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UFPPC (www.ufppc.

org) Digging Deeper CXLV December 27,

2010, 7:00 p.m.

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" (13-
case, 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 accumulation has proceeded more or
institutions are increasingly crystallised less uninterruptedly for the past half
as capital, and by virtue of their social century, and possibly longer" (44; 41-47).
centrality emerge as 'a state' in their own Differential accumulation is unstable and
right" (14). A "positive rate of unpredictable but it follows patterns: 1)
differential accumulation" can occur differential accumulation spreads; 2) its
through "breadth" (expanding processes become integrated; 3) it
employment) or "depth" (raising follows long cyclical swings between
profit per employee); the former is depth and breadth (47-48). Analysis of
associated with "easing of social conflict" breadth and depth (49-52). "Green-field
and "restructuring of power institutions," growth" is less attractive for dominant
while the latter is associated with capital than mergers and acquisitions
"intensifying of social conflict" and (52-60). Free trade is a means to "free
"the consolidation of power" (14-15). investment," and "globalization of
Instead of as a history of dramatic ownership, not trade" is "the real prize"
ideological shifts, Israeli history can be (64; 60-65). "[T]he present process of
viewed as the consolidation of a ruling globalization is inherent in capitalist
class (16-20). Eliminate these development and therefore not easily
preconceptions: 1) that capitalists care reversible without altering capitalism, or
about "the aggregate" (i.e. national, or moving away from it altogether. . . .
per capita results); 2) that business [T]he underlying force here is not greater
needs stability; 3) that neoclassical efficiency, but the control of efficiency,
economics is a solidly scientific discipline and the purpose is not aggregate gain
(its "real mission" is "to conceal reality, but differential gain" (65). When merger
not reveal it"); 4) that inflation has only activity recedes, differential stagflation
to do with supply and demand, when it is (stagflation is "inflation combined with
really "a central aspect of capitalist slow growth or recession" [69]) is more
development in general, and of effective than cost cutting in achieving
differential accumulation in particular" differential accumulation (65-72). Data
(20-24). Governments only purport to from 1880 to 2010 shows ever-tighter
follow national interests (24-27). "The negative correlation between merger-
secret of [Israeli] capital flow lies . . . [in] and-acquisition activity on the one hand
its ruling class and its progressive and stagflation on the other (72-74).
integration into the global political Global and regional applications (74-82).
economy" (28; 27-30). Data appendix (82-83).

