UFPPC (www.ufppc.org) Digging Deeper CXLV 2010, 7:00 p.m.

December 27,

Jonathan Nitzan and Shimshon Bichler, The Global Political Economy of Israel (London and Sterling, VA: Pluto Press, 2002). process is that of differential [Thesis. This unconventional study of [capital] accumulation, whereby differential capital accumulation, ruling capitalists seek "not to maximize class formation, and globalization, in profit as such, but to 'beat the Israel and elsewhere, argues that average,' and by so doing to raise "economics" and "politics" make up a their ownership share" (9). Despite holistic process that cannot be separated centuries of discussion, the definition of analytically. "[C]apital is a power capital is still unresolved (10). "Capital, institution, and . . . power is both the we argue, is neither a material entity, means and end of accumulation" (9); not a productive process, but rather the capital is "a commodification of power" very ability of absentee owners to and "capital itself can be seen as an control, shape and restructure emergent form of the state" (13; society more broadly. . . . As an emphasis in original). (These ideas, abstract financial magnitude, capital which are the basis for what the authors stands for the discounted value of future call a "radical alternative" to both liberal earning capacity. Such earnings are the and Marxist understandings of consequence not of productivity as such, capitalism, are developed further in their but of the control of productivity, which 2009 book, Capital as Power.) Israel is in turn is based not only on business not a special case economically but can arrangements, but on the entire be understood in the light of principles of spectrum of power institutions. To capitalist development.] study accumulation therefore is to study the commodification of power" List of Figures. 46 figures (xi-xii). List (10). "[I]n order to accumulate of Tables. 8 tables (xiii). differentially, leading capitalists have to constantly re-structure the underlying Acknowledgements. Unorthodox power institutions on which their relative journals, colleagues, and the Social profitability relies" (11). Differential Sciences and Humanities Research analysis requires that the normal be Council of Canada (xiv). defined; this is related to stable state institutions (11-13). "[O]ur argument is Ch. 1: Introduction. "The purpose of that capital itself can be seen as an this book is to situate [the transition from emergent form of the state" (13; the old political consensus of Zionism . . . emphasis in original). The fusion of state to a new economic consensus of free and capital have been clear historically; markets] as part of Israel's century-long "Indeed, it was this fusion between them evolution as a capitalist society" (3). The that gave rise to the first form of modern consensus has been that the economy is capital—the government bond—whose totally subjugated to the state in Israel very essence was the private ownership (4-6). It has been regarded as a unique of the government's power to tax" (13case, one with the "original sin" of "an 14; emphasis in original). "We therefore authoritarian/statist culture" (6-7). end up with a double-sided Recent discussions (7-8). This book goes 'commodification of the state.' On the further, arguing that politics and one hand, state institutions and economics cannot be treated organisations, through their systematic separately and that the core holistic impact of profit, become facets of capital.

On the other hand, differential power institutions are increasingly crystallised as capital, and by virtue of their social centrality emerge as 'a state' in their own right" (14). A "positive rate of differential accumulation" can occur through "breadth" (expanding employment) or "depth" (raising profit per employee); the former is associated with "easing of social conflict" and "restructuring of power institutions," while the latter is associated with "intensifying of social conflict" and "the consolidation of power" (14-15). Instead of as a history of dramatic ideological shifts, Israeli history can be viewed as the consolidation of a ruling class (16-20). Eliminate these preconceptions: 1) that capitalists care about "the aggregate" (i.e. national, or per capita results); 2) that business needs stability; 3) that neoclassical economics is a solidly scientific discipline (its "real mission" is "to conceal reality, not reveal it"); 4) that inflation has only to do with supply and demand, when it is really "a central aspect of capitalist development in general, and of differential accumulation in particular" (20-24). Governments only purport to follow national interests (24-27). "The secret of [Israeli] capital flow lies . . . [in] its ruling class and its progressive integration into the global political economy" (28; 27-30). Ch. 2: Capital and Power: Breaking the Dualism of 'Economics' and 'Politics.' Capital's profit derives not from its relation to production but from its "ability to limit such production below its full potential," i.e. "strategic business 'sabotage,'"; cf. Veblen's emphasis on the politics of production (35; 31-36). Capital is commodified power (36-37). The success of corporations or corporate coalitions is at the heart of the process, and this is measured in relative, not absolute terms ("differential accumulation") (37-41). Analysis of the U.S. shows that "U.S. differential

