Is the Kibbutz Kaput?

Socialism's Last Stand II: Israeli youth aren't too fond of "from each according to his ability, to each according to his needs."

The Israeli kibbutz has long been hailed as proof that the principle "from each according to his ability, to each according to his needs" is compatible with both wealth and freedom. The kibbutz is considered, in philosopher Martin Buber's words, "an experiment that did not fail," the shining exception to the general failure of socialist economics—voluntary, productive, prosperous.

Kibbutz members, or kibbutzniks, own their property collectively; on the first kibbutz, Degania (founded in 1909), they even shared clothing. Over the years, the kibbutzim have loosened their restrictions on private property, allowing members to own not only clothing, but also furnishings, books, and tools; individuals now live in private flats rather than share living quarters. And, in sharp contrast to their original vision of Jews working the land, some kibbutzim employ Arab workers, and most have added factories.

True to their egalitarian ideals, however, the kibbutzim continue to separate output from income, the individual's contribution from his reward. Both economic theory and the history of communal experiments, from the Plymouth Colony to today, predict that this arrangement would give rise to the "free-rider problem," a situation in which the incentives encourage slackers, or consumers, to take advantage of hard workers, or producers.

But, say the kibbutz's supporters, this hasn't happened: "The problem on some kibbutzim is not getting members to work, but restraining them from overwork," wrote Lawrence Meyer in Israel Now, published in 1982. "On one kibbutz I visited, members show up at the factory on Saturday, the Sabbath, even though the factory is not officially functioning." As an economic enterprise, Meyer concluded, "the kibbutz undoubtedly is a success."

But is it really? Beginning last year, reports that the kibbutzim had wracked up tremendous debts began to cast doubt on their supposed economic success. "Debts Make Israelis Rethink an Ideal: the Kibbutz," ran the New York Times headline. Approximately 127,000 Israelis, or only 3 percent of the Jewish population, live on the kibbutzim, but among them they had accumulated a debt of $4 billion—about 13 percent of GNP. As the Wall Street Journal reported, this was "about 30 times that of Mexico on a per capita basis."

The kibbutzim raise many interesting questions. First and foremost, is it really true that they were able to achieve economic success despite incentives that have proved crippling everywhere else in the world? If so, how was this achieved? How then did these vast debts arise, and what is the likely future of the kibbutz movement? To piece together some answers, I went to the kibbutzim themselves.

Kibbutz Tsuba is 10 miles southwest of Jerusalem, more than 2,000 feet above sea level, and set on a hill referred to in the biblical second Book of Samuel. A community of 550, Tsuba has 220 kibbutz members, 10 percent of whom are Holocaust survivors. The 330-odd nonmembers are visitors, volunteers, and children of the kibbutzniks. Founded shortly after Israel's war of independence in 1948, Tsuba is one of 180 kibbutzim affiliated with the United Kibbutz Movement, whose political orientation is "center-left" by Israeli standards (more to the left by ours). Another 80 kibbutzim are affiliated with a definitely left-wing organization, Artzi. Altogether there are 277 kibbutzim in Israel, and the remaining 17 belong to two religious groupings.

I was met in the parking lot by Joel Dorkam, a cheerful man of 61 who told me that he had grown up in Germany, immigrated to Israel after World War II, and spent nearly all of his adult life on Kibbutz Tsuba. Optimistic and friendly by nature, Dorkam was also candid. He had been thinking that day about the possibility that Tsuba, with its biblical associations, might one day become an "interfaith biblical theme park." Old Testament…New Testament.…In short, he was worrying about the financial future of the kibbutz—of Tsuba in particular, and the kibbutz movement in general.

For years the movement had shown a slow but steady population growth—sometimes 3 percent yearly. "But in the last two years we have had about 1 percent negative growth," he said. Initially, he admitted, "we thought the kibbutz movement would grow much more. But we are aware now that the kibbutz can never encompass the whole population."

There was barely a trace of wistfulness when he said it. Once, the kibbutzim were thought of as laboratories for the transformation of human nature. "The purpose of the kibbutz," Murray Weingarten wrote in 1955, "is not only to set up a new economic framework for society [but] to create a new man." Long before New Soviet Man was heard of in the West, there emerged in Palestine, at about the same time as the Russian Revolution, this quiet confidence that a New Jewish Man would soon appear.

