The Israeli Kibbutz Used to Be Seen as a Model for Kinder, Gentler Socialism. Then It Embraced Markets.

By James Pethokoukis of AEI.

"When Sen. Bernie Sanders ran for US president in 2015 and 2019, there was some speculation about how his democratic-socialist beliefs were influenced by the few months he spent volunteering on an Israeli kibbutz back in 1963. Such curiosity makes sense. The collective communities—the first was established in 1909 and originally all were farms—are famous for their socialist ideology. As described in the new NBER working paper “The Effect of Labor Market Liberalization on Political Behavior and Free Market Norms” by Ran Abramitzky (Stanford University), Netanel Ben-Porath (Hebrew University), Shahar Lahad (Hebrew University), Victor Lavy (University of Warwick), and Michal Palgi (Haifa University): 

For most of their existence, kibbutzim were based on full income equality, collective property ownership, and a strong mutual guarantee among members. In a traditional kibbutz, members received an equal income allowance regardless of their contributions, following the Marxist principle, “From each according to his abilities, to each according to his needs.” Members who worked outside their kibbutz had to give their full salaries to the common pull of the kibbutz income. . . . Beyond socialist ideology, mutual guarantee among members has always been a key principle. The kibbutz bylaws (our translation from Hebrew) emphasize the commitment to “provide for the economic, social, cultural, educational, and personal needs of members and their dependents . . . [and] to ensure a decent standard of living for kibbutz members and their dependents.”

In addition to the written rules of these utopian rural communities, the views of their members reinforce the importance of socialist equality and the mutual guarantee. The researchers point to surveys conducted in kibbutzim in the late 1960s where members said the most important community values “were socialist values such as ‘collectivity and equality’ and ‘developing a model socialist society,’ alongside mutual guarantee values such as ‘full social security’ and ‘an adequate standard of living.’” 

What’s super-interesting here in the history of the kibbutzim—a history I was unaware of—is that starting in the late 1990s, there was a shift away from equal sharing toward market-based wages. “For the members who worked outside their kibbutzim (approximately one-fourth of all members), market wages were those they earned from their outside employers (to reiterate, before the reforms, these wages were added to the kibbutz income pool). For members who worked inside, market wages were set to reflect wages of non-kibbutz workers with similar occupations, education, skills, and experience.” The researchers attribute this shift to a variety of economic factors including a decline in world prices for agricultural commodities, bad financial management of the kibbutzim, and the 1990s tech boom that made outside work more lucrative.

Just as super-interesting: how this liberalization affected attitudes of kibbutz members:

We find that labor market liberalization led to increased support of open labor market policies such as competitive labor market mechanisms, increased pay for overtime work, and differential wages. It decreased support for socialist policies, such as the joint ownership of the means of production. . . . Although most kibbutz members support the differential pay reforms, they still want to maintain their core principle of mutual guarantee. When reflecting on how they want to live and build their society, most members want to live in neither a traditional socialist kibbutz nor a capitalist city. Most of them prefer something in the middle—a market economy within a compassionate society with a comprehensive safety net.

And how exactly did liberalization change those socialist attitudes to something more market friendly, something more Nordic, more social democratic than democratic socialist? 

The effects we document appear to be driven by an increase in living standards and work ethics that resulted from the reform. Equal sharing in the traditional kibbutz encouraged shirking and free riding. While strong idealism among founders helped kibbutzim reduce these problems in the past, idealism declined over time, and the second and third generations became less idealistic than the founding generation. By the 1990s, before reforms took place, members complained about shirkers. As reported by members in surveys, our findings provide quantitative evidence that the reform improved kibbutzim’s members’ economic conditions and work ethics. These improvements might have, in turn, contributed to the more favorable attitudes of kibbutz members towards open labor market policies. Such improved economic conditions and work ethics might explain why even groups that stood to lose in relative terms from the reform, such as older and less educated members, supported it. . . . Moreover, these groups may have concluded that a shift away from equal sharing was inevitable for the long-term survival of their kibbutz, and accordingly became more favorable to market mechanisms after the reform.

The paper’s footnotes include some interesting quotes from kibbutz members that really drive home the above conclusion. Quotes such as “People like me who started as socialists concluded that you can work hard and get nothing while others don’t work hard. It is so unfair.” And another: “[M]ost strong members said that they don’t want to carry on their back those who don’t earn, that they want to take care of themselves.”

Perhaps if Sanders had stayed on the kibbutz he might no longer be a democratic socialist."