With the anniversary of the Six-Day War upon us, it is easy to forget the anniversary of another event nearly as important in the history of the Jewish state. On May 14, 1977, Menachem Begin led the Likud party to its first national electoral victory, defeating Labor (then known as Mapai), which had reigned uninterrupted since 1948. Zev Chafets explains how Begin put the country on the path to becoming the economic powerhouse it is now:

Perhaps the worst accusation [his political opponents] leveled against Begin was that he was a capitalist. That was a bit ironic for a man who was born broke and stayed that way all his life. Even as prime minister, Begin bought his suits on an installment plan.

From Israel’s founding until the 1977 vote, Mapai or its affiliated Histadrut labor organization tightly controlled most of the country’s agriculture and industry, health care and social welfare, infrastructure and development, education, housing, and radio. No detail was too small for the socialists: in 1964, the government banned the Beatles on the grounds that they would subvert the morals of Israel’s pioneering youth.

Begin, who had spent an instructive year in a Siberian Soviet gulag during World War II, was skeptical of such power. He had simple instructions for his finance minister, Simḥah Ehrlich: free the economy and make life better for the common people (by which he meant Likud voters).

Ehrlich, who owned a small optics factory in Tel Aviv, was a short, sixtyish man, pink-cheeked, fastidious, and laconic nearly to the point of silence. He . . . was devoid of formal education or economic training. The Israeli media began calling him a follower of Milton Friedman, the free-market guru who had recently won the Nobel for economics. But Ehrlich, who couldn’t read or write English, didn’t know the first thing about Milton Friedman. . . .

Although Ehrlich’s reforms led to what Chafets describes as a “fiasco,” they paved the way for the more successful reforms of the mid-1980s—which saved a cratering Israeli economy—and for the even more sweeping changes of the 1990s, which allowed for the birth of today’s “start-up nation.”

If there’s one lesson to be learned from the history of the Israel-Arab conflict, it’s never to be confident that an end is in sight. Ehud Yaari nevertheless—and with all due caution—points to some noteworthy developments:

The absolute primacy of “armed struggle” in Palestinian discourse has discouraged any serious attempt to discuss or plan for a future Palestinian state. Palestinian political literature is devoid of any substantial debate over what kind of a state they aspire to create. What would be its economic, foreign, and social policies?

One significant exception was a seminar held by Hamas in Gaza—under the auspices of the late Yahya Sinwar—prior to October 7, 2023. The main focus of what was described as a brainstorming session was the question of how to deal with the Jews in the land to be liberated. A broad consensus between the participants was reached that most Israeli Jews should be eradicated or expelled while those contributing to Israel’s success in high tech and other critical domains would be forced to serve the new Palestinian authorities.

Yet, the ongoing aftershocks from the ongoing war in Gaza are posing questions among Palestinians concerning the viability of armed struggle. So far this trend is reflected mainly in stormy exchanges on social-media platforms and internal controversies within Hamas. There is mounting criticism leveled at the late Mohammad Deif and Yahya Sinwar for embarking upon an uncoordinated offensive that is resulting in a “Second Nakba”—a repeat of the defeat and mass displacement caused by launching the war in 1948.

To be sure, “armed struggle” is still being preached daily to the Palestinian communities by Iran and Iranian proxies, and at least half the Palestinian public—according to various polls—believe it remains indispensable. But doubts are being heard. We may be reaching a point where the Palestinians will feel compelled to make a choice between the road which led to past failures and an attempt to chart a new route. It will certainly require time and is bound to cause fractures and divisions, perhaps even a violent split, among the Palestinians.