"But it turned out that this way of life is difficult and it is inherently selective," Dorkam told me. "Many cannot take the demands that the kibbutz makes on the individual. It is an intensive, 24-hour way of life. The society is in a position to evaluate your whole personality.…" Here he paused to restate the point with greater emphasis. "Your whole personality is constantly on view to the whole community," he said. "It makes for a great strain for many people."

He explained the implied contract of the community. "You get all that you need from the kibbutz," he said: food, clothing, lodging, health care, education for the children, "cultural formation" for the adults. Your retirement worries are taken care of; higher education, vacations, and travel abroad all are subsidized by the kibbutz.

In return, individuals donate their labor. They work on the farm or in the factories, at Tsuba making laminated windshields for automobiles or self-assembly furniture. All families at Tsuba receive the same monthly stipend (about $330), whether the work they do is easy or difficult, managerial or subordinate.

I asked Dorkam how the kibbutz manages to circumvent the free-rider problem, and he admitted that it is very difficult. "We have no court, no laws, no police," he said. But there are ways of "creating an antagonism" against the stubborn egotist. And as a rule, such individuals either reform or leave. In Tsuba's 41-year history, only three people have been expelled.

Dorkam took me outside, and we walked down pleasant paths, through well-kept gardens. Tsuba itself was very quiet. It had the sunny, mid-morning tranquility of a campus when everyone is still in class. Dorkam said that child psychologist Bruno Bettelheim had stayed at the kibbutz in the mid-1960s while researching his 1969 book Children of the Dream. For decades, kibbutz children were reared in special "children's houses," apart from their parents. This in turn produced a vast serial pilgrimage from the sociology departments of American universities, to test theories of child rearing.

The children at Tsuba no longer live in children's houses—five years ago there was an 80-percent vote to make this important change. Almost all other kibbutzim have likewise changed, or soon will. And, yes, when they grow up the children have been moving away, to the high-rise suburbs north of Tel Aviv.

"One-third stay, two-thirds leave," Dorkam told me. Of all the people in Israel I talked to about the kibbutz, he was the only one who gave so unpromising a statistic. Others said that half left, or were noncommittal. Formerly, Dorkam's ratio was reversed. Two-thirds stayed. "More and more are leaving, and that's a big problem we have, and the ideological strength of youth declines," Dorkam said—a personal psalm of sorrow, I thought. I admired him for uttering it unflinchingly.

Bettelheim saw it quite differently 20 years ago: "The founding generation has slowly acquired some private property, usually just a handful of things, some of them presents from relatives outside the kibbutz. But owning them makes quite a difference. And though they try to restrict and regulate such gifts, the wish for possessions seems so strong that there are many infractions of the principle of common property.…Things are very different for the second generation.…For them, communal property is not an idea defensively or consciously embraced, but the only normal way to live."

Among the majority of children who stayed on the kibbutz, then, Bettelheim saw more or less successful indoctrination; communal property was "the normal way to live." For Dorkam, however, the "ideological strength of the youth" had declined. No doubt what we really see here is a fairly long period (lasting perhaps until Menachem Begin's election in 1977) when collectivist ideals were by and large accepted by those born on the kibbutz (of whom there have been two or three generations, depending on the kibbutz). Only recently has this given way to a real, and worldwide, decline of the collectivist faith.

In the afternoon Dorkam took me to see the windshield factory, which was started 10 years ago—at the request of the children, he said. Agriculture was becoming less and less profitable. The assembly line was in operation, and no one even looked up when we entered. Tsuba produces 100,000 windshields a year and sells them on the world market, two-thirds to the United States and Europe, one-third for domestic use.

Making laminated safety windshields, with a thin layer of PVP plastic inserted between a sandwich of tempered glass, is a complex operation, requiring skill, precision, and care. This is real work, not just idle kibbutzniks playing at "Factory." The factory employs 50 workers, 35 of them kibbutz members, 10 volunteers, 5 from other kibbutzim. It is on its third manager, the first two having been rotated back into other jobs.

