Ideologies and academics
Although many Jewish immigrants to Palestine came due to economic opportunities and lack of better opportunities, many others came due to their commitment to the Zionist idea of a Jewish homeland and forsook more promising immigration destinations.
For many, the future character of the Jewish homeland was an essential part of their vision, and therefore the small Jewish community that emerged in Palestine was engaged in lively and prolific discussion of social and economic problems. The numerous political factions, the various kibbutz movements, the numerous offices of the Histadrut, and many other bodies published a plethora of pamphlets and translations of European thinkers in Hebrew from all nations and of all stripes.Outside the political arena there were very few other institutions in which economic debates could take place. Most noticeable was the absence of academic studies of the economy. Indeed, the establishment of a university was a central idea in the Zionist program since its inception, and the first university, the Hebrew University (HU), was officially opened in 1925. It fascinated many Jewish scholars worldwide as is evident in the membership of Albert Einstein and Sigmund Freud on its Board of Trustees. Growing anti-Semitic and Fascist trends pushed many salient scholars out of Europe, most notably from Germany after the rise of the Nazi party in 1933; a few went to the HU.
Yet this development missed the social sciences, and during its first quarter of a century the university had only two faculties: humanities and natural sciences. Without constant state funding, and in a small and poor Jewish community (in 1931 there were only 175,000 Jews in Palestine), budgetary constraints limited the number of new appointments, and outside funding was necessary to secure a new position. Several times during the 1930s/1940s attempts were made to establish chairs in social science, including economics.
Prominent Jewish economists were contacted to solicit names of suitable candidates, including Richard Kahn from Cambridge and Adolph Lowe, a German Jew who was fired from Frankfurt in 1933 and eventually taught at The New School in New York. Abba Lerner and Michael Kalecki were two candidates who were considered to lead the economics studies at HU, but the work conditions offered were not attractive enough, and the HU was unwilling to compromise on less prominent nominations (Gross, 2005). Sally Herbert Frankel, a prominent development economist from South Africa, considered an invitation to teach at HU but eventually preferred a career at Oxford. His objection to the collectivist approach to economic development was probably a factor.With funding from the Jewish National Fund (JNF), the HU did have a chair in agrarian economics. This was Boris-Dob Brutzkus (1874—1938), a specialist on Jewish agrarian settlement in Russia who taught in St. Petersburg (1907—22) and worked in the Russian Scientific Institute in Berlin until 1932 (Brutzkus, 1935). His death in 1935, three years after his nomination, left HU again with no nomination in economics. Economics was taught, however, by an adjunct lecturer at the Department for Islam Culture (and later in the Agricultural Institute as well) by Alfred Bonne (1889—1959), a German Jew who got a PhD in economics from the University of Munich (1923) and left an academic career in favor of the Zionist project. He was the head of the Statistics Office of the JNF and headed the Economic Research Institute of the Jewish Agency. Bonne studied Palestinian economics and his book (1932) on that topic was quite successful in Germany (Gross, 2004; Michaeli, 2005). When a Social Science Department was established at HU in 1944 (headed by Martin Buber), Bonne taught “the descriptive- institutional aspects of Palestine [Eretz-Israel] and Middle-East economies” (Michaeli, 2005, 3).
The void created by the absence of social science at HU was filled by a public research institute and a private enterprise of academic education.
In 1935 Ruppin persuaded the WZO that a body for economic research would be useful in advancing the rational development of a Jewish community in Palestine.
The result was the Economic Research Institute (ERI; Ruppin, 1968, 240—1), a unit whose objectives were to “investigate methodically economic life in Palestine, examine the possibilities of its development, and provide Executives [of the Jewish Agency] the necessary material for its economic and practical operation” (Ruppin, 1922, 809). ERI had an independent budget, and its structure granted Ruppin an autonomous space relatively free of political pressures. Ruppin assembled a group of young economists who arrived in Palestine from Germany, and their studies helped the Zionist leadership in its bargaining with the British rulers, but following Ruppin's death in 1942 the ERI lost its influence and was eventually dismantled.In 1937 the Higher School of Law and Economics (HSLE) was established in Tel Aviv and responded to the growing need of professional training for the burgeoning industrial economy. The school absorbed several European-educated economists, who often worked also in the service of the Jewish Agency, the Histadrut, and other public bodies. The head of the economics wing of the school was Benjamin Ziv (1879—1948), a Lithuanian Jew, who got his PhD from the University of Konigsberg and worked in commercial banks and in the Russian and Latvian Treasuries, and wrote for local newspapers. Gershon Cyderovich, a Lithuanian Jew, who got a PhD in economics from University of Berlin, worked in a state research center on business cycles in Berlin, and left Germany after the Nazis took power. In addition to teaching, he worked in the Economic Research Center of the Jewish Agency and, after independence, advised government offices and the Histadrut.
Another prominent teacher at HSLE was Peretz (Fritz) Naphtali (1888—1961), a prominent economic columnist and editor in Weimar Germany (see Naphtali and Kahn, 1930). He served as the head of the economic research institute of the federation of German unions. In Israel he served as the Director-General of the Histadrut-owned Bank Hapoalim, one of Israel's largest banks, a Member of the Knesset, and a Minister in several governments (Naphtali, 1962; Riemer, 1991).
Walter Preuss (1895-1984), another German Jew who got a PhD in 1921 in Germany, was among the founders of the Higher School (Preuss, 1936, 1960). He also founded the Statistic Department of the Histadrut. Fanny Ginor (1911-2007), another lecturer at the School, was one of the first female economists in Israel. Due to the Nazi rise to power she had to complete her studies at Basel (under Edgar Salin). She was an economic advisor of David Horowitz in the Jewish Agency, Ministry of Finance (MOF), and the Bank of Israel (BI), and served as a member of Israel's UN delegation (Ginor, 1959, 1979).The above researchers studied at German universities and worked in research units of the Jewish Agency and the Histadrut. Their main topics of research were labor relations, unionization, cooperatives, and income distribution, but the topics taught included political economic theory (including the major schools from mercantilism to Marxism), business cycle theory, and finance. Some of the teachers published their courses as textbooks and thus produced the first Hebrew textbooks in economics. Ziv, for example, published the first book on political economy theory (1938), a book on the business cycle (1945), and a book on public finance (1937). He also translated in the early 1940s J.S. Mill's and Ricardo's famous treatises on political economy, the first (to the best of our knowledge) Hebrew publications in Palestine (Israel) of non-socialist classics in political economy. This heritage notwithstanding, the contributions of the above economists has been forgotten. This fact owes much to the dominance of Don Patinkin and the Department of Economics at HU that he led upon his arrival in Israel in 1949.