Decline and Transformation
Already in the 1920s the Labor movement disregarded its socialist roots and concentrated on building the nation by constructive action. According to Tzahor its leaders did not "abandon fundamental ideological principles". However according to Ze'ev Sternhell in his book The Founding Myths of Israel, the labor leaders had already abandoned socialist principles by 1920 and only used them as "mobilizing myths".
Following the 1967 Six-Day War several prominent Labor Zionists created the Movement for Greater Israel which subscribed to an ideology of Greater Israel and called upon the Israeli government to keep and populate all areas captured in the war. Among the public figures in this movement associated with Left-wing nationalism were Rachel Yanait Ben-Zvi, Yitzhak Tabenkin, Icchak Cukierman, Zivia Lubetkin, Eliezer Livneh, Moshe Shamir, Zev Vilnay, Shmuel Yosef Agnon, Isser Harel, Dan Tolkovsky, and Avraham Yoffe. In the 1969 Knesset elections it ran as the "List for the Land of Israel", but failed to cross the electoral threshold. Prior to the 1973 elections, it joined the Likud and won 39 seats. In 1976 it merged with the National List and the Independent Centre (a breakaway from the Free Centre) to form La'am, which remained a faction within Likud until its merger into the Herut faction in 1984.
Other prominent Labor Zionists, especially those who came to dominate the Israeli Labor Party, became strong advocates for relinquishing the territory won during the Six-Day War. By the signing of the Oslo Accords in 1993, this became the central policy of the Labor Party under Prime Minister Yitzhak Rabin and Foreign Minister Shimon Peres. What distinguishes Labor Zionism from other Zionist streams today is not economic policy, an analysis of capitalism or any class analysis or orientation but its attitude towards the peace process in the Israeli-Palestinian conflict with modern Labor Zionists tending to support the Israeli peace camp to varying degrees. This orientation towards Israel's borders and foreign policy has dominated Labor Zionist institutions in recent decades to the extent that socialist Zionists who support a Greater Israel ideology are forced to seek political expression elsewhere.
In Israel the Labor Party has followed the general path of other governing social democratic parties such as the British Labour Party and is now fully oriented towards capitalism and even neo-liberalism, though recently it has rediscovered the welfare state under the leadership of Amir Peretz.
The Israeli Labor Party and its predecessors have ironically been associated within Israeli society as representing the country's ruling class and political elite whereas working-class Israelis have traditionally voted for the Likud since the Begin Revolution of 1977.
Read more about this topic: Labor Zionism
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