It is "not so popular" to work in the factory, Dorkam admitted. People work in teams of six to eight "on a strict schedule," and many look forward to being rotated back into farm or administrative work. Dorkam himself had worked in the quality-control unit, where they test the new windshields against the standards of British and German institutes.

Dorkam mentioned the "disconnection between contribution and retribution," as he put it. (But, unlike many in Israel, he spoke excellent English.) With the financial crisis now afflicting the kibbutzim, I mentioned the suggestion I had heard that the linkage of pay to performance should be restored.

"That would be in my opinion the end of the kibbutz," he said. Surely he is right. Its most distinctive feature would have been discarded, and there would be no remaining reason for the communes not to convert completely into corporations.

Before I left he said that the "hidden assumption of the kibbutz" is that "talented people, or people who are above average, have to make a personal sacrifice." This is true, and it is not normally pointed out. He also told me that the kibbutzim are all interlinked economically; profitable kibbutzim must subsidize the loss makers. And this "causes resentment," he said. "Some kibbutzim built themselves dining rooms and cultural facilities three times as costly as ours." Nonetheless, Dorkam was discomforted by the suggestion that the kibbutzim should be separated from one another. The political clout of the kibbutzim (and their ability to extract subsidies from the Ministry of Finance) depends on their remaining unified.

I was impressed by Kibbutz Tsuba. Yes, it was subsidized, but people are working despite poor incentives, and an arid hill of stones has been turned into a functioning community with two factories and a farm, their output sold in world markets. And it has survived for over 40 years.

The kibbutz, of course, has all along enjoyed the great advantage, as Dorkam reminded me, that its values are voluntarily embraced. Those who do not like it are free to leave at any time; new applicants are carefully screened for good work habits and "socially compatible" attitudes, and must receive a two-thirds vote to be admitted. In addition, the external military threat to the country has imparted a sense of mission to the kibbutzim, a mission often made explicit by assigning them a specific defense role; most of the country's military leaders, as well as many elite units, have come from the kibbutzim. These factors in combination may have enabled the kibbutzim to overcome, at least to some extent, the free-rider problem that has been the ruin of communes everywhere else.

Still, as I drove back to Jerusalem, I realized that despite Dorkam's helpfulness (I had only given him half an hour's notice of my arrival), I really didn't know whether Kibbutz Tsuba was economically self-sustaining or not. With the embedded nature of the subsidies, some of them applying across the board in Israeli society (e.g., price supports for much agricultural produce), it is possible that many kibbutz members themselves do not really know. I would encounter vagueness about financial matters throughout my visits to the kibbutzim.

This vagueness was most striking at Shefayim, a kibbutz on the Mediterranean coast, 12 miles north of Tel Aviv. It began as I checked into the kibbutz-owned hotel: The clerk quoted me three different prices for the same room. I had the feeling that if only I knew the password, the room could be had for free.

The next day, I met Beny Kaz Nelson, a gaunt, white-haired Marlboro smoker who had been born on this kibbutz in 1933, "a very bad year in the history of mankind," he said. His father came from Poland, his mother from Riga—"pioneers of the Zionist Youth Movement," and his mother-in-law, now 92, still lives on Degania, the first kibbutz. The kibbutz way of life, Nelson said, "is not natural, it belongs to the realm of ideas, of mind." But he thinks it is "part of the essence of the Zionist movement."

Currently, he said, there is a great crisis for those who espouse socialism, "both in the communistic and the social-democratic world." For the "capitalistic way," he said, in his good but idiosyncratic English, "it is a moment of flourishing." In the 1920s, he said, "every good fellow was a socialist. In our times, it will not be so. So I am sure that this change will have an influence on the kibbutz."

"A negative influence?"

"Yes."

Nelson has held a number of government and kibbutz jobs, including three stints as general secretary of Kibbutz Shefayim. I asked him if he could tell me how much the annual family stipend was at Shefayim. "Something near to 2,000 shekels [about $1,000] per family," he said. "But I don't want to give you figures that are not exact. I will telephone to the treasurer."

He picked up the phone by his side and asked for someone, who was out but apparently would call back.

