 Likewise, it has been associated with a deviation from the national consensus and its associated attributes, focus on individualism as opposed to collectivism, the decline of a welfare state in favor of sound finance, and lastly, the disintegration of organized labour as the power of businesses continue rising. With this background, this essay explores the political economy of Israel in the context of its uniqueness and classes. However, an emphasis is placed on the country's class structure.
Background
The actions of any nation-state are often dominated by an amorphous group that is comprised of rule makers, state officials, and central-decision makers. This group of individuals is allegedly driven by the need to further the national interest. As a result, the group plays a vital role in the achievement of such broad macroeconomic goals as a desirable balance of payment and growth. The group is also essential in meeting such macro-political aims as social stability and military prowess. These goals are often perceived as being independent of the specific interests of numerous societal groups. Likewise, the objectives of a nation-state are often conceptualized in aggregate terms. In the context of this aggregate framework, practitioners usually subdivide society into economics and politics. In Israel's case, the economic system has not been able to guarantee universal welfare. This shortcoming is associated with inefficiencies. Israel’s political system undermines this efficiency in its quest to meet such additional goals as national security. This is exacerbated by the failure to strike a balance between meeting security goals and advancing the nation’s economic growth while taking into consideration the production possibilities of the nation.
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Israel’s military expenditures are aimed at deterring the nation’s potential enemies from initiating war and ensuring that it easily achieves superiority in case of war. This justification of military spending makes it difficult to assess a military expenditure program’s success or failure. On the other hand, while the Israeli society is free, democratic, peace-seeking, and focused on improving its people's quality of life just like other nations, it has been coerced into a state of being in a constant war. 6 The economy is also wholly subjugated to the state. This implies that the nation's economic goals are driven by the natural need for the country to survive. When planning for such survival, economic growth cannot be left out even if it is not one of the intended objectives. This is because economic growth acts as a means of facilitating the establishment of a solid defense system which is necessary in light of future wars. In this case, the nation is concerned with its ability to respond to the increasing challenges in the weapon market globally as well as its ability to maintain its competitive advantage and position. To achieve the two, Israel has to focus on domestic dexterity among other strategies. It should also focus on looking into the future and preparing adequately in response to this future.
The uniqueness of Israel is first driven by the fact that as opposed to other democracies, the country has been characterized by a continuous state of war. This has been initiated by the nation's hostile neighbors. 7 As a result, applying the narrative of the military-industrial complex in terms of a conspiracy by the leaders of the defense, political, and economic establishment in a bid to further their interests cannot be applied. Israel has experienced war continuously since its establishment. Also, the full nature war in Israel coupled with the importance of security to the nation have created a scenario whereby the various civil spheres fall within the security scope and are characterized by secrecy. Thus, beyond the political and ideological disagreements that are common in Israel, the threat to the nation’s survival as driven by the Arab-Israeli dispute cannot be overstated. 8 Israel is also unique in that its founding fathers put in place an authoritarian and socialist culture. Israel's challenges are closely tied to this culture. Specifically, a socialist culture is bound to result in a statist bureaucracy. Subsequently, the statist bureaucracy dampens the people's drive to engage in private enterprise. 9 This drain's the vitality of a society consequently resulting in chronic stagnation. This is the case in Israel. For instance, the government predominates the economy making Israel one of the most socialist nations. The government’s budget exceeds the country’s gross national product (GNP). Figure I below highlights growth in Israel’s GNP in recent years. Also, various controls are instituted on the actions of private-sector companies, government officials, and individual citizens. The country is thus bound to be affected by the democratic west and the east that is centrally controlled.
