Last March, Israel marked its 75th anniversary as a state. The Economist journal commented “Today Israel is hugely rich, safer than it has been for most of its history, and democratic—if, that is, you are prepared to exclude the territories it occupies (sic!). It has overcome wars, droughts and poverty with few natural endowments other than human grit. It is an outlier in the Middle East, a hub of innovation and a winner from globalisation.” These words now seem like a sick joke given the events of the last few weeks, or for that matter if we look at the real history of the Israeli state.
That history is one of Jewish immigrants coming to Palestine with the broad aim of setting up a ‘safe-haven’ state for Jews in their ‘homeland’ alongside the existing Arab inhabitants. Many of these Zionists dreamt of Israel as becoming a model ‘socialist society’, communally owned and run through local communes or kibbutzim acting, as an democratic alternative to the rule of sheikhs and generals in the Arab states. The reality was that in practice Jewish immigrants settling in Palestine and establishing a new ‘socialist’ state could only do so by the removal of hundreds of thousands of Arabs from their homes and land through violence.
Nevertheless, through a combination of massive immigration (which doubled the Jewish population), huge inputs of foreign investment by rich Jewish communities and mainly American capital, plus the setting-up of a strong military force, Israel’s economy grew very fast from 1948. This was the ‘golden age’ of post-war capitalism, when profit rates were high and investment was equally strong. So it was possible to inaugurate a new economy very fast. GNP grew at an average annual rate of 10.4 percent between 1948-1972. The capital needed to build the Israeli economy came from US aid transfers and loans, German reparation payments and the sale of Israeli state bonds abroad. Profitability was kept high by controlling prices and wages, so keeping workers’ real incomes from rising too much.
But then, as in the rest of advanced capitalist economies, the profitability of capital in Israel fell sharply from about the mid-1960s to the early 1980s. This brought economic crises as part of the international slump of 1974-5 and 1980-2. It also brought a new war with the Arab states in 1973. At this point in the story of the Israeli economy, it is very useful to look at the profitability of Israeli capital from the 1960s, as provided by the World Profitability Database.
The graph clearly shows the sharp fall in profitability to a low in the global slump of 1980-2. Between 1973 and 1985, GNP growth declined to about 2 percent per year, with no real increase in per capita output. At the same time, the inflation rate spiralled out of control, reaching a high of 445 percent in 1984 and the balance of payments deficit with the rest of the world hit highs.
Israel’s so-called democratic socialist state had to go if Israel’s capitalists were to prosper. And so, as in many other capitalist economies, Israelis now elected governments that aimed to end ‘socialism’ and open up the economy to capital without restrictions, while at the same time reducing Israel’s ‘welfare’ state and support for collectives like the kibbutz. Israel entered the neo-liberal era which lasted globally for the next two to three decades with a vengeance.
In 1983, the Tel Aviv Stock Exchange collapsed, bursting a huge financial bubble that had been growing for years. The right-wing Likud government blamed the banks. It took over Bank Hapoalim which had direct and indirect control over some 770 companies and controlled some 35 percent of the Israeli economy with the aim to privatise all these state assets. The state eventually sold the three major banks: Bank Hapoalim, Bank Leumi, and Bank Discount to private capitalists. The telecommunications industry and the ports were privatised.
In a carbon copy policy of Reagan in the US and Thatcher in the UK, between 1986-2000, 83 government owned companies were sold for a total of $8.7 billion US dollars. The national airline ELAL, the telecommunications network Bezeq, all the major banks and the other big five conglomerates were all sold off to buyers selected by the government. The buyers included many of Israel’s wealthiest, combined with moneyed American Jewry, and other foreign conglomerates. None of these companies were privately listed for sale. For example, the government sold Israel Chemicals Ltd. to the Eisenberg family through a private bidding process that was carried out between 1993 and 1997.
For a while these measures did help to get the profitability of Israeli capital up – in our profitability graph, there was a doubling of the rate of profit from 1982 to 2000. But the rise in profitability was mainly driven by a new influx of immigrants after the collapse of the Soviet Union and from North Africa. Immigration cheapened labour costs, while a period of seeming ‘truce’ with the Arabs ensued after the Oslo accords enabling even greater inflows of foreign investment.
