Political entrepreneurs and electoral capital: the case of the Israeli State Economy Arrangement Law

This article looks at a specific institutional change in Israel. In 1985, Israeli politicians adopted the “State Economy Arrangement Law” (SEAL), commonly regarded as part of the budgetary legislation in Israel. This law became an alternative channel through which applicants could circumvent the necessity of applying to the Israeli parliament (the Knesset) for the implementation of certain policies. This law enabled an accelerated, flexible regulatory process that short circuited democratic discussion in the Knesset and obviated the intervention of Israeli consumer organizations. This article suggests that this institutional change should be analyzed as part of a process where institutional reality influences individual and collective beliefs, thus triggering an individual and collective learning process that eventually leads to institutional change, specific policies and outcomes in terms of economic performance. The article also claims that the SEAL legislation is an equilibrium that results from the actions of political entrepreneurs (or agents of change) who operate to maximize their own electoral capital against the backdrop of certain structural and cultural conditions, both local and international. They operate in an environment characterized by the inability of the government to function effectively (non-governability) and the development of an alternative political culture.