Figure I: Israel’s GNP from 2016 to 2018
Israel is unique in that, until recently, the country is unlike other capitalist societies. The nation’s history can be traced back to a trilateral relationship between three key factors. These include the pioneering elite who stamped their control via political parties, the settlement movement, and the bureaucratic classes that recognized the relationship's dominance. For instance, political parties had tremendous powers in the party state. Therefore, power and the Israeli society's historical course were anchored on its formal political sphere and was put in the hands of its political elite. 10 Over time, emphasis on the primary role of decision makers and politics was used in the separation of economics and politics. It was also used as a means of diverting attention from Israel’s class structure. Notably, control was seen to be wielded by former army officers and politicians. It can be argued that since the two groups were from a non-capitalist background, class conflict was not relevant in Israel. Owing to this phenomenon, Israel was viewed as a classless society. In this kind of society, it was safe to ignore such issues as the consolidation and growth of the ruling class; the capital accumulation process; resource ownership in the country; income distribution among the citizenry; the methods of legitimation and persuasion; economic power control; and lastly, the means of violence. Recent developments have resulted in increased economic integration, the creation of a business structure that is highly concentrated, a more developed and industrial mass production system, and lastly, the growth of wage earners in the urban areas.
Class Structure and the Society
Class Structure, Employment Relations and Economic Efficiency
Societies, whether modern or pre-modern, are likely to boast different stratification structures. In the modern, capitalist societies, the structure and process of the stratification system are characterized by two distinct attributes. Firstly, the formation of the social structure is facilitated by the division of labor as experienced in the marketplace. Secondly, the impacts of such traditional ascriptive criteria as ethnicity on the stratification processes are projected to be on a declining trajectory. 11 The establishment and maintenance of class divisions in modern society is informed by various factors. One central theme is concerned with employment relations. Two forms of employment relations are likely to be distinguished in this regard. Firstly, employment of lowly graded non-manual workers and manual workers involves the use of a labor contract. Conversely, employing professional managerial and administrative employees in organizations that are characterized by bureaucracies entails service relationship. Apart from these forms of employment relations, mixed types of employment are also likely.
The concept of class position cannot be decoupled from economic efficiency. For a nation to attain economic efficiency, employers have to provide suitable employment relations to some employees and at the same time offer less desirable ones to others. 12 In this regard, an employer’s quest to achieve economic efficiency acts as the basis for the different employment relations. It is a differentiation that informs class divisions. Thus, for employers to achieve economic efficiency, they don't have to exploit their employees necessarily. Instead, employers may develop different employment contracts for employees based on the activities they are undertaking. The differentiation of the existing employment contracts is often viewed as the response by an employer to two possible sources of contractual risk. The first risk is concerned with the degree of difficulty associated with monitoring the output of employees. The second risk pertains to the extent of human asset specificity as used by employees. Therefore, in cases where both human assets specificity and monitoring are negligible, such as in assembly line workers, employment relations similar to those of a labor contract become apparent. However, in case of a combination of high levels of human assets specificity and monitoring difficulties, employers expect to gain the commitment of their employees' to the employing organization. Therefore, service relationship employment relations bear more benefits to the employer.
The basis of class differentiation in most societies is the interest of employers in efficiency as opposed to antagonism and exploitation. 13 It is thus expected that in capitalist and modern society that boasts a market economy, emergence of class division as driven by employment relations is inevitable. Moreover, with a society’s progression, achievements tend to replace the conventional ascriptive criteria as the primary elements of stratification processes. This process has changed significantly in the modern era. In modern and democratic societies, an individual’s social position is not determined by his or her birth. Instead, the stratification process is determined by such new factors as education. A similar narrative has also been advanced by the proponent of the industrial society theory. In this case, it is argued that the industrialization process affects stratification in two ways. These are either processual or structural. Processual effects are related to the inheritance o social positions from one generation to another. Thus, the industrialization process changes the processes via which persons are allocated to particular positions in the division of labor. At the center of this argument is a shift from ascription to achievement as the primary criterion for social selection. 14 By focussing on such ascriptive criteria as ethnicity in the modern society’s stratification process, it can be argued that there is a decline in the role of ascriptive criteria in the stratification process.
The Israeli Society
Ancient Israel was not only a political society but also a religious entity. Regarding the latter, ancient Israel was governed by a religious monarchy that was characterized by priesthood. As a result, society was not solely politically motivated. Instead, it was also driven by religion. 15 Religion was firmly ingrained in Israeli's monarchy. As a result, the king was expected to rule in a given way and uphold certain religious ideals. Consequently, the nation’s social classes reflected this arrangement. There existed a social class comprised of priests. The rest of the society was divided into rulers, those in the royal court or military, and lastly, the working class who comprised of artisans and farmers.