He told me that Shefayim is a successful kibbutz, "one of the 20 richest." So much so that a part of its income goes to other kibbutzim—nearly 2 million shekels, he thought. They have a "very successful" plastics factory and the tourist trade is also successful, if uneven.

When I asked him how people are motivated to work, he said that only the day before a guest from Hungary had asked the same question. "I think the answer lies in identification with others," he said. "When you are at home you clean the family's dishes without asking yourself why, because that is your home. Only in a moment of crisis do you ask."

He took out another Marlboro and a son, in his 20s, came through the room and glanced across at us without much sign of interest. One-half of the children who grow up in kibbutzim stay on, Nelson estimated. "Thirty years ago, it was 60 to 70 percent. So I am not so sure about the future. If we stay as we are, we will not have a future. But if we change…"

The telephone rang, and it was the treasurer of the kibbutz, returning his call. Nelson was happy to share the information with me. The stipend for a family of four is 7,000 shekels. The income of the kibbutz is 30 million shekels. And they give 500,000 shekels to other kibbutzim, not 2 million as Nelson had guessed. Forty percent of revenue comes from industry, 30 percent from tourism. "And our expenses are lower than our income," he said, repeating these last words into the receiver, before saying thank you and hanging up. "I speak with the treasurer because I want to give you correct figures," he told me.

It was puzzling, that his earlier estimate of the stipend should have been off by 350 percent. I could only assume that he never looked at the checks—in short, that money wasn't something that he worried about. It wasn't that he was trying to hide anything from me—on the contrary. The truth was that he really didn't know very much about the finances of the kibbutz, even if he lived on it, and didn't mind if it showed. Probably (it was later suggested to me) he receives a government salary and regards the kibbutz stipend as a minor detail.

Like Nelson, the kibbutzim themselves have rarely had to worry about finances. Until the 1930s, they couldn't balance their budgets, Eliyahu Kanovsky reported in a rare study of kibbutz finances published in 1966. But aid from the World Zionist Organization and other philanthropic sources allowed them to survive, and the Depression made it possible to buy agricultural equipment cheaply. The 1940s constituted a "golden age" for the kibbutz movement: The world war cut off supplies from abroad, and the Allied armies in the Middle East provided a ready market for agricultural and industrial products at favorable prices.

The first few years following independence were likewise financially "successful," at least on paper. The new government provided both direct subsidies and protection from competition, while mass immigration created a ready market. Even so, in the late '50s and early '60s, the Jewish Agency had to "adopt" about 100 newer kibbutzim to save them from insolvency. A joint fund established by the government, the Jewish Agency, and the Workers' Bank of the Histadrut union bailed out those kibbutzim that couldn't repay their debts to private commercial banks and suppliers.

According to Gershon Kaddar, then the agricultural adviser of Israel's largest bank, all but the oldest kibbutzim lost money even in the supposedly profitable years 1954–57, once the depreciation of their assets is properly accounted for. "He concluded that, in effect, the kibbutzim were consuming their assets, which had been provided them by the government, the Jewish Agency, and the other public bodies in Israel," Kanovsky wrote.

Lavish agricultural subsidies from the government and Jewish Agency accounted for the "profits" of the older kibbutzim. Kanovsky concluded that the kibbutzim were, in aggregate, in deficit from 1954 to 1960 but may have shown a small profit in the next two years. Since then, the kibbutzim have become increasingly dependent on the government for land grants, protection from competition, government salaries for some kibbutz members, and direct subsidies.

More important than direct aid, however, has been inflation. The government seems to have followed, whether consciously or not, a strategy of bailing out debtors by inflating the currency. Since 1948, the Israeli currency has been devalued by a factor of 80,000. This de facto debt forgiveness enabled the kibbutzim to maintain an appearance of solvency and to claim the success of the kibbutz experiment. And for much of this time, a steady infusion of cash from abroad—some of it from the U.S. Treasury and some of it voluntary Jewish philanthropy collected worldwide and funneled into the Jewish Agency (now amounting to about half a billion dollars a year)—preserved a semblance of financial stability.

