The supposedly biggest scandal to rock the Israeli business world, dubbed “The Trojan Horse Affair,” is not at all something new. The American corporate world, on which we base our own, has been hit by a slew of similar stories that bounce back between conference rooms and interrogation chambers.
A quick glace at finance and crime sections in community newspapers brings back memories of scandals involving investors, executives and private investigators, as well as banks and insurance companies.
The current saga emphasizes the double standard of the press and the Israeli business world. The “exposure” of the unemployed citizen who secretly works while still receiving government benefits has made it essential to tighten the criteria for unemployment allowances, if not to cancel them entirely.
A strike at a seaport or a local municipality would lead to a lawsuit calling to limit the right to protest, and if a labor court upholds the right, a “free market knight” immediately emerges and calls for the establishment’s dismantlement.
We have not been told that the needed conclusion from the “Trojan Horse Affair” is the need to restrain “competitive capitalism” or the “free market.” No one has shouted out that they are “sick of it” and that the “system has gone belly up,” while using words such as “Mafia” and “gangsters,” which are usually reserved for attacks on workers’ unions.
Like in previous financial affairs, the current case incorporates a mystical belief in “efficiency” and “competition,” which remains stronger than any reality.
The sole advantage of the current scandal is that it has penetrated the heart of the Israeli business world and that something could be learned about the real nature of “free competition” in the process.
'Free competition' a ploy
Free competition is an urban legend. There is no such thing. This so-called “competition” is done through strict government supervision, which implements tight rules and regulations. Those in charge of financial restraints, for example, are busy limiting competition to allow the competition.
No, that is not a mistake. This contradiction of logic implements the very essence of “free competition,” which is a deceptive term that hides the government’s regulations and surveillance of the economy.
Even the beating hearts of capitalism - the financial markets and stock exchange - are supervised. The Bank of Israel head stands behind the decision regarding the interest rate, and using insider information in stock businesses is illegal, even through such information could show initiative and competitive readiness.
"Free competition" is therefore a ploy. The government always regulates and supervises the economy. The only question is, for whose benefit? “Free competition” is a code name for regulating the economy in favor of investors, while in welfare states it is a synonym for regulating it in favor of the general public.
Therefore, any time the followers of capitalism start to incite against the services of the welfare state, or against a “monopolistic” organization of workers with the claim that they are interfering in the free economy, we must stop and say, yes, this is an intervention, because there is no economy without guarantees. But this interference works in our favor, and for the benefit of the entire public.
Prof. Danny Gutwein is a lecturer in Israeli economic and social history at the University of Haifa
