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creating self-sustaining Jewish agricultural cooperatives; they relied instead on Rothschild and
Arab labor. In Zichron Ya'akov, where Rothschild sponsored the opening of a branch of the
Carmel wineries, some 200 Jewish farmers employed 1,200 Arabs.
In pre-state Palestine, the socialist ethos was developed into a concrete reality with the es-
tablishment of the Histadrut (trade union federation), the kibbutzim and moshavim, and an
array of other economic institutions. With the Ottomans and later the British ruling Palestine,
the Zionist establishment could not impose a socialist economic structure, but it created one
for the Jewish population through quasi-offi cial institutions, building a system from scratch
in an economy that had virtually no modern infrastructure. Many in the Zionist leadership
shared the philosophy of the most ideological socialists, believing that the economy was not
simply a tool for providing goods and jobs but could serve as a platform for remaking people
and society. For them, Zionism meant remaking the Jew and creating an ideal society in the
Jewish homeland.
Inspired by the socialist ideas prevalent in Eastern Europe at the time, the Second Aliya
immigrants were very different from their predecessors. They saw Jewish life in Europe, domi-
nated as it was by petty traders and craftsman, as economically and socially distorted. They
believed that Jews should use the new homeland they were building to develop a working class
engaged in manual and agricultural labor and in class struggle. Without any local industry,
however, the new arrivals had no choice but to seek work with the veteran Jewish farmers and
form independent labor brigades.
Oddly, at a time when the most advanced economies were industrializing, these Labor Zi-
onists saw the foundation of their social revolution in agriculture, hence the pride of place
given to the kibbutz, which married the two goals into a single institution. “We saw in Zion-
ism a revolution in the life of the Jewish people and its economic structure, a transition from
a nation of intermediaries to a nation of real workers,” Eliezer Kaplan, then treasurer of the
Jewish Agency, wrote in 1935. “Agriculture and the conquest of labor are therefore a necessary
condition for the fulfi llment of our desires.”
The ranks of the agricultural workers and their ideological proclivities were reinforced by
another wave of newcomers arriving in the Third Aliya after World War I, by which time
the country had passed to British control. The fi rst two decades of the twentieth century saw
the establishment of many of the Israeli economy's founding institutions — the kibbutz, the
Histadrut, and an array of social and educational networks — that refl ected the view of those
in the Second and Third Aliyas that economic life was inseparable from political, social, and
cultural life.
TWO COMPETING STRATEGIES: CAPITALISM AND SOCIALISM
The debate over the two competing strategies for building up the Jewish homeland —
capitalism and socialism — came to a head at the Zionist Congress of 1920. On the one side
were American Zionists led by Louis Brandeis, a Supreme Court justice who wanted private
investors to spearhead economic development. They argued that the Zionist movement's eco-
nomic organizations, such as the Jewish National Fund, should act as a quasi-government,
building infrastructure and ensuring social welfare. Opposing them was Chaim Weizmann,
