Institutionalizing the Liberal Creed
This chapter analyzes the role Israeli economists have played as purveyors of pro-market economic ideas and political entrepreneurs of economic liberalization in Israel. Israeli economists were strongly committed to economic liberalism already in the 1950s, but they were lacking decisive political influence. Two mechanisms increased their power over policy. First, long-term institutional changes gradually eroded “political” decision-making mechanism and opened the way to greater involvement of professional economists. This long-term trend was joined and reinforced by economists’ institutional entrepreneurship at the height of the 1980s economic crisis, when they initiated changes of macroeconomic governance. These changes enhanced the political power of the Ministry of Finance and the Bank of Israel and supported the institutionalization of neoliberalism in Israel.