Histadrut began as a capitalist phenomenon

Learning from early history of Israel

The Socialist organization Histadrut (from Hebrew: getting settled), founded in 1920s in Palestine, was a free market phenomenon. It raised funds through donations and brought people from abroad to employ in its factories. Any one could do this, but the Histadrut did it better.

There was no element of force, or threat of force: people joined Histadrut voluntarily and could have left. It taking care of its employees is no different from Facebook, Amazon, and Musk’s companies which arrange the lives of their employees. A friend who worked in Facebook for half a year told me that he couldn’t remember the last time he had to use his wallet.

Capitalism is a political system that permits voluntary socialist or communist associations.

Who were the leaders of Histadrut? Working in a little office, at its founding, were Ben Gurion, Golda Meir, Levi Eshkol, Berl Katznelson, David Remez, Zalman Shazar. Working as an executive team in a Corporation, they managed Histadrut’s operations, settled immigrants, travelled around Europe and the U.S. to campaign for donations. All of them people prided themselves of being socialist. Ben Gurion, Levi Eshkol and Golda Meir became later Prime ministers of Israel, and David Remez minister of Transportation and Education.

But after the Israeli independence, Histadrut became a regulatory body of the government. Evil happens when collectivist ideas have the backing of force. Now Histadrut could force its socialist ideals on others. It used state authority to dictate union-like conditions to other independent businesses.

As for businesses that Histadrut owned, those were de-facto state owned, for Histadrut got the majority of government contracts. Other companies could bid, but they had to abide by the standards set by Histadrut in order to qualify. While Histadrut vowed to protect so called “worker rights,” it was obstructing individual rights.

The story of Histadrut provides an important lesson and a cautionary tale to anyone willing to go anthem and attempt to found a new capitalist state. There is the “before” and “after” a region has obtained autonomy. The same organization that was legitimate and needed before independence, became poison of statism afterwards.

When forming a new country, we must recognize that there will be a stage when the organizers do not have sovereign control of the land. In this stage they are facilitating the immigration effort. Theodore Herzl—twenty years before Histadrut was founded— insisted that mass immigration is necessary to create a new state. However, mass immigration would not happen by itself if a region doesn’t already have an industry that can absorb the immigrants. Many of the immigrants to 1920s and 1930s Palestine where dirt poor and Histadrut made the initial investment to buy the land and to provide basic housing for them.

Golda Meir writes in her memoir “My Life” (p.105),

In many ways, the Histadrut was entirely unique. It could model itself on no other existing labour organization because the position of the Jewish worker in Palestine then was totally unlike that of the worker in Britain, France, or America. As elsewhere, the economic rights of the Jewish worker, as well as the Arab worker, in Palestine had to be guarded, including the right to strike, the right to a decent wage, the right to paid annual holidays, to sick leave, and so forth. But even though its official title was the General Federation of Jewish Labour, it would be an oversimplification to describe the Histadrut only as a trade union, because it was much more than that, in concept as well as practice. First of all, the Histadrut based itself on the unity of all the workers in the yishuv [village] — whether they were wage earners, members of kibbutzim, blue- or white-collar workers, manual labourers or intellectuals — and from the start it was in the forefront of the struggle to bring Jews to Palestine, even though the burden of increased immigration inevitably fell on its own shoulders.

In the preceding we see the Marxist claim that a worker has a right to a decent wage, paid annual holidays and sick leave. There are no such “rights,” because such rights would amount to the right of confiscating wealth from an individual (the owner of a business). A worker sells his productive capacity on certain terms, which he negotiates with the owner, in a scenario acceptable for both. Those terms may or may not contain things like paid annual holidays or paid sick leave. For instance, it may be more opportune to a worker to increase his wage instead of having the guarantee of these paid leaves. The Socialists, however, wish to dictate the terms wholesale, but who gave them this right to decide for others?

