The cult of capitalism

A small grassroots student group strives to expound of the virtues of the free market.

By NEIL ROGACHEVSKY
February 18, 2008 22:56
The cult of capitalism

rotem sella 224. (photo credit: Courtesy)

On a rainy winter evening, a group of students and young professionals assembles in a conference hall at the Maiersdorf Faculty Club of the Hebrew University in Jerusalem. The young people have come to hear Rotem Sella, 25, the star lecturer of the Israel Center for Social and Economic Progress, give the introductory lecture of this extra-curricular "Introduction to Economics" course run by the pro-market think-tank. The course is designed to introduce non-economists to the principles and virtues of a free market, and Sella proceeds on this theme at full speed ahead. After quickly outlining in broad terms how feudalism, socialism and capitalism work, Sella spends the bulk of the hour arguing for the supremacy of capitalism: "History has shown that these planned economies never work. The free market is the best way for us to produce the things that we want." Some of the audience is clearly impressed by Sella's presentation, but not everyone is persuaded. "What about waste?" chimes in a skeptic. "The free market is chaotic. People have bad ideas and waste resources that belong to all of us. If a few competent people decide what we should develop, we won't waste our resources." "Who are these people?" retorts Sella playfully, if combatively. "I would like to meet them. You're assuming that a small group can judge the propriety of all economic decisions in society. That knowledge isn't available. People with bad ideas go bankrupt, and market forces encourage the production of things we want." "Those market forces have ruined our environment," retorts another audience member. "Yes, ruined the environment," replies Sella, "But also stimulated new technologies that make our lives better. Maybe the rivers were less polluted in the 18th century, but you also died at 40. Not much time to enjoy them!" Just another rowdy exchange over economics for Sella. For the young man from Ashkelon has made agitating for free markets his life's core pursuit. He is one of a handful of enthusiastic crusaders for less government intervention in the workings of Israeli society. These proponents of capitalism are at once exasperated by the way the country is currently run but also unfailingly optimistic about the possibilities for more market freedom and the great effects it would have. It would be difficult to deny that free market supporters here are opposing some of the country's most deeply ingrained convictions. Since at least the 1890s, when Russian activist Ber Borochov argued that Zionism would eliminate the Jewish "petit bourgeois," Zionist thought has been suspicious of capitalism. Even Ze'ev Jabotinsky, while questioning mainstream Labor's views on foreign policy and territory, shared in the opinion that the state had a duty to provide health and housing to its citizens. The Histadrut, founded in 1920, put these ideas to work, building a vast but centralized network of infrastructure and services for the Jewish workers of Mandatory Palestine. The organizations and companies it established, such as the Clalit health fund and the agricultural cooperative Tnuva, became the core institutions of the nascent state, and the Histadrut was able to direct the various sectors of society without competition. Over the years, of course, the economy has nudged towards greater privatization. In recent years, especially, successive governments have been cutting back on spending. In 2003, faced with the possibility of bankruptcy, finance minister Binyamin Netanyahu ordered massive cuts in social spending and a fire sale of formerly public assets like the large banks. Some credit the subsequent economic recovery to the improvement in the security situation. Still, the remarkable economic growth - 5.1 percent in 2006 despite the war in Lebanon - has brought market-style economics into wider repute or at least notice among the public. ACCORDING TO market activists, though, the opinion makers in the media and academia remain lined up against the market. "In the 1980s, saying you were in favor of a free market in Israel was a gesture akin to holding a pork chop in front of a Lubavitcher rabbi," says Daniel Doron, director of the Israel Society for Economic and Social Progress and Sella's boss in its economics program. "It's not that way anymore, but opposition remains fierce." Doron, a sort of elder statesmen of free-market activists, has been wrestling with public opinion about markets for the better part of four decades. In the 1970s, having sharpened his free market leanings by work and study in the US, he helped found Shinui, which at the time promoted economic liberalization. The think tank engages in some political lobbying, but these days Doron seems most engaged by the educational aspect of his work. He considers himself a teacher and defender of a truer version of reality against the false pieties of academia. "Every university grad is a leftist," he says, "having been taught nothing but sick Marxian pornography. Our classes are, therefore, a bit like group therapy." In contrast to Sella's flamboyant presentation, Doron speaks with rabbinic seriousness. Over the course of his hour, he tells the students that all their social beliefs are wrong. "Our tradition says to pursue justice but not that we can have perfect justice on earth," he says. "Our leaders and professors have taught you that they could bring about this utopia on earth. But they ignore the human condition." Sella was drawn