accumulation has proceeded more or less uninterruptedly for the past half century, and possibly longer" (44; 41-47). Differential accumulation is unstable and unpredictable but it follows patterns: 1) differential accumulation spreads; 2) its processes become integrated; 3) it follows long cyclical swings between depth and breadth (47-48). Analysis of breadth and depth (49-52). "Green-field growth" is less attractive for dominant capital than mergers and acquisitions (52-60). Free trade is a means to "free investment," and "globalization of ownership, not trade" is "the real prize" (64; 60-65). "[T]he present process of globalization is inherent in capitalist development and therefore not easily reversible without altering capitalism, or moving away from it altogether. . . . [T]he underlying force here is not greater efficiency, but the control of efficiency, and the purpose is not aggregate gain but differential gain" (65). When merger activity recedes, differential stagflation (stagflation is "inflation combined with slow growth or recession" [69]) is more effective than cost cutting in achieving differential accumulation (65-72). Data from 1880 to 2010 shows ever-tighter negative correlation between mergerand-acquisition activity on the one hand and stagflation on the other (72-74). Global and regional applications (74-82). Data appendix (82-83). Ch. 3: The History of Israel's Power Structure. Contemporary Israeli development is presented as the triumph of "the market," but "[t]he market is forever a mechanism, and mechanisms can neither win nor lose. The real victors are always real people" (84). Power in Israel is marked by high corporate centralization and integration, dominated by five private groups (IDB, Ofer, Koor, Dankner, Arison) (85-88), increasing transnationalization (88-90), and incessant restructuring of vendible assets (90-91). Development of sectors of the pre-independence settlement of

Palestine (91-96). "[N]obody seems to know" how Palestinian land was distributed (97). Not much more is known about foreign capital inflow (97101). Labor depended on the proletarianization of Sephardi and Yemeni Jews (101-02). State backing facilitated the formation of a corporate elite, as Harry Recanati's memoir shows (102-05). The formation of a ruling elite was dressed in the trappings of a "class struggle" (105-08). Intermarried "dynasties" form a "cohesive power bloc"; "Although there was nothing inherently secret about this power, the academia and much of the media went out of their way to obscure its existence, discourage research into its functioning, and make sure discourse remained focused on more fruitful questions, such as the evils of 'government intervention,' the greediness of 'labour unions' and the merits of 'free enterprise.'" (119; 10820). Standard economic analysis masks the benefit to Israel from Palestinian labor (and, later, foreign workers [120n.11]); declining "breadth" got new life from the 1967 war (120-22). During the post-1973 "depth" period, differential accumulation centered around finance (122-25) and arms (125-33). The rise to power of Likud signified "the declining importance of formal politics altogether" ushering in a period during which stagflation, rising military spending, dependency on the U.S., and growing debt contributed to differential accumulation (134, emphasis in original; 133-36). Ch. 4: The Making of Stagflation. Neither the deficit nor rising wages have been the cause of inflation in Israel (13758). Esther Alexander's innovative theory of stagflation is inadequate (15860). Michael Bruno's and Stanley Fischer's analyses serve to mystify the issue (160-70). Inflation, for which there can be no universal theory, is "in fact a mirror of changing social relations" that is "inherently opaque" because it focuses

on aggregates (170; 170-71). In Israel it enhanced differential accumulation in the military and financial sectors (171-82). An account of Israeli inflation in the 1980s (182-97). Ch. 5: The Weapondollar-Petrodollar Connection. Understanding the linkages of oil and arms is impossible if they are examined through aggregates (states) (198-201). "In a nutshell, our argument is that, during the 1970s, there was a growing convergence of interests between the world's leading petroleum and armament corporations. Following rising nationalism and heightened industry competition during the 1950s and 1960s, the major international oil companies lost some of their earlier autonomy in the Middle East. At the same time, the region was penetrated by large U.S. and European-based manufacturing companies which, faced with mounting global competition in civilian markets, increased their reliance on military contracts and arms exports. The attendant politicisation of oil, together with the parallel commercialisation of arms exports, helped shape an uneasy Weapondollar-Petrodollar Coalition between these companies, making their differential profitability increasingly dependent on Middle East Energy conflicts. Interestingly, when we look at the history of the region from this particular perspective, the lines separating state from capital, foreign policy from corporate strategy, and territorial conquest from differential profit, no longer seem very solid. Many convention wisdoms are put on their head. State policies, ostensibly aimed at advancing the national interest, often appear to undermine it; company officers and government officials, moving through a perpetually revolving door, sometimes simultaneously cater to several masters; arms races are fuelled