The Israeli king was charged with the responsibilities of ruling as well as defending the nation from others. The king was expected to rule on behalf of the people’s god, popularly known as Yahweh. The religion was comprised of various covenants between Yahweh and the people. Thus, the king was required to uphold the various covenants. These covenants were contracts that governed who the people could worship, their interactions with the non-Israelites, and other aspects of their everyday life. Often, the king made connections with various nations mostly through marriages. By doing so, he would end promoting the worshipping of other gods. This was a violation of Yahweh's covenant and led to the objection of the king's leadership approach by the prophets. Apart from the various government officials, kings and queens, the royal court boasted other positions. One of these positions was that of a scribe. The scribe was not only a secretary but was also involved in accounting and judicial affairs. A cupbearer often accompanied the king. The cupbearer was required to fill the king' wine goblet frequently. A trustworthy and royal person was given the position of either cupbearer or scribe. This is because any tampering or mistakes were likely to be disastrous.
In ancient Israel, the division of the classes was informed by authority and power. The highest class or rank in the ancient Israeli social hierarchy was occupied by the pharaoh, who was the king. The king possessed more authority and power than any other person in Israel. For instance, pharaoh's decision was final, and no one could question this decision. This implies that everyone had to follow Pharaoh's orders. The pharaoh overlooked the kingdom's operations. The second rank in the social hierarchy was the upper class. These individuals comprised of landowners and were the highly wealthy individuals, the government officials, and army officials. Often, these people were natives of Israel. The middle class formed the subsequent class in the social hierarchy and comprised of artisans and merchants. While this group enjoyed various rights and substantial authority, this was minimal when compared to those of the upper class. However, this group led a better life compared to the lower class, slaves, and servants. The lower class was comprised of the farmers and unskilled laborers. These individuals were engaged in non-administrative work and had few authorities and rights. The lowest class in the Israeli social hierarchy comprised of servants and slaves. Members of this lower class were only expected to serve their owners. Thus, they enjoyed minimal rights and were of no much value. Compared to servants, the lifestyle of the slaves was worse. This is because their life belonged to their masters and they did not have free will. Figure II below is a representation of the social classes. This social system greatly influenced ancient Israel. However, this has changed tremendously.
Figure II: Israel’s Ancient Class Structure
Class Structure in Modern-day Israel
Currently, Israeli society is multi-ethnic and has been described as a dual society on two different levels. The primary level is characterized by a division between non-Jews and Jews, with the former being predominantly Arabs. Out of the national population, Arabs hold up to 17% of the citizenship. At the secondary level, a division exists amongst the Jews between the group that is of American or European origin and the one of African and Asian descent. The two groups are the Ashkenazi Jews and the Sephardi Jews respectively. 16 About 20% of the Jews are born of Israeli parents in Israel while the rest are either Ashkenazi or Sephardi Jews. Before the 1930's most of the Palestinians were farmers. The economic boom of the same period led to a proletarianization in the Palestinian society. Nevertheless, the most critical effect of this on the Palestinian society was the 1948 establishment of the state of Israel. On the establishment of this state, Palestinians emerged as a subordinate minority in Israel and accounted for about 12% of Israel's population in the 1950s. Majority of the Palestinians were also wage laborers who mostly did the most manual jobs in Israel. Likewise, the state amplified the Jewish national character while ignoring the Arab national claim.
The newly established Israeli state imposed a military government targeted on the Arab population. This was done in the guise of security reasons and lasted between 1949 and 1966. During this period, the movement of Israeli-Arab was curtailed as well as their labor movement. Their restrictions were aimed at protecting the Israeli-Jewish labor force. The new state also restricted all political activities among Israeli-Arabs, while the Arab leadership was co-opted into Zionist parties. A significant proportion of the national votes have been going to the Zionist parties. Further, the state began discriminating the Israeli-Arabs using institutional and legal means. Notably, this was expressed through confiscation of land leaving the Israeli-Arabs landless, and thus accelerating proletarianization of the Israeli-Arab workforce. The above dynamics have had an unprecedented impact on the local and global economy.
