Introduction

The economic history of Israel is often portrayed as a story of transformation from socialism to capitalism: a change from an era in which the state intervened in the economy to achieve socialist goals, to an era in which the economy was managed by market forces and rational economic principles. This chapter argues that social or economic values such as equality, economic freedom or private property right did not play a decisive role in shaping Israel’s economic strategy. Rather, the primary factor that shaped the Israeli economy were the preferences of the state in the socio-economic and national security policy areas.