Residents of Modi’in Illit do not consider themselves settlers. The housing shortage has pushed large ultra-orthodox families to the settlement, where they get public housing and government assistance not available in Israel.

In Modi’in Illit on the West Bank, you can see where the old economy of contractors and developers and the new hi-tech economy meet. Both are closely tied to the state. Several software companies have opened branches there; leading them is the services company Matrix, one of the largest in Israel and part of the Formula Group. Matrix is valued on the Tel Aviv stock exchange at $100m and employs 2,300 workers.

To compete with cheap programmers in India, Matrix decided to use ultra-orthodox women as a cost-effective labour force, on condition that the Israeli government subsidised it. If not, Matrix threatened to relocate abroad. Ehud Olmert, then minister of trade and industry, went along with this (1) and in 2005 Matrix opened a development centre in Modi‘in Illit employing such women. By the end of 2006, 500 of them will work there.

Settlements such as Modi’in Illit, only 25 minutes away from Tel Aviv, provide an alternative to cheap Indian labour: Matrix calls it offshoring at home, in Israel’s backyard. The colonial frontier is a source of cheap (stolen) land, as well as state subsidies, public resources – police and army to secure investments – and a captive, disciplined labour force. Israeli capitalism is tapping into the country’s old colonial project to find new resources to enter the global market.

The women who work for Matrix in Modi’in Illit are diligent, efficient and exceptionally productive staff: “What an assembler elsewhere can do in a crazy week of pressure and sleeping at work, the girls here can easily accomplish in three days,” said the centre’s head (2). Their wages are low, and not only by international standards: workers starting at Matrix get the minimum wage of about $4 an hour. In their second year, their salaries are around $1,000 a month, and the state pays Matrix about a fifth of that. Workers are tied to the company for at least two years and there are no bonuses.

An ultra-orthodox spokesman said: “Our community is used to living on nothing, so making a little is a lot for them” (3). Matrix says that the wages paid to the women do not reflect their relative productivity or the price of their services in the international market, but rather “their low cost of living”, a remarkable, if not wholly unfamiliar, theory of value.

The Matrix centre is strictly kosher and two local rabbis supervise the site. Besides legitimate consideration for their workers’ way of life and values, rabbinical support plays a crucial role in this capitalist enterprise: the women “live according to a complex religious and professional code”, a rigorous code (4).

“Although many are mothers of six, they miss fewer days of work than a mother of two in Tel Aviv,” said an Imagestore project director in Modi’in Illit. “These women have no issues. They just work. No smoking or coffee breaks, chatting on the phone, or looking for holiday deals in Turkey. Breaks are only for eating or pumping breast milk in a special room. Some women can pop home, breast-feed and come back” (5).

Visitors are struck by the silence at Matrix. Personal conversations are forbidden in the workplace, not only between men and women, but also among women. “They pay you for eight hours of work,” said a worker, “so they expect you to work. If someone is talking too much or surfing the web, someone else will say hey, that’s theft [ghezel], as though we’re taking from the company. Once we asked if we could take a break of five minutes for prayer, but the rabbi said that the ancient sages didn’t take a break but would call out the shma [the essential daily prayer] while working, and thus we can put off the prayer until after the working day.”

The punctilious adherence to the rules is maintained even when the bosses are not present. “We’re accustomed to rigour and obedience,” a worker said, “and we’ve got used to not doing forbidden things, even when no one is looking, because there is someone watching from above.”

The ultra-orthodox women working for Matrix and its equivalent could find ways to circumvent both the rabbis’ injunctions and shop-floor control. But there are practical reasons for the remarkable discipline. Where else could they work? There is no other local work and the women do not have cars to go anywhere else.

What is remarkable about this settlement is the way it replicates the internal colonialism in Israel in the 1950s, when new immigrants, many from the Arab world, were settled on the border both to secure the territorial gains of the 1948 war and to serve as cheap labour in the early stages of Israel’s industrialisation. Integration into Israel’s colonial project, populating its frontier, was a condition for access to fundamental social rights.

New immigrants from the Arab world were seen as no more than unskilled workers.

Similarly, today’s ultra-orthodox women workers are now depicted as emerging from darkness to light, from consignment to the home to the benefits of modern capitalism, although in fact they are often well educated and have traditionally earned a living while caring for their families.

Frontier colonialism reinforces dependence and subordination. In Modi’in Illit, the poor are the instruments of the colonisation process and also its victims.

It is sometimes suggested that Israeli capitalism, as it modernises, should be able, even required, to abandon its attachment to old-style colonialism. But Modi’in Illit proves that Israeli capitalism can be both colonial and digital, and move back and forth between global markets and colonial settlements, and between campaigns for unbridled privatisation and heavy government subsidies. Left to itself, Israeli capitalism is not able, or predisposed, to pull itself out of the colonial swamp or to exert pressure on the state that sustains it.

Only resistance by those whose land it occupies and their allies seems likely to force a change. At that point Israel’s colonial project would be seen to be a liability.