The Israeli Path to Neoliberalism

The State, Continuity and Change

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Arie Krampf
Routledge Studies in Middle East Economies
  • New York, NY: 
    Routledge
    , February
     2018.
     254 pages.
     $140.00.
     Hardcover.
    ISBN
    9781138721869.
     For other formats: Link to Publisher's Website.

Review

In The Israeli Path to Neoliberalism, Arie Krampf sets out to analyze Israeli development, starting from the British Mandate years through to the present. He does so by taking the reader through four critical stages in this process: the founding of pre-state institutions before 1948, the establishment of the Israeli state, the development of independent organizations in the 1950s (chiefly the central bank), and the transition to neoliberalism from the 1980s onwards. 

Throughout the book, Krampf aims to demonstrate that the history of the Israeli state’s development is one which can best be understood by focusing, in each period, on the specific goals of Israeli policy makers and their interaction with the particular circumstances they found themselves in. This approach leads him to offer the reader an intellectual history of Israel’s developmental path. It is in this that the book makes its greatest contribution. Indeed, the careful analysis that Krampf brings to the debates between, and intellectual influences of, Israeli policy makers during the four periods under survey are often rich in detail and bring to the fore new elements about how policies were developed to meet the challenges faced by the emerging Israeli state and economy. 

This is especially true when Krampf discusses the establishment of the Israeli central bank and its early policies. Based on his archival research, these chapters describe the relationship between the Mapai-led government and the dominant financial institutions in Israel which set the stage for the curtailing of the Histadrut’s power in the Israeli economy as well as the centralization of the banking industry. Krampf is attentive throughout to the way in which different, and at times opposing, interests collided in a process of “cooperation through confrontation.” 

The central weakness of Krampf’s book lies in the way it fails to apply its own empirical commitment consistently. Indeed, one is struck by the silences and omissions in its narrative. These not only raise questions about the author’s own assumptions but also weaken the explicatory power of the book. 

Firstly, Krampf is virtually silent about the Palestinian people and the Israeli state’s ongoing conflict with them. This leads him, for example, to fail to mention in his account of the creation of the state the mass displacement of seven hundred thousand Palestinians and the destruction of roughly four hundred villages. This is not only a striking historical omission; it also undermines his analytical precision. Indeed, Krampf demonstrates convincingly that many of the early policies of both the Yishuv and the Israeli state were guided by a dual concern for development of infrastructure and settlement of large quantities of new arrivals. These concerns are impossible to explain without accounting for the political context in which they emerged: the active displacement of the indigenous people and the construction of a new society on the vacated land. Without accounting for the central settler colonial aims of Israeli politicians, their focus on settlement as a key developmental goal appears ex nihilo in the analysis and is accepted without explanation—the very approach Krampf rejects in his theoretical framework. 

The absence of acknowledgment of the Palestinian people, combined with the focus of Israeli policy makers on their control and/or removal, generates other blind spots throughout the book. For example, it is striking that the redistribution of expropriated Palestinian land and property after 1948, the active policies of land occupation in the aftermath of both the 1948 and 1967 wars, or the use of the cheap and captive Palestinian labor force after the occupation of the whole of historic Palestine in 1967, are ignored as key elements of the Israeli developmental story, or crucial concerns of Israeli policy makers. 

Secondly, Krampf avoids accounting for the specific relationship between Israel and its European and North American allies throughout the book. While he engages with discreet elements of this relationship—financial or military donations and agreements are mentioned—at no point does he offer the reader an explanation as to why these relationships existed. They are simply stated as individual facts, which again leads to analytical problems. For example, throughout the book Krampf compares the Israeli developmental trajectory to Global South and late-developing countries. While this comparison can be productive in certain circumstances, it is not possible to account for key differences without acknowledging and explaining the unique relationship Israel enjoyed with its Western allies. The large influx of financial donations, advantageous trade deals, and preferential treatment on the international stage cannot be approached, as Krampf does, as incidental elements of the narrative. They are key to the Israeli developmental trajectory, and have allowed the Israeli state to achieve its rapid and successful industrialization and integration into the world market. It is not that the decisions of Israeli policy makers are irrelevant, but they cannot be explained without accounting for the specific circumstances in which they took place. 

This silence further undermines Krampf’s analysis in other ways—crucially in his account of the Israeli neoliberal transition. While he is right to point out that the Economic Stabilization Plan of the 1980s cannot be explained as externally imposed nor analyzed without acknowledging Israeli policy makers’ decisions, it is equally impossible to do so without accounting for the specific status Israel was afforded by its allies, mainly the United States. To make sense of Israel’s economic success story in the last three decades, one has to engage with US financial aid as well as the preferential economic treatment it afforded Israeli capital. The book concludes by emphasizing Israel’s trade surplus as an element of its stated economic independence. It does not however point out that this surplus was achieved chiefly through advantageous trade agreements with the United States. Similar conditions did not exist for other late-developing states. 

The omissions in Krampf’s analysis are not simply questions of focus or research interests. They are fundamental aspects of the story of Israeli development, and their absence in The Israeli Path to Neoliberalism weakens its explanatory power considerably. The book’s key strength lies in its commitment to the specificity of the confrontation between policy makers and their environment. Yet because the book does not follow through on this commitment, it is limited to important but discreet insights while failing to give a satisfactory overall explanation of the emergence and development of both the Israeli state and its economy.

About the Reviewer(s): 

Sai Englert is Senior Teaching Fellow at SOAS, University of London, and Visiting Lecturer at both New York University (London) and the New College of Humanities.

Date of Review: 
September 22, 2018
About the Author(s)/Editor(s)/Translator(s): 

Arie Krampf is a Senior Lecturer in International Relations at the School of Government and Society, at the Academic College of Tel Aviv Yaffo, Israel. His research focuses on the political economy of Israel, International Political Economy, European monetary integration and Economic History.

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