Israeli Marxism

Steven Plaut

It is difficult to explain to people living outside of Israel, and especially to Americans, the extent to which Israelis truly believe in communism.

Sometimes they call it socialism, but they basically mean communism.

This is not to say that they behave as communists in their private lives. Quite the contrary, Israelis live as the ultimate ideal of capitalism. They are enormously individualist. They are exceptionally good at starting and managing businesses, and of development and marketing innovations. Israel as a country has more start-up businesses than all of Europe. It registers more patents than any European country. Yet those very same Israelis, who demonstrate every day their skills in succeeding in markets, hate markets. The word “socialism” carries enormously romantic and positive implications for Israelis. Especially among educated (non-Russian-born) Israelis. The word capitalism is something of an obscenity for most Israelis. I suspect that someone arrested for assault could get himself off in court if he claimed the victim had called him a capitalist, it being a form of hate speech. The Israeli media invariably use the word “capitalism” in conjunction with the word piggish. (Ironically, the one exception is the business editor of Haaretz, who supports market capitalism, while the rest of the same newspaper yearns for communism.) The only conceivable form of market economy in the minds of the Israeli chattering class is “piggish capitalism.” You would not believe the portion of Israeli professors and intellectuals who use that expression. The head of the Histadrut, Israel’s largest organized crime family, uses it, being a loyal believer in piggish communism.

In normal countries, pointing out that someone is a card-carrying member of the communist party is usually more than enough to discredit that person. Not in Israel. Carriers of communist party membership cards do so with pride. Most of the members of the history department at Tel Aviv University are such communists. So are oodles of other academics.

On the one hand, the operation of markets is what makes Israel a successful viable country, one incidentally that experienced almost no implosion at all during the global financial collapse of the past 4 years. But on the other hand, markets are things Israelis claim they want suppressed. Literate Israelis insist in unison that markets are what is wrong with the world, and suppressing markets is the answer to Israel’s problems. Markets are evil, rewarding selfishness. Benevolent governmental bureaucrats controlling the economy are what is needed.

Not every Israeli, mind you. Russian-Israelis, who today are maybe a fifth of the population, have no patience for those preaching the wonders of communism. And they are notably absent in the current “social justice” rallies and marches, or what I have been calling the Woodstock along the Yarkon Festival. Orthodox Jews rarely mouth the slogans of nostalgia for Bolshevik central planning of markets, although there are exceptions. (The commentator on the Torah portion in Maariv cannot get enough of communism and insists that suppressing piggish-capitalism is the highest form of Jewish ethics.)

Israeli academics are almost universally anti-capitalism. I am on the list of a chat list of Israeli social science faculty members, and for the past few weeks it has carried hundreds of postings yearning for socialist controls and denouncing capitalism. The posteurs universally fantasize about Israel adopting Scandinavian-style “socialism.” Putting aside some doubts as to how pleasant life really is in Scandinavia (witness Norway recently), Scandinavian “socialism” is actually not. It is essentially free markets mixed with very high tax rates and a gargantuan welfare state providing cradle-to-grave welfare services at state expense. In other words, Scandinavia has always been far more capitalistic countries than Israel, certainly of Israel was before the 1980s. In addition, Israel has always provided Scandinavian-style welfare state services, but without the freeing of markets and liberalization of production that characterized Scandinavia.

Academic economists generally do not join the antlered herds in pining for bolshevism, but there are exceptions. Israeli economists are among the few who know what a market is, what a price is, what a wage is. The protesters never know these things. But Israel has a long history of academic prostitution and one can always find a few academic economists willing to endorse the most idiotic “ideas” of those who understand nothing about economics, if it earns them a shekel or advances their careers. Hence the most passionate supporter of RAISING the minimum wage is “economist” Avishai Braverman​, the guy who turned Ben Gurion​ University into Hamastan, and one can find similar cases of street-walking economists endorsing rent controls, nationalizations, and other fundamental axioms of economic Bolshevism.

Most people are not aware of it but Israel began its existence as a country with a system of Bolshevik central control. In its first years Ben Gurion implemented a system of massive nationalization and near-universal price and wage controls. It differed little from the economic structure created by Lenin. Ben Gurion got away with it for a while because of the War of Independence and the national emergency. Like in that old joke about how communism in the Sahara would produce a shortage of sand, by the early 1950s everything in Israel was in shortage, buying anything and everything involved endless Soviet-style queues, and most products could only be obtained in the black markets.

To Ben Gurion’s credit, he realized by the early 1950s that the system of Bolshevik controls was unworkable. Curiously, Lenin had also understood this and took steps to dismantle the controls, except that he died and was replaced by Stalin before serious reform took place in the Soviet Union. Lenin called his plan for partial de-Bolshevikation of the economy the “New Economic Plan” or NEP, exactly the SAME name adopted by Ben Gurion for HIS reforms in the early 1950s. (No coincidence!)

While most price controls were ended, other forms of economic Bolshevism were retained by Ben Gurion and his MAPAI party comrades. Huge portions of Israeli industry were nationalized, and much of what was left was semi-nationalized and grossly mismanaged by turning it over to the Histadrut trade union federation.

Economic policy sought to suppress competition everywhere. It strived to maximize the number of monopolies and cartels in the economy. The government controlled enormous amounts of resources, which it handed out as political favors, often to cronies and party oligarchs. Tax rates were enormous and sometimes exceed 100%. Profits by enterprises were derived mainly from government subsidies and handouts. Government policy was protectionist and anti-competitive. The capital market was suppressed and nationalized. The government’s working philosophy demanded that Israelis essentially turn all their income, savings, and wealth over to the government, and then the government bureaucracy would take care of the needs of the public and of citizens.