But with the massive inflation of the 1980s, reaching 450 percent in 1984, this strategy became no longer feasible. Since bank loans as well as savings were thereafter indexed to inflation, debt could no longer be inflated away. Israelis began to bank abroad, and the task of bailing out debtors by devaluing everyone's savings became more and more difficult. The insolvency of the kibbutzim was exposed to view.

"The economic problems associated with the kibbutzim have been endemic since the day they were started," says Steve Hanke, a professor of applied economics at Johns Hopkins University and a senior fellow at the Institute for Advanced Strategic and Political Studies in Israel. "They only recently became visible to the untrained eye because the hemorrhaging grew so large that it was impossible to cover up. The subsidies required for their bailout are too massive to disguise."

So the kibbutzim are being bailed out again, but this time publicly. Jacob Gadish, an economist and member of Kibbutz Yavne, a religious community of 850 (400 kibbutz members, one-third of whom are over 65) helped to negotiate the bailout. "For each kibbutz we found out what is its ability to repay the money it owes," he told me, "and then to create a repayment schedule so that they can repay over 25 years." Some of the debt (about half) is being forgiven outright.

For two years in the 1980s, Gadish worked for the government, heading the budget division of the treasury. Today he runs a consulting business in Tel Aviv, commuting from Yavne, the largest religious kibbutz. Yavne's main business is poultry farming, producing one-seventh of all the poultry marketed in Israel; its annual income is $23 million. After expenses and taxes, Gadish said, "we have about $7 million net profit."

Gadish told a Jerusalem Post reporter: "I was conversing with a comrade from a kibbutz whose debts equal the combined debt of the whole Kibbutz Dati [the federation of all 17 religious kibbutzim]. The man told me he had spent a month overseas the year before and a fortnight again in the current year. I informed him that in our kibbutz nobody may go abroad more than once in eight years. He could not believe me." He added that about 20 kibbutzim are incorrigible. "If their debts are totally written off, they will pile up new ones tomorrow."

A strong believer in the kibbutz ideal, Gadish worries that the present system of interlinked kibbutzim may "destroy the entire movement." The bailouts are imposing continuing costs on the whole of Israel, and the political will to keep propping them up cannot last forever. The danger is that dead-weight kibbutzim will drag down those that are making a sincere effort.

"The kibbutzim do continue to receive subsidies from the government right now?" I asked.

"Yes. I am afraid it can destroy us. There is a big danger that it can do so."

"Without the subsidies you would do better?"

"I am sure that our religious movement can profit from it."

The religious kibbutzim are doing better financially than the secular ones. Only three of the 17 religious communes are debt-ridden. A part of the explanation is that "our approach to public money has been different. We are not so close to the public…cash…trough, yes?" (English had not come easily to him.) At Yavne, fiscal conservatism is the rule. The religious kibbutzim do not have the same political clout as those affiliated with the Labor Party, and therefore are less confident of being bailed out. This has encouraged prudence.

There might be a more specifically religious reason for the better performance of the religious kibbutzim, Gadish thought, and he had read Max Weber on the Protestant ethic. A few very ideological, socialistic kibbutzim have also managed to stay in the black, he said. Joel Dorkam's "hidden assumption" of self-sacrifice can probably be sustained over a long time only by people driven either by ideological conviction of the need for selflessness or by a belief in God.

"You know," Gadish said, "there is a big discussion in economics about whether aid is useful. We know that only once in recent history was it profitable, and that was the Marshall Plan. Otherwise I don't know one country that received money where the economy was helped. You become dependent—addicted." It was clear that he had the country in mind as well as the economically dependent kibbutzim.

As for linking individual pay and performance: "The moment there is a connection between contribution and compensation, at that moment the kibbutz system is finished." The kibbutz system, he said, is in conflict with human nature, "the statistical meaning of human nature." But "we are speaking of the 3 percent on one side of the Gauss distribution," he said. "There are some people who are willing to live in such a system. You cannot force anyone. It is contrary to individualism, yes. But we have to improve ourselves. That is the idea! The idea is to be a little less materialistic and to be ready to share your ability with people of less ability."

