Selected Topics in Area Studies: THE POLITICAL ECONOMY OF ISRAEL

Political economy analyzes linkages between the economic and political spheres. It asks about the role of the state and politics in the economy; and conversely, how economic interests and power shape politics. The political economy of Israel today is similar to other capitalist democracies in having strong neoliberal or “free market” features. Yet at the same time,  the Israeli state pursues an ambitious and expensive agenda related to territory, demography and national identity. The state also has unusual capacities to shape economic activity through war preparation, occupation, and by attracting resources from abroad such as immigration and foreign aid. The course addresses this and other puzzles posed by the Israeli case. They include the unusual meaning of left and right in Israeli politics, a clash between “hawks” and “doves” that is seemingly all about ideology and identity politics, not “pocketbook issues” and the economy. On these issues Israeli public opinion has a clear preference for equality and the welfare state over unbound capitalism. Yet inequality is high and rising, in part because of government policies. Another seeming paradox is that Israel’s economy performs well, led by a dynamic and entrepreneurial hi-tech sector. Yet despite structural reforms to encourage competition, large sectors are sheltered from competition, and so-called “tycoons” control many of Israel’s largest businesses and enjoy vast personal wealth.