This was the period of the expansion of ‘start-up hi-tech’ firms that Israel has become noted for and of the apparent integration of the Israeli economy into a a fast-globalising world economy. Nicknamed the “Start‑Up Nation”, Israel now has more than 7,000 active start‑up companies.
But this did not last. In the 21st century, Israel’s capitalist economy increasingly struggled like many other ‘emerging economies’. The big difference, of course, is that in its perpetual war with its neighbouring Arab states, Israel has been backed to the hilt by the US and Western capital. So even facing permanent conflict with its Arab neighbours and uprisings by the displaced Palestinians, it has been able to survive economically and also develop a formidable military force.
Ironically, massive immigration from the former Soviet Union, the importation of foreign workers and the rapid natural growth of the local Arab population, has made Israel less and less of a ‘Jewish state’ in population terms and still relatively small at just under 10m. But the impact of neoliberal policies and economic slowdown has not led to a shift to the left. The fear of Arab attacks and the failure of any effective alternative socialist opposition have instead led to the rise of religious and ethnic political parties. The race and religious cards have been played by Israeli capital to avoid any confrontation over its economic and social failures.
Economic crises have continued at regular intervals in the 21st century. In 2003, Netanyahu cut welfare benefits, privatised more state-owned corporations, reduced the top income tax rate, slashed public sector services and imposed anti-trade union laws. The Great Recession of 2008-9 followed and then the pandemic slump of 2020, when GDP fell 7%. The relative economic decline of the Israeli economy is revealed by the real GDP growth rate in the Golden Age, the profitability crisis of the 1970s, the neoliberal period and now in the Long Depression of the 2010s onwards.
In the past ten years the collective Kibbutzim have rapidly disappeared to be replaced by high-end suburban housing. Land values have skyrocketed with real estate speculation. There has been continual erosion in funding for health and other public services which has led to a rise in the private cost of health and adds to growing gaps in the access to services between those who have money and those who don’t.
The ‘socialist dream’ of the early Israeli state has now given way to the capitalist reality. The gap between the lowest and highest earners in Israel is the second highest in the industrialized world, and the child poverty rate is second only to Mexico among developed countries. An average of one in three Israeli children are living in poverty, with one in five families subsisting well below the poverty line.
Israel is one of the most unequal high-income countries. The bottom 50% of the population earn on average NIS 57,900, while the top 10% earn 19 times more. Thus, inequality levels are similar to those in the US, with the bottom 50% of the population earning 13% of total national income, while the top 10% share is 49%
Of course, poverty and the inequality gap is much greater for the Arab citizens of Israel who represent around 20% of Israel’s population. But poverty rates are also high in orthodox Jewish communities, which represent one-tenth of the population. As for Gaza and the West bank, poverty levels are horrendous.
In stark contrast, the concentration of wealth in Israel is the second highest in the western world. The notorious family fiefdoms include: Arison, Borovich, Danker, Ofer, Bino, Hamburger, Wiessman, Wertheim, Zisapel, Leviev, Federman, Saban, Fishman, Shachar, Kass, Strauss, Shmeltzer, and Tshuva. These families collectively control a fifth of the revenue generated from Israel’s leading companies and these top 500 companies account for 40% of the business sector and 59% of national revenue.
This latest war will not bring down the Israeli economy. The government is backed by military and financial support from the US.
Continual war may benefit the arms manufacturers and the military, but over the long term it lowers profitability and investment in the productive sectors of the economy. And for workers, apart from the horrible loss of life and limb, it means a straitjacket on improved prosperity and human development.
Israel’s capitalist governments have no solution to the interminable conflict with the Arab people under its occupation and next to its borders. Now with an outbreak of yet another war at a grotesquely intensified level of violence and retribution, the sweet words of the Economist on Israel’s 75th anniversary taste very sour – for both Palestinians and Israelis.
Is this to continue for another 75 years?
Michael Roberts Blog 
The Middle Orient is a major abscess of fixation in the geo-politics of imperialist rivalries that punctuate the fate of the final crisis of the rate of profit. Since the irreversible shaking of the dollar in 1971, the totalitarian spectacle of the greenback has continued to develop its own backyard to phase out all rival spheres of co-prosperity
C/C > C/V dead capital consumes living labor = irremediable fall in the rate of return.
