Political entrepreneurs and electoral capital: The case of the Israeli State Economy Arrangement Law

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This article looks at a specific institutional change in Israel. In 1985, Israeli politicians adopted the "State Economy Arrangement Law" (SEAL), commonly regarded as part of the budgetary legislation in Israel. This law became an alternative channel through which applicants could circumvent the necessity of applying to the Israeli parliament (the Knesset) for the implementation of certain policies. This law enabled an accelerated, flexible regulatory process that short circuited democratic discussion in the Knesset and obviated the intervention of Israeli consumer organizations. This article suggests that this institutional change should be analyzed as part of a process where institutional reality influences individual and collective beliefs, thus triggering an individual and collective learning process that eventually leads to institutional change, specific policies and outcomes in terms of economic performance. The article also claims that the SEAL legislation is an equilibrium that results from the actions of political entrepreneurs (or agents of change) who operate to maximize their own electoral capital against the backdrop of certain structural and cultural conditions, both local and international. They operate in an environment characterized by the inability of the government to function effectively (non-governability) and the development of an alternative political culture.

Original languageEnglish
Pages (from-to)301-312
Number of pages12
JournalConstitutional Political Economy
Issue number4
StatePublished - Dec 2008
Externally publishedYes

Bibliographical note

Funding Information:
The National Unity Government (Maarach: Avoda (Labor) and Mapam) was formed in September 1984 headed by Shimon Peres as the prime minister. Towards the end of that year, a small group of experts and high officials met to formulate an economic stabilization program, of which the SEAL was to become a part. Some of the political entrepreneurs behind the initiatives were the director general of the Treasury at that time, Dr. Emmanuel Sharon, leading representatives of academe such as Prof. Michael Bruno, later the governor of the Bank of Israel, Prof. Eitan Berglas, Mordechai Frenkel from the Bank of Israel, and Amnon Neubach, the economic advisor to the Prime Minister. The team enjoyed the support of Prime Minister Shimon Peres (Maarach) and the Minister of Finance, Yitzchak Modai (Likkud). The discussions were held in secret concurrently with talks with the US Administration, which committed itself to a special allocation of $1.5 billion to rescue Israel’s economy (Peres 1995, p. 575). The team agreed that the only way out of the crisis was through a comprehensive economic program (for the status of Israel’s PM see Arian et al. 2002, p. 129).4 Shortly after the government’s approval was received, the necessary actions were taken for approval by the Knesset under the title ‘‘The State Emergency Economic Arrangement Law—1985.’’ This was the first Arrangements Law, which, over time, has been transformed into ‘‘electoral capital’’ for the decision makers and into a platform that influences political and economic processes and gives rise to certain political and professional norms in Israel’s politics and public system.


  • Institutional political economy
  • Israel
  • Law and politics
  • Political culture
  • Public policy

ASJC Scopus subject areas

  • Sociology and Political Science
  • Philosophy
  • Economics and Econometrics
  • Law


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