Author Howard Jacobson has weighed into a debate over whether Israel's national theatre company, Habima, should be banned from performing at the Globe in London as part of next month's Cultural Olympiad event, saying art should never be censored.

Habima was invited to perform The Merchant of Venice in Hebrew as part of an ambitious programme to stage 37 Shakespeare plays, each in a different language, during the six-week festival. Yet a letter signed by 37 leading actors, directors, producers and writers – including Emma Thompson, Mike Leigh and Mark Rylance – published in the Guardian last week, called for the invitation to be withdrawn because Habima had performed in Israeli settlements.

The letter, also signed by Miriam Margolyes, Richard Wilson and Jonathan Miller, said: "We ask the Globe to withdraw the invitation so that the festival is not complicit with human rights violations and the illegal colonisation of occupied land. By inviting Habima, the Globe is associating itself with policies of exclusion preached by the Israeli state and endorsed by its national theatre company."

But now there has been an equally passionate counter-attack. Jacobson, winner of the 2010 Man Booker prize for his comic novel The Finkler Question, about what it means to be Jewish, said artistic critics were wrong. Writing for the Observer, below, he said: "If there is one justification for art… it is that it proceeds from, and addresses, our unaligned humanity. Whoever would go to art with a mind made up on any subject misses the point of what art is for.

"So to censor it in the name of political or religious conviction… is to tear out its very heart. For artists themselves to do such a thing to art is not only treasonable, it is an act of self-harm.

"With last week's letter to the Guardian, McCarthyism came to Britain. You can hear the minds of people in whom we vest our sense of creative freedom snapping shut."

Jacobson's comments follow a letter from actors Simon Callow, Steven Berkoff and Maureen Lipman, and the playwright Arnold Wesker, which said that an attempt to ban Habima was tantamount to Nazi-era book burning.

The Globe theatre's management said that it was standing by its decision, and that the Habima performance was a key part of its eclectic Cultural Olympiad, running from 21 April to 9 June.

A spokeswoman for Dominic Dromgoole, the Globe's artistic director, said: "We have not changed our position. We thought long and hard about it. We, as an institution, are welcoming everybody to the festival." Ashtar theatre, a Palestinian company, is performing Richard II in Arabic on 4 and 5 May.

Ilan Ronen, Habima's artistic director, said his company was offended by the original letter. "It's a disgrace. We don't see ourselves as collaborators with the Israeli government over its West Bank policy. We don't remember artists boycotting other artists.

"They don't know the true facts about our theatre activity. Somehow, they have been manipulated, they are getting it wrong. It is important to emphasise, we express our political views in many of our projects. But like other theatre companies and dance companies in Israel, we are state-financed, and financially supported to perform all over the country. This is the law. We have no choice. We have to go, otherwise there is no financial support. It is not easy. We have to be pragmatic." Of the 1,500 performances given by the company every year, he said that about "four or five" were in the Ariel settlement in the West Bank. "It is a little bit out of proportion to represent us this way.

"We are supported by the state, but not representing it. We are completely independent, artistically and politically."

He said that company members who asked not to perform were not required to, and they were not pressured or demoted, rather they were protected and consciences were respected. "It is a difficult situation, not ideal," he said, declining to say how many of the company refused to work in the West Bank.

"Artists should create bridges where there is conflict; the issue of Israel and the Palestinians is an area in which European dialogue can be very helpful in creating a better atmosphere. To boycott us prevents any artistic dialogue."