Rate of profit 1880 = 45% 2023 = 6% Disregarding anticipations (credit), that’s a little less.
https://scholarworks.umass.edu/do/search/?q=rate%20of%20the%20profit&start=0&context=1066666&facet=
Israel is like the capitalist version of Cuba: that little and precious pet project that, for a plethora of historically specific reasons, became something like a too emotionally important thing to lose and, therefore, must be protected at all costs.
The only thing that keeps Israel afloat is American money and weapons, and the fact that its population, besides its many booms, is still small (so the Americans can still afford to keep it afloat) by modern nation-state standards. In this sense, Israel is to the USA what Estonia is to the European Union: a little showcase of success of its doctrine.
As for the eschatological aspect of Israel’s existence, well, even if they get Eretz Israel (the Greater Israel), it would still be a small enclave in a sea of Islamism. I really hope the Israeli people doesn’t feed itself the illusion Judaism will ever eradicate Islamism and take its place as one of the “world religions” (which are: Buddhism, Christianism and Islamism), because, to everyone who knows how to read a map, it is clear that will never happen. The golden era of religion — the Middle Ages, where conversion of entire kingdoms happened frequently and at breakneck speed — is gone. The window for a religion to become a world religion is closed.
Very strange stuff you write about Cuba.
Israel a capitalist version of Cuba? How does that work?
fascinating read…. with thanks
Dear Michael, it’s probably because of what you’ve just said, or let’s say strong probabilities, that Israel’s Ministry of Finance is declaring the possibility of being able to manage the entire civil war system.
Isarael is therefore entering a war economy, in other words, an economy of scarcity, control of production capacity, control of consumption capacity.
Any article which shows that religion cannot temper capitalism as you have shown with your analysis of inequality in Israel, is always useful.
I would like to touch on the Kibbutz movement. Essentially this was an example of barrack socialism. Communism requires internationalism, the opposite of any attempt to implant it in a settler state. Communism requires appropriating the resources of the most advanced capitalist countries not being sited on a farm in an impoverished part of the world as it was then. Communism requires the flourishing of the individual as Marx pointed out in the Critique of the Gotha Program not the levelling down as occurred on the Kibbutzim and which made them so unattractive to following generations which saw the cities providing more freedoms. Communism depends of conquering the commanding heights of the economy not being subject to the banks and merchants which the Kibbutz movement was, and which bankrupted it.
Its greatest achievement was providing the Israeli army with some of its most hardy commanders and soldiers. In short the Kibbutz movement was a travesty, a stain on the name socialist.
If I may digress a little on the subject of religion (re-ligare).
Religion and its messianism were born on the basis of exchange value, and there’s no such thing as animist or Taoist messianism (the latter is a bit different, since, like the Mayans, it’s a society based on land rent), and so on.
Religion has become the world, since the destiny of merchandise is the global market.
Remember, by the way, that man generically produces and reproduces “directly” for human needs of all kinds.
And that he began to produce and reproduce the anti-human from the moment his production became autonomous, producing a residual fraction that totally escapes him, for a supply/demand market.
And so, in exchange for his exploitation (extraction of surplus-value), he receives an indirect means “money” to meet his needs, which he previously produced directly for his own needs or the needs of the community.
Religion precedes capitalism by millennia, so I don’t know about this exchange value stuff.
However, it seems religion is very closely related to the birth of patriarchy, at least in the West: the first sacerdotal roles we can identify through archaeology in pre-Rome and early Rome (Kingdom) were almost surely fathers who headed their respective families, and they exerted this power of leadership through their role of some kind of priest, that is, over the execution of all rituals that involved the family’s existence. For example: only the father-priest could bury his family members.
Of course that the true theoretical birth of patriarchy must have been violence, i.e. the specialization of the first adult males into the activity of warfare (the creation of a warrior class) for lost-to-History reasons (we can only infer that by studying very primitive tribes from Central Africa, who may or may not be remnants of primitive communism). But the transition of primitive communism to ancient slavery may very well have involved the creation of religion, that is, first of the father-priest, then of the king (the “leader of leaders/men”, i.e. a father-priest who commands other father-priests), then of centralized religion.
vk
Don’t confuse exchange value with capitalism. Exchange value began in Neolithic times, with the birth of what we call HISTORY, with agrarian stocks (value), then calculi, then the State, then writing, then religion, then money, and so on, with the development of the commodity, then capitalism in the 15th century in Italy…
Émile Durkheim explained religion a century ago, and at least some sociologists think (Randall Collins for one) it still stands.
