The Capitalist Kibbutz

9 February 2010 at 11:07 pm Peter G. Klein 2 comments

| Peter Klein|

That’s how the Financial Times headlines this fascinating story about the transformation of many Israeli kibbutzim into partially privatized, profit-seeking, professionally managed entities that act in capital, product, and factor markets just like private firms. There are some similarities with the end of the socialist experiment in Russia: “‘The kibbutz was never isolated from society,’ says Shlomo Getz, the director of the Institute for Research of the Kibbutz at Haifa University. ‘There was a change in values in Israel, and a change in the standard of living. Many kibbutzniks now wanted to have the same things as their friends outside the kibbutz.”

The bottom line, from economist and former kibbutznik Omer Moav: “People respond to incentives. We are happy to work hard for our own quality of life, we like our independence. It is all about human nature — and a socialist system like the kibbutz does not fit human nature.” (Via BK Marcus.)

Entry filed under: - Klein -, Classical Liberalism, Management Theory, Myths and Realities, Theory of the Firm.

Measure for Measure Industrial Policy Redux

2 Comments Add your own

1. What Will Happen to a Socialist Seastead? « Let A Thousand Nations Bloom | 10 February 2010 at 12:10 am

[…] cooperatives have transformed into professionally managed, profit-seeking organizations. From Peter Klein who picked up on a Financial Times story, The Capitalist Kibbutz: “‘The kibbutz was never […]
2. Ukrainewatch | 12 February 2010 at 8:14 pm

It is interesting fact that the world-known Israeli kibbutz (eng. community) is the ancestor of Russian cooperative. After a series of anti-Semitic riots (pogrom) took place in Russia in the early beginning of the twentieth century, many Russian Jews who were afraid of further riots had emigrated from Russia to the U.S. and Palestine. Russian Jews who immigrated to Palestine were strong supporters of Zionism movement. And they understood that they would have to live in area where majority of land is covered by dessert and inhabited by a hostile population. Under these circumstances the key to their survival was cooperation in agriculture and protection. The first kibbutz “Dganiya” organized on the cooperative principles was founded in 1910 near the Lake Kemeret. In 1922 there were already 19 kibbutzes on the territory that is Israel now. In 2008 more than two thousand and five hundred kibbutzes operate in Israel and produce almost 40% from the national agricultural output.
But the main point that I wanted to make is that the Russian theory of cooperative organization was perverted by the communists. Originally, Chaynov viewed the cooperative as a democratic self-governed professionally-managed profit-seeking organization.