Jonathan Nitzan and Shimshon Bichler, The Global Political Economy of Israel (London and Sterling, Virginia: Pluto Press, 2002), 407 pages, cloth $75.00, paper $24.95.
...Nitzan and Bichler start by challenging the traditional view of Israel as a "unique case" characterized by a strong state guided by socialist ideology. Their argument instead looks beyond the apparent form and seeks to identify the essence, using as their guiding principles the concepts of capital accumulation, ruling class formation, and Israel's place in the global political economy....
In contrast to the standard approaches, Nitzan and Bichler argue that the key issue underlying political economy is that of capital accumulation by groups of dominant capital. The aggregates that we are told are "bad for the economy" often obfuscate massive gains for these dominant groups, at the expense of other sections of capital and, of course, those who have nothing to offer but their labor power....
Firstly, Nitzan and Bichler argue that accumulation must be seen in a relative context. In other words, it is not the absolute level of accumulation that is important but rather the level of accumulation relative to the average -- what the authors term differential accumulation. Modern capitalists don't seek to maximize profit, but rather aim to beat the average.
Flowing from this stress on differential rates of accumulation is the second key concept introduced by Nitzan and Bichler. Taking issue with traditional Marxist approaches to capital accumulation, they argue that the differential struggle between different capitals is at heart a struggle for power....
This point bears some examination, as it is probably the most novel -- and hence controversial -- argument that the authors make. Essentially, Bichler and Nitzan argue that traditional Marxist approaches to concepts such as capital, accumulation, and profit have attempted to find a basic unit with which to measure exactly what is being accumulated. To neoclassicists, this basic unit is money, which supposedly expresses a quantitative measure of "well-being." For Marxists, the authors argue, the basic unit was "abstract labor."
In contrast, according to the argument of Bichler and Nitzan, the process of accumulation cannot be understood solely in terms of the productive labor process. Instead, accumulation should be understood as an interaction between productivity and power. In the modern capitalist world, accumulation comes to depend not just upon ownership and the inputs into the productive process, but also critically becomes a function of social power. Drawing on the work of Thorstein Veblen and Lewis Mumford, the authors attempt to develop an institutionalist theory of capital that encompasses this aspect of power. They argue that we cannot understand accumulation solely in terms of physical inputs such as land, labor, and machinery but must also ask what enables these quantities to become inputs in the first place.
Following Veblen, the authors argue that under modern capitalism there is a growing separation between "industry" and "business." The source of capitalist earnings is not only found in the productive process, but in the politics of production. In other words, accumulation increasingly relies upon distribution that in turn derives from power over production. The modern nature of business -- characterized by absentee ownership -- means that the nature of this power takes the form of the ability of absentee owners to limit production below its full potential. How do the means of this power today differ from that found in the nineteenth century? According to Nitzan and Bichler, "In the twentieth century, these means further expanded to rely on the broader political realm of the state, including aspects of policing, propaganda, taxation, tariffs, subsidies, patent laws and intellectual property rights, as well as on international institutions such as trade zones, regional investment agreements and global, government-backed corporate alliances" p. 35.
The Israeli Case
Turning to Israel, this understanding of the nexus between power and capital accumulation is clear. The early Israeli state played a critical role in creating the institutional context for the development of favored capital groups in Israel. The state directed external "gifts" (initially from German reparation payments and then later aid from the U.S. government) to the five key conglomerates that dominated the Israeli economy. The state also established the framework that permitted these groups rapidly to expand at the differential expense of lesser capital, through policies such as encouraging joint investment with the government, permitting the manipulation of banking shares that precipitated a collapse of the banking system in 1983, granting special development assistance, and directing the process of proletarianization of Jewish immigrants from Arab and African countries who were to become the core of the industrial working class....
Oil and Arms
Returning to the notion of dominant capital, the authors identify what they term the weapondollar-petrodollar coalition as a key component of global dominant capital as a whole. They show an increasing interaction between the major oil companies and arms manufacturers and examine how the pursuit of differential accumulation by this coalition is linked with so-called energy conflicts in the Middle East.
In a remarkable series of graphs, the authors plot the rate of return of the major oil companies (dubbed the petro-core) in comparison with dominant capital as a whole. They then show that each sustained period of negative differential accumulation for this sector (i.e., where dominant capital has outpaced the petro-core in terms of differential profits) has been immediately followed by an "energy-conflict" such as the 1967 and 1973 wars, the Iran-Iraq war, and the 1990-1991 Gulf War....
[The full review is available at <http://www.monthlyreview.org/0103hanieh.htm>.]