What props every religion up are rites and the demarcations between holy and profane. Other things are intellectual games that intellectuals have succeeded to implant. Rites are necessary to make people feel, really feel, that they are a part of society. And it is always useful to think about what is profane, that is can be dispensed with, and what is holy, that is what we never will give up.
I agree that the intellectual games are a nuisance. But it is also what will get a religion bust. According to Joel Mokyr it was the massive building of “truths” that eventually could be shown to be no truths at all that made the Christian churches loose power and prestige in the 18th-20th centuries. After they dropped these truths they have prospered better because of the rites that make people feel like a society.
@ Raoul
Exchange has always existed and will always exist (even in socialism and communism). In philosophy, exchange is any relation between equals. You don’t even have to be human to exchange.
Value only exists in capitalism, therefore exchange value only exists in capitalism or, to be more exact, in capital.
@ Jan Wiklund
Not only I disagree with Durkheim, but I also think sociology is a pseudo-science. But, to each their own.
The so-called pagan religions didn’t need a concept of profane (although they had one) and were votive: people did the rituals in exchange of the favor of the god(s). It was pure bargain. Indeed, they didn’t even have a concept of an afterlife — that’s a Judaism/Christian innovation. The concept you adhered to some religion and your only reward would come after you died was a complete novelty to the Romans when Christianity started to become popular.
Religion really reached its apex in the West during the Middle Ages. The Dark Ages were truly a Golden Age for religion (not just Christianity).
I agree about Israel’s ‘barrack socialism” . No doubt, there were many sincere idealists (e.g. Chomski) among of the early zionist “socialists” within the Kibbutz movement, but Zionism, from its beginnings, was a form of “jewish”* facsim, theorized by characters like Vladimir Joblotinski (an admirer of Mussolini). Israeli socialism/democracy/liberalism were/are mere window dressing.
The State of Isreal itself is the not product of the holocaust or Znionism as such, but of Anglo/American imperialism, the interests of which Israel’s early leaders swore to defend. The So-called “Jewish State” today has to be understood, historically, as a particularly noxious Middle Eastern outpost of the degenerating 400 year old colonial/imperialist system, and (according to Marx) its “jewish” mode of production: capitalism. It’s defeat will liberate both Palestinians and the millions of “jews” who are not capitalists…
*the term (derived from “Judaism”) is an empty signifier
vk
Your argument is flawed, for one thing you don’t know exactly what use value and exchange value are.
On the other hand, you’re taking an example of patriarchy on trial, let’s say Rome at some point, why not Summer or the Assyrians?
It seems to me that you should distinguish between community and society.
You’re missing the point: from the moment human production and reproduction become autonomous, every society is a system of domination, over all its members.
But even if you don’t know what value is, that doesn’t stop you from hopping from antiquity to savannah hop hop!
@ Drink Red
That’s class struggle (the substance of History), not exchange value.
Exactly. But Roberts titles his articles ‘the shattering of a dream’, ignoring that the state was built on dispossession, ethnic cleansing and continuous oppression. The use of the word ‘dream’ implies good intentions, adhering to some leftist belief of progressive Zionism that wanted to build ‘socialism’ in Palestine. Myths abound.
Ned Yes your are right in a way. That title does convey that thought and is misleading. I meant that many Zionists had the illusion that they were creating democratic socialism. But was not what the political elite of Israel really thought, of course.
quite the most concise and lucid analysis of Israel’s history I have ever seen in over sixty years of studying it
Surely, don’t you mean the long overdue end of the nightmare for Palestinians?
This nightmare is certainly a human disaster, a foreshadowing of the barbarism into which humanity is heading at full steam, in a system in decline.
You’ll never get a happy ending if you don’t start from the premise and understand what has generated all the nightmares, planetary nightmares that are a production of a crunchy capitalist system, Ukraine, Iraq, Afghanistan and so many other capitalist butcheries.
As Communists, we are in favor of a zero-State solution, since all the wars of liberation, while necessary and undeniable, have never freed people from servitude.
What they have done, and this is deplorable, is to leave one master to adopt another.