into market activism by his experiences in university. When he arrived at the Hebrew University, where he is finishing a degree in philosophy, politics and economics, he was already a capitalist. He had been expecting to learn about the benefits of a free economy in his economics classes, but was instead taken aback by what he saw as socialist propaganda. "We were told only about the downside of national wealth," he recalls. "Though only a freshman, I was certain that this portrait of an evil market was a distortion." Sella's lecturers were annoyed by his opinion but charmed by his enthusiasm and sense of certainty, and he would often be called upon to present lengthy monologues about the economic issue under discussion. These experiences imbued him with the taste for speaking to a crowd and a desire to spread the word by all available means. Sella's most cherished soapbox is the "Daily Capitalist," an awkwardly designed but lively on-line forum of free-market writing. Sella analyzes a wide range of topical social issues, but always with an eye toward advancing some market idea. Writing recently about the secondary school teachers' strike, he argued that the country needs a school voucher program giving parents more choice about where to send their children. Considering the flight of young professionals from Jerusalem, Sella suggested equal urban tax for all Jerusalem residents, haredi or not. The market would then do the rest and more students and young couples would return to the city. The Daily Capitalist has become something of a cult, and articles by Sella and his chief collaborator, Asaf Hadany, can sometimes generate hundreds of responses. With Sella there's always a new project on the front burner. One day he'll hear about a new idea or book, and the next day they'll be flyers at the university, a new e-mail group and plans for a discussion group about how to put the idea in practice. SELLA AND DORON are by no means moderate capitalists. On just about any social issue they advocate radical free-market positions. Yet in comparison to some of the other activists, they appear as level-headed moderates in favor of compromise above all else. For example, Mark Heinrich, a Tel Aviv-based asset manager, has been developing a plan, presented on his Web site Kav Yashar, to lessen or remove government involvement in every sector of society, from the army and police to water supplies and education. Heinrich brings an almost extraordinary level of dedication to his task. He rises each morning before dawn so he can fit in three and half hours of work on the Web site before work, and often puts in some more time in the evenings. The site now includes the equivalent of about 1,000 pages of polemics against the status quo. In his section on the police and law enforcement, for example, Heinrich proposes the legalization of prostitution, drugs and privatization of a large sector of current police activities, such as turning investigations over to private firms. Heinrich acknowledges that his suggestions seem far beyond what even market-friendly Israelis are currently willing to accept. This does not deter him, however, because he believes he can influence change on one issue at a time. He has a sort of religious faith in the economic initiative of individuals, a trait he shares with his sometimes intellectual partner Boaz Arad, a disciple of Ayn Rand. The two believe that economic growth is natural, and that all that's required is for people to be left alone by their governments or them to build wonders. Heinrich is therefore buoyant about the country's economic prospects. "We have the best labor force in the world," he tells me as we sit in his cluttered office on Rehov Dizengoff. "I am convinced that we can be the richest country on earth." Heinrich's sense that Israeli society can be changed is echoed by many of the free-market activists. This stems in good measure from their faith in their own powers, but they have also been encouraged by the recent string of economic reforms. The privatization policies instituted by Netanyahu and to some degree maintained through the tenures of Ariel Sharon and Ehud Olmert have bred hope that there might be moves toward greater privatization in sectors such as education and transportation. In the realm of opinion, there is a sense among the activists that the concept of free market is slowly gaining in credibility within the wider public. Ori Redler, who runs a software company and writes free-market articles from an anarchist's perspective at his blog Ha'ona Hasmoleet, puts it this way: "Now even when people are opposed to the free market, they still have to pay lip service to it." At the same time, the advocates bring a sense of worried urgency to their task, prompted by the belief that market reform is an issue of national survival. As free market economists, they are naturally worried that greater economic opportunity elsewhere will be too tempting for many talented Israelis to refuse. "Too many good people are emigrating," Heinrich says, "but no one leaves because of terrorist attacks. It's simply too difficult to pursue their projects in Israel. We need to give them an opportunity to initiate their projects and earn good money here." Sella, as we overlook Jerusalem's old city, expresses the same idea in more romantic terms. "I don't think people just want to get out of Israel. When people leave it's because they find opportunities to pursue their dreams elsewhere. All we need is to allow people to enjoy the fruits of their labor. They will then see that their dreams can be realized here."


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