A Comment on Yitzhak Greenberg’s Anatomy of a Crisis Foretold: The Collapse of Labor Owned Enterprises in the ‘80s

Abstract

Reading Greenberg’s book, one may gain the wrong impression that the liquidation of the ‘Hevrat Ha’ovdim’ (the holding company of the worker’s economy) was the result of the economic crisis in the 1980’s. The article describes the recovery of the main industrial companies that were owned by the H.H. during the years 1988- 1991. It then criticizes Greenberg’s analysis of the causes that led to the economic crisis of the 1980’s, and rejects the claim according to which it stemmed from a ‘genetic fault’ on the part of labor-owned economic enterprises (as suggested by Greenberg) and lists several outcomes of the catastrophic policy of the Likud government during the years 1984-1988, and the economic stabilization policy of 1985: (1) The real appreciation of the exchange rate; (2) The astronomic interest rates after 1985; (3) The decline in construction activity; (4) The drop in the demand for military equipment. 

The article describes the policy of Chaim Ramon, who was elected Secretary of the Histadrut in May 1994, and his decision to liquidate the H.H. Finally, it describes the general sale of the industrial holdings of the H.H. for more than NIS one billion (approximately $350 million).