Golda Meir continues,

Secondly, Palestine didn’t have a ‘ready-made’ economy that could absorb the steady flow of Jewish immigrants into the country. There was the smattering of small industry, of course, and the agricultural settlements. But these enterprises couldn’t sustain a country with a growing population; and we who had come to Palestine to build the Jewish national home knew that we had to create what today is so casually referred to as a ‘national economy’! If you stop to think about what this involves —industry, transport, construction, finance, not to speak of tools for dealing with welfare, unemployment, and so forth — the job ahead of us was actually the creation of something almost out of nothing. Even at the time of which I write, when the workers of Palestine were still few in number and very isolated, through the Histadrut they unhesitatingly undertook the responsibility of being the vanguard of a state-in-the-making, though certainly no one imposed this mission upon them.

In other words, Histadrut was indispensable to bring immigrants on a mass scale. Indeed, it had all the markings of the modern startup which attempts to optimize resources and business operations using a hierarchical structure of management and reporting. And, as in any startup, the founders and the CEOs are the thinkers. Golda describes the key men running Histadrut exactly in such terms. About Levi Eshkol, she writes:

If you wanted a Jewish national home, you had to settle Jews on the land - never mind how much the land cost or what obstacles the [British] mandatory government put in the way of the Jewish institutions that wanted to buy it. Not enough room to swing a cat in Palestine,’ said the British Colonial Office in 1929, by way of trying to excuse its inexcusable policy of limiting Jewish immigration and land purchase. So Eshkol spent the next thirty years looking for places in which new settlements could indeed be established, and, as head of the Jewish Agency’s Land Settlement Department, he supervised the founding of nearly 400 new Jewish villages. You couldn’t have settlements without irrigation or irrigate without water, so Eshkol proceeded to organise an intensive search for water. It was a very expensive search, so he also looked for money, as well, and managed to find both - though not, needless to say, in quantities that would last for ever.

The biggest praise Golda Meir reserved, in her memoir, to Berl Katznelson (p. 120),

Above all, there was Berl Katznelson. He died in 1944 and never saw the State of Israel, though I have often wondered what he would have thought of it - and of us. I have no doubt that many things would have been different - and better - had Berl been with us over the past thirty years. The Labour move - whose undisputed spiritual leader and guide he was would have remained, I am sure, more loyal to itself and is stated principles than it has, and maybe we would have achieved society blessed by greater equality. Berl played a unique role in the movement, though he held few official posts in it, and I am ashamed of the fact that despite the twelve volumes of his essays and speeches that have been published, no one has yet written a real biography of him. I am certainly no historian an (and will not) presume to try to analyse or assess the extent of Berl’s influence upon all of us. But at least I can do something to introduce his name to the world outside Israel’s borders, for he was the one man whom all of us, including Ben-Gurion, deeply revered and who served us all as an unquestioned and much loved moral authority.

… I think of him as I saw him, hundreds of times, buried a shabby old armchair in one of the two book-lined rooms in in a which he lived in the heart of Tel Aviv, where everyone came which he to see him and where he worked (because he hated going to an office). ‘Berl would like you to stop by’ was like a command that no one disobeyed. Not that he held court or ever gave orders, but nothing was done, no decision, of any importance to the Labour movement in particular or the yishuv in general, taken without Berl’s opinion being sought first.

He sat in that chair, chin in hand, and talked and listened for hours; and his views were almost always decisive, although the only administrative offices he held in the Labour establishment were as editor of Davar and director of the Am Oved publishing house.

Is this not a description of a startup founder of the present, in shorts and a T-shirt, brainstorming and pondering million dollar expenditures in his business? Weren’t these people, at the founding of Histadrut, basically trying make a difficult project succeed against all odds?

So what went wrong? What went wrong is that (a) they subscribed to a wrong, evil philosophy of Marxism, and (b) with the independence of Israel, that wrong philosophy obtained the power of force. Golda Meir wrote her memoir in the 1970s, and she stated that in her time the “head offices of the Histadrut occupy an immense building on the Tel Aviv’s main street and are like a great beehive that hums with the sound of hundreds of voices, typewriters and telephones”. Each of those clicks of the type writer, which Golda so praises, is a new letter of regulation designed to curb the individual rights of Israelis.

But how are we to prevent a similar occurrence, while creating a new laissez-faire state? How to prevent an organization that will own land, factories and will facilitate mass immigration, to not become a hundred pound statist gorilla, like Histadrut? Let’s brainstorm together.