The Neoliberal Revolution and Labor’s Share of Israeli National Income

Abstract

This chapter underlines a relatively unfamiliar outcome of the neoliberal revolution. Following the shift from social protection to economic liberalism, in many rich countries workers’ share of national income has declined, and capitalists’ share has increased. To better understand this link between neoliberalism and workers’ share of national income, Kristal develops a new political economy approach that stresses the importance of state policy for determining how national income is distributed between workers and capitalists, and applies this conceptualization to the dynamics of labor’s share in Israel, once a socialist economy with little inequality, today one of the world’s most unequal.

This is a commissioned chapter that draws heavily on a previous publication (Tali Kristal, “Slicing the Pie: State Policy, Class Organization, Class Integration, and Labor’s Share of Israeli National Income.” Social Problems 60, pp. 100–127. Copyright © 2013 by Oxford University Press. Reprinted by permission of Oxford University Press). The chapter is based on a detailed discussion of the changes that the Israeli political economy underwent in the second half of the twentieth century, and analyses of how these changes affected income inequality. The emphasis here, however, is on the role of state policy, in particular, privatization, in rising inequality since the mid-1980s.