The small communities established by settlers, like those of Petach Tikva, would never have been able to achieve such explosive growth on their own. They were joined by waves of new immigrants who contributed not only their numbers but a pioneering ethos that overturned the charity-based economy.
One of those immigrants was a twenty-year-old lawyer named David Gruen, who traveled from Poland in 1906. Upon arrival, he Hebraized his name to Ben-Gurion—naming himself after a Jewish general from the Roman period of 70 c.e.—and quickly rose to become the uncontested leader of the Yishuv. The Israeli author Amos Oz has written that “in the early years of the state, many Israelis saw him as a combination of Moses, George Washington, Garibaldi and God Almighty.”4
Ben-Gurion was also Israel’s first national entrepreneur. Theodore Herzl may have conceptualized a vision for Jewish sovereignty and begun to galvanize Diaspora Jews around a romantic notion of a sovereign state, but it was Ben-Gurion who organized this vision from an idea into a functioning nation-state. After World War II, Winston Churchill described the United States Army general George Marshall as the Allied Powers’ “organizer of victory.” To paraphrase Churchill, Ben-Gurion was the “organizer of Zionism.” Or in business terms, Ben-Gurion was the “operations guy” who actually built the country.
The challenge facing Ben-Gurion in operational management and logistics planning was extremely complex. Consider just one issue: how to absorb waves of immigrants. From the 1930s through the end of the Holocaust, as millions of European Jews were being deported to concentration camps, some managed to flee to Palestine. Others who escaped, however, were denied asylum by different countries and forced to remain in hiding, often in horrendous conditions. After 1939 the British government, which was the colonial power in charge of Palestine, imposed draconian restrictions on immigration, a policy known as the “White Paper.” British authorities turned away most of those trying to seek refuge in Palestine.
In response, Ben-Gurion launched two seemingly contradictory campaigns. First he inspired and organized some eighteen thousand Jews living in Palestine to return to Europe to join the British army in “Jewish battalions” fighting the Nazis. At the same time, he created an underground agency to secretly transport Jewish refugees from Europe to Palestine, in defiance of the United Kingdom’s immigration policy. Ben-Gurion was at once fighting alongside the British in Europe and against the British in Palestine.
Most histories of this era focus on the political and military struggles that led to the founding of Israel in 1948. Along the way, a myth surrounding the economic dimension of this story has arisen: that Ben-Gurion was a socialist and that Israel was born as a thoroughly socialist state.
The sources of this myth are understandable. Ben-Gurion was steeped in the socialist milieu of his era and was heavily influenced by the rise of Marxism and the Russian Revolution of 1917. Many of the Jews arriving from the Soviet Union and Eastern Europe in pre-state Palestine were socialist, and they were highly influential.
But Ben-Gurion was singularly focused on building the state, by whatever means. He had no patience for experimenting with policies that he believed were simply designed to validate Marxist ideology. In his view, every policy—economic, political, military, or social—should serve the objective of nation building. Ben-Gurion was the classic bitzu’ist, a Hebrew word that loosely translates to “pragmatist,” but with a much more activist quality. A bitzu’ist is someone who just gets things done. Bitzu’ism is at the heart of the pioneering ethos and Israel’s entrepreneurial drive. “To call someone a bitzu’ist is to pay him or her a high compliment,” writes author and editor Leon Wieseltier. “The bitzu’ist is the builder, the irrigator, the pilot, the gunrunner, the settler. Israelis recognize the social type: crusty, resourceful, impatient, sardonic, effective, not much in need of thought but not much in need of sleep either.”5 While Wieseltier is describing the pioneering generation, his words fit those who risk all to found start-ups. Bitzu’ism is a thread that runs from those who braved marauders and drained the swamps to the entrepreneurs who believe they can defy the odds and barrel through to make their dreams happen. For Ben-Gurion, the central task was the wide dispersion of the Jewish population over what would one day become Israel. He believed that an intensely focused settlement program was the only way to guarantee Israel’s future sovereignty. Otherwise, unsettled or thinly settled areas could someday be reclaimed by adversaries, who would have an easier case to make to the international community if Jews were underrepresented in contested areas. Moreover, thick urban concentrations—in cities and towns like Jerusalem, Tiberias, and Safed—would make obvious targets for hostile air forces, which was another reason for dispersing the population widely.
Ben-Gurion also understood that people would not move to underdeveloped areas, far away from urban centers and basic infrastructure, if the government did not take the lead in settlement and provide incentives to relocate. Private capitalists, he knew, were unlikely to take on the risk of such efforts.
But this intense focus on development also produced a legacy of informal government meddling in the economy. The exploits of Pinchas Sapir were typical. During the 1960s and ’70s Sapir served at different times as minister of finance and minister of trade and industry. His style of management was so micro that Sapir established different foreign currency exchange rates for different factories—called the “100 exchange rate method”—and kept track of it all by jotting each rate down in a little black notebook. According to Moshe Sanbar, the first governor of the Bank of Israel, Sapir famously had two notebooks. “One of them was his own personal central bureau of statistics: He had people in every large factory reporting back to him on how much they sold, to whom, how much electricity was consumed, etc. And this is how he knew, well before official statistics were kept, how the economy was doing.”
Sanbar also believes that this system could have worked only in a small, striving, and idealistic nation: there was no government transparency, but “all the politicians then . . . died poor. . . . They intervened in the market, and decided whatever they wanted, but at no point did anyone pocket even one cent.”6
The Kibbutz and the Agriculture Revolution
At the center of the first great leap was a radical and emblematic societal innovation whose local and global influence has been wildly disproportionate to its size: the kibbutz. Today, at less than 2 percent of Israel’s population, kibbutzniks produce 12 percent of the nation’s exports.
Historians have called the kibbutz “the world’s most successful commune movement.”7 Yet in 1944, four years before Israel’s founding, only sixteen thousand people lived on kibbutzim (kibbutz means “gathering” or “collective,” kibbutzim is the plural, and members are called kibbutzniks). Created as agricultural settlements dedicated to abolishing private property and to complete equality, the movement grew over the following twenty years to eighty thousand people living in 250 communities, but this still amounted to only 4 percent of Israel’s population. Yet by this time the kibbutzim had provided some 15 percent of the members of Knesset, Israel’s parliament, and an even larger proportion of the IDF’s officers and pilots. One-quarter of the eight hundred IDF soldiers killed in the 1967 Six-Day War were kibbutzniks—six times their proportion in the general population.8