For a communist, every state is a sham.
A seemingly abrupt comment, but if you read it seriously : The Origin of the Family, Property and the State, you’ll find detailed explanations.
RE, ‘This nightmare is certainly a human disaster, a foreshadowing of the barbarism into which humanity is heading at full steam, in a system in decline.’
Well I think Roberts’ title is a complete misnomer, Israel was NEVER the dream of the Jewish ‘people’ but the creation of British imperialism and Zionism has many parallels with Fascism, ‘the Chosen People’ being the most obvious and in fact, the title, ‘ Israel: the shattering of a dream’ perpetuates the myth, which is why I left my comment and the fact that the article itself pretty much avoids the fundamental issues by hiding behind cold, hard economic ‘facts’, merely reinforces the power of propaganda to blind us to reality, for Palestinians.
You are right until the 1930s and the victory of fascism Zionism was a minority movement amongst world Jewry. http://theplanningmotive.com/2023/10/13/gaza-is-a-concentration-camp-final-solution-or-peace-deal/
Agreed. Just browse and find out when it was the last time Roberts wrote about the Arab uprisings, ‘Islam and Capitalism’ (R.I.P Maxime Rodinson), or the political economy of the Middle East, let alone Egypt or Iran or the Gulf states. Not a single political economy article about the region since he launched his wordpress blogs more than a decade ago although there is a wealth of books on the subject. There is something disturbing of a self-proclaimed marxist, who for ideological reasons ignores a region like MENA.
Dear Nadim. Your comment seems to suggest that I am not a Marxist because I have not covered specifically the Middle East on my blog. If I had covered it thoroughly but said nothing about another region, would I then qualify as a Marxist in your view? Give us a break.
I said self-proclaimed marxist. There are many marxists who do not write about the Middle East. I commented on your blog because you write about other regions, but not about MENA. It is your conscious choice. Have your break!
it’s not a conscious ‘choice’. Calling me a self proclaimed Marxist indicates that you do not consider me one. If so, then maybe you are wasting your time following this blog and instead follow those you consider are marxists
I did indeed a while ago stop following your blog, stopped making links to your posts on my blog, stopped receiving them in my inbox, and stopped giving feedback although you praised my ‘sharpness’ more than once. Good luck.
barovsky
Je pense sans vouloir polémiquer, que les graphiques froids et durs, sont important, puisqu’ils soulèvent le soubassement de l’impérialisme, en effet, on pourrait pousser plus loin, en relevant que la crise Israélo/palestinienne, se déroule sur un marqueur et quel marqueur, puisque déterminant, LA BAISSE DU TAUX DE PROFIT.
Le conflit Iraëlo/Palestinien…de la baisse du taux de profit.
Le conflit Otano/Russe…de la baisse du taux de profit.
Les tensions Sino/Us… de la baisse du taux de profit.
Le taux de profit qui est la loi, et le marqueur principal de la dynamque du capitalisme.
A translation:
A translation:
I do not think that cold and hard graphs are important, since they raise the foundation of imperialism, indeed, we could go further, noting that the Israeli/Palestinian crisis takes place on a marker and what marker, since it is decisive, THE DISPOSAL RATE. The Irailo/Palestine conflict… the fall in the rate of profit.
The Otano/Russian conflict… the fall in the rate of profit.
The Sino/Us… tensions of the lower rate of profit.
The rate of profit that is the law, and the main marker of the dynamque of capitalism.
The buried lede in the Disparities in Disposable Income chart is that Victor Orban’s government apparently leads the world in reducing income inequality.
Doc Evatt resisted access to the veto by the UNSC members; he lost – which means effective international law is still a pipedream.
The US should nominate a date for the creation of a Palestinian state, but the US Zionist lobby is too powerful. Hence we are all shamed by the ongoing slaughter of children on the altar of the war god – not much of an advance on the Aztecs, really.
Speaking of law, is Chinese socialism legal? If it is, then the US is exposed as a paranoid ideological state bent on maintaining its own global hegemony.
As to the rate of profit, it is a common misconception among bourgeois economists that one currency can be substituted by another. The unit of account of the rate of profit is the dollar!
