Economic Stabilization Plan 1985 – ‘Appropriate Economics’ or an Ideology

Abstract

The 1985 Economic Stabilization Plan was a strategy to combat inflation and stabilize the Israeli economy. This program was also an instrument that advanced a paradigmatic change in the economic regime. The new paradigm supported liberalization, privatization, and the dominance of monetary policy. This approach has become the hegemonic economic regime since the nineties. Economists became influential intellectuals in social policy. The new economic paradigm has become the accepted truth as it was in accordance with the beliefs of the dominant economic elite in Israel.

The study shows that the ideas that flowed to the public sphere were based on Western scientific paradigms and were accepted as legitimate scientific truth. The economists gave a solution to a specific problem, to an economic crisis. Their ideas had ‘clients’ among the dominant elite. These economists were not collaborators with the dominant economic elites, they were autonomous agents who acted according to the scientific rules of their community. Their social opinions were embedded in old Israeli values: Socialism and Zionism. Unlike dominant economists in the West, they thought that the new plan was ‘Right’ not Just. However, in the long run, these ‘scientific truths’ were homologous with the dominant elite’s interests, were ‘consumed’ by them, and hence became ‘Common Sense’.