Israel’s Capitalist Triumph

There’s an unspoken reason that the Democratic Socialists of America cannot forgive the Jewish state.

Milli Sands | July 7, 2026

The Democratic Socialists of America (DSA) has made opposition to Israel a defining feature of its politics. The organization brands the Jewish state “apartheid” and “settler-colonial,” champions the Boycott, Divestment, and Sanctions (BDS) movement, calls for an end to U.S. military aid, and endorses a “right of return” for “Palestinians” that would end Israel’s existence as a country, let alone a Jewish-majority state. The DSA frames all of this around occupation, human rights, and anti-imperialism—and those are the terms on which the debate is usually fought.

But there is another, quieter tension in the DSA’s position that gets far less attention than it deserves: Israel is the clearest postwar example of a country built on explicitly socialist foundations that then abandoned them, embraced market reforms, and became dramatically more prosperous as a result. That awkward data point directly undercuts an organization that has as its founding premise the claim that capitalism produces exploitation and crisis while collective ownership delivers justice and shared prosperity.

Israel’s founding generation built the state on Labor Zionist principles: kibbutzim, a powerful Histadrut labor federation, nationalized industries, and heavy state planning. For the first few decades, this produced real nation-building achievements—rapid absorption of immigrants, a functioning welfare state, and near-full employment. But by the early 1980s, it had produced economic collapse. Inflation hit roughly 445 percent in 1984, the budget deficit approached crisis levels, and the country stood on the edge of hyperinflation.

The 1985 Economic Stabilization Plan, implemented under a national unity government led in part by Shimon Peres, began the reversal through sharp budget cuts, price controls, and initial trade liberalization.........

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