Neoliberalism as a State Project: Changing the Political Economy of Israel

This book explores the politics, institutional dynamics, and outcomes of neoliberal restructuring in Israel. It puts forward a bold proposition: that the very creation of a neoliberal political economy may be largely a state project. Correspondingly, it is argued that key political conflicts surrounding the realization of this project may occur within the state. Neoliberal restructuring and the institutionalization of permanent austerity are dependent on reconfigured power relations between state actors and are manifested in a new institutional architecture of the state. This architecture, in turn, is the context in which efforts to change social and employment policies play themselves out. The book begins by construing the coming of neoliberalism as a set of concrete and far-reaching changes in the power and modes of operation of the key players in the political economy. These include neutralizing or undermining veto players and enabling the ascendance of two state agencies—the Ministry of Finance and the Central Bank—which gained greatly augmented authority and autonomy. These reconfigurations were set in motion by state initiatives that combined punctuated and incremental change. Then, attention shifts to changes in specific social and labor market policies, to reveal a close elective affinity between programmatic neoliberal changes and the proactive drive of the Ministry of Finance to enhance its control over public spending and policy design. The book explores triumphant neoliberal reforms but also reforms that were blocked, undermined, or overturned by opposition, emphasizing the importance of reformers’ capacity to translate temporary achievements into entrenched strategic advantages.