What a tragedy that Theodor Herzl’s successors, especially Israel’s first president Chaim Weizmann and his socialist allies, deserted Herzl’s plan to build a Jewish national home in which a prosperous market economy would guarantee its social cohesion and political strength.

Instead they replaced Herzl’s vision with socialist fantasies and programs that impoverished the Zionist enterprise demographically, economically and socially, as prominently occurred in the kibbutzim. Had the Zionist enterprise implemented Herzl’s vision, it might have grown strong enough to have saved more European Jews and secured a safer transition from the yishuv to an independent state.

Unlike most other Zionist leaders who were raised in an oppressive, virulently anti-Semitic and parochial tzarist Russia, Herzl grew in Vienna, the tolerant and liberal capital of the multi-cultural Austro-Hungarian Empire.

Herzl described the younger Zionist leaders as the flower children of their time; shiftless intellectuals who scorned their parent’s wealth because they accepted the anti-Semitic calumny that Jews were exploitative capitalists (when in fact most were very poor). They expressed their adolescent rebellion by embracing socialism or communism and by advocating a romantic return to agricultural labor to purify the Jewish soul. Since in Germany, as in Russia, the state was worshipped, it seemed natural for these young firebrands to accept socialism’s implicit assumption that the state must totally dominate the economy, even by abolishing all private property rights.

VIENNESE INTELLECTUALS were not in such awe of the state. Rather, they were inspired by Adam Smith’s market economics and by the successful model of the British Empire that thrived on minimal state intervention and on free trade.

When Professor Karl Menger promulgated what became known as the Austrian school of market economics it became an intellectual sensation and Menger was appointed personal tutor to the Crown Prince, the Archduke Rudolf Von Habsburg.

Herzl’s programmatic book Altneuland, his intellectual last will and testament, charts the future development of the Jewish home. It fully embraced the basic premises of the Austrian school, including what was considered its radical support for the issuance of competitive currencies by private banks. True, in earlier stages of his ideological development Herzl also flirted with socialist inspired cooperative ideologies, just as at an early stage he thought of solving “The Jewish Problem” by the mass conversion of the Jews.

True, after contemporary Jewish capitalists like Baron de-Hirsch and the Rothschilds rejected his vision and even militated against it, Herzl bitterly accepted some of the largely anti-Semitic prejudices against (Jewish) great capital and its inordinate political clout. As a fervent humanist Herzl was also appalled by the prevalent dismal poverty and was attracted by communitarian and mutualistic ideologies.

Nevertheless, in his well considered judgment formulated in Altneuland, this is what he put in the mouth of his model new Jew, David Litvak, the moving spirit in The Company charged with building the Jewish National Home:

Money is an extraordinary thing, if it did not already exist we would have to invent it…. No, we have not [followed socialist dogma] and abolished the differences between mine and yours. We are not crazy. We have not thrown overboard the incentive to work, to try harder to invent and to develop. Remarkable talent deserves proper reward, and special effort high recompense.

Wealth stimulates the ambitious and nurtures rare abilities…. Profit encourages entrepreneurship and creates new opportunities… if free entrepreneurs accumulate great profits by honest endeavor it is absolutely Kosher… Our new society did not embrace equality. Each person is rewarded according to their work and effort; we have not abolished competition, though we insist on fair opportunity for all, as in sports…

When it came to practically implementing Zionism, Herzl entrusted the huge enterprise of the mass transfer of Jews and their resettlement in their National Home not to a state or public bureaucracy (“we have no state like the Europeans have” his David Litvak avers, “we are a community of citizens who seek satisfaction in work alone… organized in a novel way), but to a privately held corporation of shareholders and to its executive arm, an investment bank. And he did so not only for reasons of efficiency but from deep moral concern.

THE PURPOSE of this “Bank of Jewish Resettlement,” Herzl explained:

Just as we [Zionists] replaced Zionist pleading with Zionist statesmanship so we must replace in our settlement work the reliance on alms and charity by a strictly businesslike approach. Charity has impoverished both givers and takers. Charity seekers have climbed to the top [of our enterprise] and our work lost what is most essential: individual responsibility. Those who seek help from rich patrons will not build the economic status of the Jews nor improve their moral standing…. [Because] he who receives alms degenerates [and] patrons only create ingrates…

To head the Anglo-Palestine bank, Herzl appointed a young banker Zalman David Levontin, the founder of the successful private settlement of Rishon Le-Zion. But after Herzl’s death, Weizmann and his socialist allies took over Zionism and founded the charity-based Settlement Fund (Keren Hayesod). They undermined Levontin’s support for private settlements and enterprises, entrusting the settlement effort to a bureaucratic Settlement Department headed by Arthur Ruppin, a communist sympathizer, and to other avowed leftists.

This group also directed all of Zionism’s scarce resources to collectivist settlement and to a vicious class warfare against the successful private sector. Rather then develop Zionism through industrialization and urbanization – thereby the sole basis for a thriving agricultural sector – Zionism supported the failed experiments of collectivism that almost ruined it.

Levontin openly challenged Weizmann asking “do you believe you can develop the land through charity or through investment?”

Weizmann’s choice proved tragic.

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