for the sake of 'stability'; and peace is avoided for being 'too expensive.' In contrast to these anomalies, the logic of differential accumulation seems remarkably robust. It helps us make sense of corporate strategies, of foreign policies and of the link between them— and all of that within the broader context of 'energy conflicts'" (201-02). Review of left theories of imperialism (202-08). The "U.S. Arma-Core" (Boeing, General Dynamics, General Electric, Grumman, Honeywell, Litton Industries, Lockheed, McDonnell Douglas, Martin Marietta, Northrop, Raytheon, Rockwell International, Texas Instruments, Textron, United Technologies, and Westinghouse) shows increasing differential profitability (208-19). The "Petro-Core" (Exxon, Royal Dutch/Shell, British Petroleum, Texaco, Mobil, Chevron, and Gulf) [N.B. now ExxonMobil, Royal Dutch Shell, BP, Chevron, since Chevron acquired Gulf and Texaco, and Mobil merged with Exxon] have increased their differential profitability; their formal political decline in terms of control of oil is belied by the "progressive politicisation of the oil business" (224, emphasis in original; 219-28). In the period 1966-1995, every time Petro-Core profits fell behind overall Fortune 500 profits, an "energy conflict" occurred (228-72). Ch. 6: From Foreign Investors to Transnational Ownership. Israel has depended on external capital flows; these have been mediated by a series of "godfathers" like Meshulam Riklis, Édouard de Rothschild, and Saul Eisenberg (274-94). The 1990s saw Israel transition to transnationalism and high-tech, a development consonant with differential accumulation (294-353). But "an extended period of depth" may "mark the beginning of the end of Zionism" (354; 353-57). References. 322 books and articles.

Index. 36 pp. About the Author. Jonathan Nitzan teaches political economy at York University in Toronto. Shimshon Bichler teaches political economy at colleges and universities in Israel. [Additional information. Jonathan Nitzan and Shimshon Bichler are also the authors of Capital as Power: A Study of Order and Creorder (Routledge, 2009, xxvi + 438pp.; available on web in .pdf). They maintain an archive of work on the website of York University where about 20 reviews of The Global Political Economy of Israel can be consulted, along with much other material, including the complete text of their most recent book (http://bnarchives.yorku.ca/).] [Critique. Roll over, Marx & Engels, and tell Maynard Keynes the news: Nitzan & Bichler are here! This is a controversial book, but there is no shortage of informed commentators to bestow superlatives upon it. — The Global Political Economy of Israel delivers much more than its title promises. Chapters 1, 2, 4, and 5 (about a third of the book) are general discussions of capital, differential accumulation, stagflation, and the economics of imperialism, respectively. These discussions serve to ground the argument that economics of Israel obeys general principles, and is not, as is usually thought, a special case. (They are developed further in Capital as Power [2009].) — As practiced by Jonathan Nitzan and Shimshon Bichler, economics is not a dismal science. They write in lively prose that is not without humor; e.g.: "[C]apitalism got its first global push in the sixteenth century with the plundering of Caribbean gold, while the United States reached its global economic peak with a bootlegger family in the White House; so it seems only fitting for Israeli transnationalization to be led by heirs of a famous alcohol smuggler [Samuel Bronfman, 1889-1971]

and by cruise ship owners registered in the Caribbean [the Ofers]" (90). They name names and call a spade a spade. — In some parts densely technical (particularly in the discussion of inflation

and stagflation), in other parts journalistic (recent developments in Israeli politics and business), the book is always readable and well documented. Highly recommended.]

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