VK Again, it’s not clear, all societies with state and religious structures have one thing in common, wheat, corn, sorghum, rice, unroll the ball, everything will follow naturally. German Ideology, Contribution to Early Christianity…
ucanbpolitics One of the problems is that Israel defines itself as a Jewish state, a Jewish nationality, created by atheist Zionists, so if we can challenge the way Israel was created, we cannot deny Israel. It has its language, its culture, its production. The situation could improve if Israel defined itself instead as a democratic republican state, (one citizen, one vote) with both Palestinian/Israeli sides a kind of confederation. But as communists, we are against any state, the solution to 0 state.
Raoul, agreed but aren’t you jumping the gun a bit? Isn’t the state meant ‘whither away’ after we’ve established Communism? In fact, isn’t Communism, by definition not a state of people, being rather, a state of things? Or Anarchism if you prefer.
To answer your question, the subject is quite vast, so we’ll summarize and simplify the terms to the extreme, bearing in mind that this commentary is not intended to be exhaustive.
Communism cannot exist in isolation, or isolated in a capitalist ocean, all attempts having failed and produced the exact opposite effect.
In fact, just as the bourgeoisie was encysted within feudalism, so the feudal mode of production had to become foreclosed before the bourgeois mode of production could emerge and transform the peasantry into the proletariat.
But at the same time as the French revolution produced Danton Robespiere and others, there was Babeuf and his manifesto.
Communism means collective ownership of means and needs.
Ultimately, it’s a return to our completed naturalness, the end of the historical process.
So, to answer your question, if it’s a state of things, we have to remember that it’s the mode of production and reproduction that makes man, not the other way round.
So it’s a state of things.
Contemporary man is alienated and reified; appropriative neurosis distances him from nature and his individual subjectivity.
Yet the singular man who thinks of the world with his big neuronal box between his two ears is a profoundly crippled subject: there are only collective men, man is a social being.
In completed and realized communism, one day you participate, the next you do nothing, you do as you please, there’s no separation between the individual and the group.
In capitalist society, you do because you have to work, otherwise you die.
And all this to say that the alienated subject has enormous difficulty in learning what a community is, once disalienation (self-possession) has been achieved, man naturally participates, without any particular obligations, in the production and reproduction of the community.
A community that cannot be realized until the capitalist mode of production collapses under its own contradictions.
As far as anarchism is concerned, Marx replied to Proudhon that substituting vouchers for money makes little difference.
However, if the first communities were imperfect localized communities in conflict with each other, plant-based capitalism has laid the foundations for a planetary community.
Okay, so what’s the solution? Is there one or are you saying we have to give up all hope, to paraphrase?
barovsky
We have two revolutionary subjects: a relatively revolutionary subject, the Kapital itself, which is constantly revolutionizing the social body.
And an absolutely revolutionary subject, the proletariat.
In short, revolution/counter-revolution, revolution/counter-revolution, that’s how history works, until the end of the greenback, the world’s currency.
Because, as the saying goes, history doesn’t rewrite itself. Once a mode of production has become obsolete, it disappears.
Monitoring a bomb has never prevented it from exploding.
En poussant la balle.
Pour le prolétariat, la société bourgeoise lui apparaît sans classes. Ce n’est pas un hasard si la classe ouvrière ne fait preuve d’aucune conscience de classe, puisqu’elle n’a en premier lieu aucune conscience de classe.
Ce prétendu « défaut » dans l’appréhension empirique du prolétariat des relations sociales actuelles signifie que la lutte des classes n’est pas le terrain social sur lequel la classe se bat.
Pour certains la notion même du communisme requiert la présence de l’autre classe et la lutte des classes. Mais si Marx et Engels avaient raison, l’autre classe est désormais rendue superflue par le progrès du mode de production lui-même.
By pushing the ball. For the proletariat, bourgeois society appears to it to be classless. It is no coincidence that the working class does not show any class consciousness, since it has no class consciousness in the first place. This so-called “defect” in the proletariat’s empirical apprehension of current social relations means that the class struggle is not the social terrain on which the class fights. For some, the very notion of communism requires the presence of the other class and the class struggle. But if Marx and Engels were right, the other class is now rendered superfluous by the progress of the mode of production itself.
I am missing the text to set the record straight of the colonial settler state in Palestine.
Which side are you on?
That is the question.
Colonial conquest or fight for freedom from racist genicidal oppression.
Thanks, Lüko.