Summary
Grinberg’s term for the political economy institutionalized after June 1967: democratic rules for Israelis in Israel “proper” and military rule for Palestinians in the Occupied Territories, in which the Histadrut and the IDF — two non-democratic quasi-state institutions — occupied the political sphere and closed Political Space on both sides (Moments of Resistance, PDF p.147-148).
Details
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The dual political economy readjusted state structures to the pre-1948 ZLM institutions: its core was the Histadrut welfare quasi-state and its ruling-coalition parties (the Labor Institutional Complex), now built on workers’ structural weakness from competition with Palestinians in the markets, creating dependency without direct representation (PDF p.147).
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It rested on three elements: (1) blurring state borders by integrating the Palestinian captive market and non-organized workers; (2) maintaining the sovereign-state/OT border for legal and political purposes, preventing joint worker organization, segmenting the labour market and weakening the working class as a whole; and (3) concealing politics’ mediating role by using “security” for the military’s protection of powerful economic groups (PDF p.150).
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Since 1967 “security” has largely meant protecting powerful Israeli groups against competition with Palestinians and extraction of the latter’s resources, and the IDF became the most important regulator of a “(very) political economy” (term coined by Brynen 2000, as Grinberg notes) (PDF p.148).
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The regime abolished the two conditions that had endangered the colonial LIC in 1948-1967 — recognized borders including or excluding the Palestinians, and a balance of power between dominated and dominant groups — by returning to the Mandate borders and incorporating the Palestinians without granting them citizenship (PDF p.148).
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“Security” was its organizing principle after 1967: the security industry became the leading, most subsidized industry, the Ministry of Security an autonomous resource allocator against the Treasury, and US aid and Sinai oil replaced German reparations as external finance (PDF p.159-162).
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The regime split the state itself: the Ministry of Security, administering the OT, became an autonomous resource allocator subsidizing security firms and their “cost-plus” workers into its clients, while the Treasury, administering sovereign Israel, answered from 1968 with non-indexed “indexing insurance” loans — half the Histadrut pension funds to WS firms under the WS Financial Plan — a subsidization without public scrutiny that became the main source of the 1970s internal debt and fiscal crisis (PDF p.163-165).
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That split undermined state autonomy and the ability to restrain subsidies after 1967, and is Grinberg’s indirect explanation of the later hyperinflation (PDF p.165, 192-193).
Related pages
Moments of Resistance, Political Space, Security Myth, Labor Institutional Complex, Histadrut, Condensation