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.
One of the characteristics of much academic writing is an obsession with theory at the expense of empirical investigation. It is rare to find a book that combines genuinely novel theoretical exploration with rigorous empirical study, the more so in fields such as political science where abstraction seems to have become the norm. It is for this reason that The Global Political Economy of Israel is such a gripping read. A remarkable investigation into the concrete workings of the Israeli and U.S. economies that avoids the fatuous generalities of much of the globalization literature, it presents a challenging theoretical framework that not only clarifies the past but also seeks to understand the present.
Nitzan and Bichier 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 so doing, they attack key premises of neoclassical economics; assumptions such as an economy in equilibrium, full employment, and obsession with so-called neutral aggregates such as GDP and inflation rates. Instead they ask the questions: Who are the winners and losers in the economy and how is power exercised?
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. This is most clearly demonstrated in the case of stagflation--a period of little or no growth combined with high rates of inflation. The accepted wisdom is that these periods, which emerged as a global phenomenon during the 1970s and early 1980s, were bad for the economy as a whole. Instead, Bichler and Nitzan demonstrate with a rigorous examination of profit rates for dominant capital that these periods were in fact extremely profitable for dominant capital.
In the United States for example, the authors examine inflation figures and profit-per-employee figures for the Fortune 500 companies relative to figures for the economy as a whole. The results are a startling confirmation of their thesis: that the movement of inflation correlates almost precisely with dominant capital doing dramatically better than average capital--i.e. winning a greater share of profits. Inflation is therefore demonstrated to be a powerful redistributional phenomenon.
Between Depth and Breadth
At this point the authors introduce a theoretical framework that sees the political economy of the twentieth century as moving between two alternating regimes of capital accumulation--depth and breadth. A breadth regime is characterized by attempts by capital to increase the size of its workforce through green-field investments or corporate amalgamation. These periods tends to be structurally dynamic and are commonly less conflictual. A depth regime, on the other hand, is marked by attempts to increase the rate of profit per-employee through either cost-cutting measures or stagflation. In the latter case, dominant groups of capital, acting in collusion, use higher prices to offset the loss in reduced volume sold. These periods of depth tend to consolidate rather than change institutions and structures, and are usually more conflictual and often violent.
There are two important points to be made in regards to this framework. Firstly, Nitzan and Bichler argue that accumulation must be seen in a relative context. …