The political economy of Israeli neoliberalism

Israel’s political economy has been transformed since the 1980s from a developmental to a neoliberal model. This chapter describes and explains this transformation, emphasizing the unevenness and incompleteness of liberalization and its impact on socioeconomic inequality. Adopting a historical-institutionalist perspective to explain both the rise of Israeli neoliberalism and its unevenness, the chapter argues that liberalization was led by economic technocrats in state agencies, who were guided by liberal economic ideas and simultaneously pursuing their interest in greater authority and autonomy. The technocrats were empowered by re-engineering economic policy institutions and cooperating with other political actors. However, their ability to fulfill the goal of technocratic management of a competition-driven economy was limited by the continuing power of some sectors of both business and labor and the continuing vibrancy of the state’s national and military projects. The conclusion discusses recent challenges to neoliberalism in Israel as a result of public discontent and conflict between state actors.