Ch. 2: Capital and Power: Breaking Ch. 3: The History of Israel's Power
the Dualism of 'Economics' and Structure. Contemporary Israeli
'Politics.' Capital's profit derives not development is presented as the triumph
from its relation to production but from of "the market," but "[t]he market is
its "ability to limit such production below forever a mechanism, and mechanisms
its full potential," i.e. "strategic business can neither win nor lose. The real victors
'sabotage,'"; cf. Veblen's emphasis on are always real people" (84). Power in
the politics of production (35; 31-36). Israel is marked by high corporate
Capital is commodified power (36-37). centralization and integration, dominated
The success of corporations or corporate by five private groups (IDB, Ofer, Koor,
coalitions is at the heart of the process, Dankner, Arison) (85-88), increasing
and this is measured in relative, not transnationalization (88-90), and
absolute terms ("differential incessant restructuring of vendible assets
accumulation") (37-41). Analysis of the (90-91). Development of sectors of the
U.S. shows that "U.S. differential pre-independence settlement of
Palestine (91-96). "[N]obody seems to on aggregates (170; 170-71). In Israel it
know" how Palestinian land was enhanced differential accumulation in the
distributed (97). Not much more is military and financial sectors (171-82).
known about foreign capital inflow (97- An account of Israeli inflation in the
101). Labor depended on the 1980s (182-97).
proletarianization of Sephardi and
Yemeni Jews (101-02). State backing Ch. 5: The Weapondollar-Petrodollar
facilitated the formation of a corporate Connection. Understanding the
elite, as Harry Recanati's memoir shows linkages of oil and arms is impossible if
(102-05). The formation of a ruling elite they are examined through aggregates
was dressed in the trappings of a "class (states) (198-201). "In a nutshell, our
struggle" (105-08). Intermarried argument is that, during the 1970s,
"dynasties" form a "cohesive power there was a growing convergence of
bloc"; "Although there was nothing interests between the world's
inherently secret about this power, the leading petroleum and armament
academia and much of the media went corporations. Following rising
out of their way to obscure its existence, nationalism and heightened industry
discourage research into its functioning, competition during the 1950s and
and make sure discourse remained 1960s, the major international oil
focused on more fruitful questions, such companies lost some of their earlier
as the evils of 'government intervention,' autonomy in the Middle East. At the
the greediness of 'labour unions' and the same time, the region was
merits of 'free enterprise.'" (119; 108- penetrated by large U.S. and
20). Standard economic analysis masks European-based manufacturing
the benefit to Israel from Palestinian companies which, faced with
labor (and, later, foreign workers mounting global competition in
[120n.11]); declining "breadth" got new civilian markets, increased their
life from the 1967 war (120-22). During reliance on military contracts and
the post-1973 "depth" period, differential arms exports. The attendant
accumulation centered around finance politicisation of oil, together with
(122-25) and arms (125-33). The rise to the parallel commercialisation of
power of Likud signified "the declining arms exports, helped shape an
importance of formal politics altogether" uneasy Weapondollar-Petrodollar
ushering in a period during which Coalition between these companies,
stagflation, rising military spending, making their differential profitability
dependency on the U.S., and growing increasingly dependent on Middle
debt contributed to differential East Energy conflicts. Interestingly,
accumulation (134, emphasis in original; when we look at the history of the region
133-36). from this particular perspective, the lines
separating state from capital, foreign
Ch. 4: The Making of Stagflation. policy from corporate strategy, and
Neither the deficit nor rising wages have territorial conquest from differential
been the cause of inflation in Israel (137- profit, no longer seem very solid. Many
58). Esther Alexander's innovative convention wisdoms are put on their
theory of stagflation is inadequate (158- head. State policies, ostensibly aimed at
60). Michael Bruno's and Stanley advancing the national interest, often
Fischer's analyses serve to mystify the appear to undermine it; company officers
issue (160-70). Inflation, for which there and government officials, moving
can be no universal theory, is "in fact a through a perpetually revolving door,
mirror of changing social relations" that sometimes simultaneously cater to
is "inherently opaque" because it focuses several masters; arms races are fuelled
for the sake of 'stability'; and peace is Index. 36 pp.
avoided for being 'too expensive.' In
contrast to these anomalies, the logic of About the Author. Jonathan Nitzan
differential accumulation seems teaches political economy at York
remarkably robust. It helps us make University in Toronto. Shimshon
sense of corporate strategies, of foreign Bichler teaches political economy at
policies and of the link between them— colleges and universities in Israel.
and all of that within the broader context
of 'energy conflicts'" (201-02). Review of [Additional information. Jonathan
left theories of imperialism (202-08). The Nitzan and Shimshon Bichler are also
"U.S. Arma-Core" (Boeing, General the authors of Capital as Power: A Study
Dynamics, General Electric, Grumman, of Order and Creorder (Routledge, 2009,
Honeywell, Litton Industries, Lockheed, xxvi + 438pp.; available on web in .pdf).
McDonnell Douglas, Martin Marietta, They maintain an archive of work on the
Northrop, Raytheon, Rockwell website of York University where about
International, Texas Instruments, 20 reviews of The Global Political
Textron, United Technologies, and Economy of Israel can be consulted,
Westinghouse) shows increasing along with much other material, including
differential profitability (208-19). The the complete text of their most recent
"Petro-Core" (Exxon, Royal Dutch/Shell, book (http://bnarchives.yorku.ca/).]
British Petroleum, Texaco, Mobil,
Chevron, and Gulf) [N.B. now ExxonMobil, [Critique. Roll over, Marx & Engels, and
Royal Dutch Shell, BP, Chevron, since tell Maynard Keynes the news: Nitzan &
Chevron acquired Gulf and Texaco, and Bichler are here! This is a controversial
Mobil merged with Exxon] have book, but there is no shortage of
increased their differential profitability; informed commentators to bestow
their formal political decline in terms of superlatives upon it. — The Global
control of oil is belied by the "progressive Political Economy of Israel delivers much
politicisation of the oil business" (224, more than its title promises. Chapters 1,
emphasis in original; 219-28). In the 2, 4, and 5 (about a third of the book) are
period 1966-1995, every time Petro-Core general discussions of capital, differential
profits fell behind overall Fortune 500 accumulation, stagflation, and the
profits, an "energy conflict" occurred economics of imperialism, respectively.
(228-72). These discussions serve to ground the
argument that economics of Israel obeys
Ch. 6: From Foreign Investors to general principles, and is not, as is
Transnational Ownership. Israel has usually thought, a special case. (They
depended on external capital flows; are developed further in Capital as Power
these have been mediated by a series of [2009].) — As practiced by Jonathan
"godfathers" like Meshulam Riklis, Nitzan and Shimshon Bichler, economics
Édouard de Rothschild, and Saul is not a dismal science. They write in
Eisenberg (274-94). The 1990s saw lively prose that is not without humor;
Israel transition to transnationalism and e.g.: "[C]apitalism got its first global
high-tech, a development consonant with push in the sixteenth century with the
differential accumulation (294-353). But plundering of Caribbean gold, while the
"an extended period of depth" may United States reached its global
"mark the beginning of the end of economic peak with a bootlegger family
Zionism" (354; 353-57). in the White House; so it seems only
fitting for Israeli transnationalization to
References. 322 books and articles. be led by heirs of a famous alcohol
smuggler [Samuel Bronfman, 1889-1971]
and by cruise ship owners registered in and stagflation), in other parts
the Caribbean [the Ofers]" (90). They journalistic (recent developments in
name names and call a spade a spade. Israeli politics and business), the book is
— In some parts densely technical always readable and well documented.
(particularly in the discussion of inflation Highly recommended.]