Impacts of Israel’s Class Structure on the Local and Global Political Economy
The implications of Israel’s class structure can best be understood in the context of the social-democratic theory. This theory postulates that material interests are the primary driver of support and opposition with regard to welfare states. 17 Classes act as critical drivers of the welfare state development with their interests being articulated forcefully by right and left parties as well as capital and labor associations. For instance, the public support for an egalitarian social policy is not only broad but is also skewed. Broadness is occasioned by the fact that social programs include the middle classes and their interests. Its skewness, on the other hand, is because the pervasiveness of class conflict in the political discourse intensifies the prominence of conflicting class interests regarding social policy. Public opinion is thus characterized by a heightened level of average support for the welfare state as well as prominent class differences.
In the Israeli society, the origins of the welfare state and the most critical aspects of its continuing development have their roots in the effort to institute a Jewish presence in Palestine as well as build its political, territorial and demographic base. Public opinion is characterized by an increased level of support for redistribution and other state-led interventions. It is also characterized by a weak differential between the classes. The difference between Israel's political left and right and the European standard is evident in the Israeli classes' political allegiance. For instance, the Labour party that has historically dominated not only society but also politics heavily depends on the support of the upper and middle classes, while the political right obtains support from predominantly lower-class religious groups and disadvantaged groups. The state-building and the nation in Israel have been shaped by the labor movement, the welfare state, and the left. As a result, a deep divide exists between Israel and various affluent democracies globally.
References
1 Nitzan, J., & Bichler, S. (1996). From war profits to peace dividends: the new political economy of Israel. Capital & Class , 20 (3), 61-94.
2 Robinson, W.I. (2014). The political economy of Israeli apartheid and the specter of genocide. Retrieved from https://truthout.org/articles/the-political-economy-of-israeli-apartheid-and-the-specter-of-genocide/
3 Plessner, Y. (1999). The political economy of Israel. Retrieved from https://www.meforum.org/articles/2006/political-economy-of-israel
4 Gordon, Y. (2014). When genocide is permissible. Retrieved from https://archive.fo/RPf3M
5 Robinson, W.I. (2014). The political economy of Israeli apartheid and the specter of genocide. Retrieved from https://truthout.org/articles/the-political-economy-of-israeli-apartheid-and-the-specter-of-genocide/
6 Nitzan, J., & Bichler, S. (2002). The global political economy of Israel: From war profits to peace dividends . Pluto Press.
7 Robinson, W.I. (2014). The political economy of Israeli apartheid and the specter of genocide. Retrieved from https://truthout.org/articles/the-political-economy-of-israeli-apartheid-and-the-specter-of-genocide/
8 Gordon, Y. (2014). When genocide is permissible. Retrieved from https://archive.fo/RPf3M
9 Plessner, Y. (1999). The political economy of Israel. Retrieved from https://www.meforum.org/articles/2006/political-economy-of-israel
10 Nitzan, J., & Bichler, S. (2002). The global political economy of Israel: From war profits to peace dividends . Pluto Press.
11 Yaish, M. (2001). Class structure in a deeply divided society: class and ethnic inequality in Israel, 1974–1991. The British journal of sociology , 52 (3), 409-437.
12 Ibid., 411
13 Ibid., 412
14 Yaish, M. (2001). Class structure in a deeply divided society: class and ethnic inequality in Israel, 1974–1991. The British journal of sociology , 52 (3), 409-437.
15 Shalev, M. (2007). The welfare state consensus in Israel: Placing class politics in context. Social justice, legitimacy, and the welfare state , 193-213.
16 Yaish, M. (2001). Class structure in a deeply divided society: class and ethnic inequality in Israel, 1974–1991. The British journal of sociology , 52 (3), 409-437.
17 Shalev, M. (2007). The welfare state consensus in Israel: Placing class politics in context. Social justice, legitimacy, and the welfare state , 193-213.