The next day I drove to Granot, about 30 miles northwest of Tel Aviv. Granot is a kind of central buyer and manufacturer of agricultural products for 45 area kibbutzim. There is an avocado packing house, a cotton gin, a slaughterhouse, and so on. About 500 people work there, among them Yochanan Blumenfeld, who is a member of the central board of Granot and an accountant. I arrived at Blumenfeld's office in mid-afternoon, by which time almost everyone seemed to have gone home; my footsteps echoed in the deserted corridors.

Blumenfeld, a cheerful man of 44, said that the kibbutzim were being managed much more cautiously these days. He candidly recalled "what we used to call the good days of Aridor," referring to Israel's former finance minister, "when the inflation was high and you could do what you wanted and nobody knew what your real financial position was." Now everybody was on his best behavior, he said, and I took his word for it.

I knew that his job—"coordinating the balance sheets of the regional kibbutz industries"—would be indecipherable, and he didn't seem terribly excited about it either, so I asked him about his own kibbutz, Givat Hashlosha, east of Tel Aviv. He was glad to change the subject to that. He discussed the problems of the kibbutzim more candidly than anyone else I met. He was also younger than the others.

Givat Hashlosha was founded in 1925, he said, all its early members coming from Eastern Europe. His parents had come from Poland. Half the children born on his kibbutz subsequently left it, he said. Today, 30 percent of the members are age 70 or over.

"The crisis of the kibbutz movement is a crisis of motivation," he said. "And I am not sure that this is clear yet to the leadership of the kibbutz movement. My parents' generation had an ideology that they were going to build 'the world of tomorrow.' They believed that the kibbutz was going to be the dominant way of life not only in Israel but in all the world. This faith gave them a strong motivation, and so did the Zionist dream. They knew that if they were to achieve this they would have to work hard. And they did work very hard, compared with today. They were ready to sacrifice. The problems began after 1948. In the first place, the real state of Israel wasn't the same as a dream. But even then, people at that time still believed they were doing something very important. But after the second generation took over, we didn't believe so strongly."

The religious kibbutzim are more successful, Blumenfeld said, because "even though they never believed in Karl Marx, they still believe in equality. Religion gives them the ideology that we don't have any more.

"The idea that the socialist system will dominate the world doesn't exist any more," he said. "And if there is no socialism, we will return to traditional motivation around the world. And the main motivation—not the sole one—is economic. If the kibbutz does not solve this problem of providing economic rewards, then it will not survive. Because the kibbutz members will vote with their feet." Blumenfeld then added something that I had not heard before:

"The main idea of the kibbutz is equality among the people. We are all supposed to receive the same reward. But many members now have property outside the kibbutz. They married outside the kibbutz, in many cases. As a result, their situation is much better, because when their spouses joined the kibbutz, they didn't give their outside property to the kibbutz. And today this has become a big problem." Many of these people with outside property are "marginal members," he said, simultaneously enjoying kibbutz privileges and unshared property. But both Blumenfeld and his wife grew up on the same kibbutz. If the kibbutz system collapses, many others will have something to fall back on. He and his wife will have nothing.

He pulled a snapshot out of his wallet and smiled. It was a photo of his only child, a 3-year-old son. For a long time, he and his wife had had no children. But then they were blessed. "Everyone on the kibbutz loves him," he said.

Blumenfeld predicted that there would be a "revolution on the kibbutz" and that it would involve what everyone I had spoken to had tried to disavow: "There will be reward according to work."

Joint ownership of the overall property would remain, he thought, "but it will become more clearly identified—more defined. For example, I will know exactly what part I own. As it is now, a member cannot pass his property on to his son unless his son stays on the kibbutz. I think that this will change too." Moreover, in order to join a kibbutz, people will have to invest money in it.

He was talking about establishing private property rights in the kibbutz, and making these rights transferable, at least within the family.

"Everyone I have spoken to says that will be the end of the kibbutz," I said.

He did not deny it. He said: "All around the world now, people work for themselves and for their families. We are not different people. We are the same as everyone else in the world."

He looked again at the photo of his child, and again that made him smile. "He will decide what to do," Blumenfeld said. "I hope he will not have to ask me what to do."

Then he looked off into the distance, thought for a second and said: "He won't have to. The revolution on the kibbutz will come before that time."

Contributing Editor Tom Bethell is writing a book on property.