The United States and Israel have each had (and are having) their experiences with socialism. One country learned its lesson (at least once upon a time), while the other did not.
The experiences these two countries have had with socialism are practically mirror opposites. The US was officially founded almost 250 years ago, with the signing of the Declaration of Independence. However, in the year 1620, more than four hundred years ago, the Pilgrims, predecessors of the signers of the Declaration of Independence, arrived in, and began settling portions of, what is now the United States of America.
The Pilgrims were a very religious group of Christians who analogized their voyage across the Atlantic Ocean to the Jews’ trek through the wilderness while en route from Mount Sinai to the Land of Israel. The Pilgrims also analogized their conquest of the “New World”; that is, to what would become the United States, to the Jews’ conquest of the Land of Israel. When the Pilgrims first sighted land from their ship, the Mayflower, they joined together in a communal recitation of Psalms 100.
As an indication of how important Tanakh (the Jewish Bible) was to the founding generations of Americans, some early courses at Harvard University were taught in Hebrew, and as late as 1817, an annual speech was given in Hebrew at Harvard.
Tanakh also had an influence at Yale University. Some early courses at Yale were taught in Hebrew, and Yale’s coat of arms contains the Hebrew phrase Urim v’Thummim (אורים ותומים), which the university translated as Lux et veritas, or “Light and truth.”
Being Christian students of Tanakh, the Pilgrims modeled the constitutions and laws of their “promised land” of the original thirteen colonies on biblical principles. Interestingly, although Tanakh clearly lists twelve tribes, confusion sometimes exists, for reasons not germane to the matter at hand, as to whether there were twelve or thirteen tribes.
Unfortunately, the Pilgrims’ limited understanding of Tanakh was not confined to comparatively simple matters such as whether there were twelve or thirteen tribes. On July 1, 1620, the Pilgrims, prior to departing Plymouth, England, signed a seven-year contract in which they agreed to pool “all profits and benefits that are got by trade, traffic, trucking, working, fishing, or any other means of any person or persons” The contract further provided “that at the end of the seven years, the capital and profits, viz. The houses, lands, goods and chattels, be equally divided” In other words, the Pilgrims brought socialism to America.
However, instead of lasting seven years, the Pilgrims’ experiment with socialism failed after a mere two years. Shortages and starvation abounded; about 50 percent of the colonists died of starvation and related illnesses.
Under the leadership of their governor, William Bradford, the Pilgrims scuttled their socialist experiment and adopted a free-market economy. The effects of a free-market economy were both immediate and dramatic. When the Pilgrims were allowed to retain the fruits of their labor, their productivity—and prosperity—increased almost overnight.
Since abandoning its extremely short, but disastrous, experiment with socialism in favor of the free market, America—and its economy—has grown from a handful of fledgling colonies to become the greatest economy the world has ever known. The only thing that is now harming America, the only thing which has ever harmed America, is its rejection and distancing of itself from biblical principles, including but not limited to free-market principles.
The State of Israel, on the other hand, is not four hundred years old; rather, it is a mere seventy-four years old. Israel, unlike the United States, was founded by socialists, mostly Jews from Eastern Europe and Russia, who implemented socialist policies.
A “guiding principle” of socialism is that nothing—including the Almighty—can be more authoritative or powerful than the state. One very important method that socialism employs to ensure that its monopoly on power is not threatened is the collective ownership of property; that is, the abrogation of the free market and private property rights.
Tanakh, however, rejects socialism. This rejection can be seen as early as parashat Noah, with the story of the Tower of Babel, which is in Sefer Bereshit, right after the flood. One need not look too far from the Tower of Babel to see other divine endorsements of the free market and the private ownership of property.
The Ten Statements (often mistranslated as “commandments”) explicitly proscribe theft. Additionally, a very large percentage of the other Statements deal, in one way or another, with free-market commercial transactions and property rights. There are also entire tractates of the Gemara which likewise focus on the private ownership of property and voluntary commerce.
Israel, like the United States, also suffered through a failure of socialism.
During the years 1978–79, inflation in Israel, caused by government manipulation of the money supply, averaged 77 percent. By 1984–85, the annual rate of inflation peaked at a staggering 450 percent! US president Ronald Reagan offered Israel a $1.5 billion grant if Israel would abandon socialism and adopt free-market economic principles. The Histadrut, Israel’s labor union, objected.
US secretary of state George Schultz responded with the threat that if Israel did not start implementing free-market economic policies, the United States would freeze all monetary transfers to Israel. The threat worked and Israel, although being “dragged kicking and screaming,” started to implement the free market “recommendations” that were made by the Reagan administration. As a part of its economic restructuring, Israel, on January 1, 1986, introduced the new Israeli shekel, which replaced the hyperinflated shekel at a 1,000:1 ratio.
Like the impact of free-market principles on the Pilgrims’ colony under William Bradford, the impact on the Israeli economy which resulted from the implementation of free-market principles was both immediate and dramatic. Within one year, Israeli’s annual rate of inflation fell from an astounding 450 percent to 20 percent.
Unfortunately, Israel’s mid-1980s forced move away from some socialist policies is not the end of its story of economic failure. Unlike America’s Pilgrims, Israel did not fully repudiate socialism. Rather, many of Israel’s socialist policies persist to this day, causing an unnecessary and significant burden on Israel’s economy and, by extension, on its people. As the Pilgrims learned under the leadership of William Bradford, and as Israelis should have learned from Israel’s 1980s economic reforms, socialism destroys an economy, while free markets allow an economy to grow and flourish.