Economic Liberalization on Israeli Kibbutzim Increases Support for Markets

Even socialist kibbutzniks can come to appreciate the benefits of markets when given a chance to directly compare them to socialism.

Kibbutzim are Israeli farming communities originally established as socialist institutions with little or no private property, equal pay, centralized assignment of work duties, and communal child-raising. Over the last several decades, however, most have introduced a variety of market reforms, in order to curb resident dissatisfaction and stave off economic disaster.

Economist Alex Tabarrok comments on a recent study by Ran Abramitzky and several coauthors which finds that such market-based reforms have proven popular and increased appreciation for markets and property rights among kibbutzniks:

The Israeli kibbutz have long been moving away from utopian socialism towards "renewing kibbutz"; a kind of cooperative in which member wages differ, consumption is unequal, many resources are privately owned but there is some mutual aid–a "safety net"–and some common ownership typically of land. Abramitzky et al. look at how kibbutz members vote and their expressed preferences after a kibbutz moves from a traditional model to a reformed or renewed model. The answer is that preferences for the market economy increased the more kibbutz members were exposed to the market economy but support for some redistribution to the poor (which was now less costly as the society was wealthier) did not decrease.

Abramitzky is a leading academic expert on the economics of the kibbutz, and author of an important book on the subject.

The results of the study are notable because kibbutz residents are mostly either people who were raised on the institution's socialist values or moved there out of ideological commitment. Thus, they are far more likely to be hostile to markets and property rights than the average Israeli, or for that matter the average person in almost any liberal democratic society. And social science research shows that most people are highly averse to evidence that cuts against their preexisting political views. Nonetheless, the superiority of market institutions over socialism is so striking that people who have direct first-hand experience of both tend to prefer the former, even in a case like this one, where they started off as strongly committed socialists.

This is not the only evidence that life on a kibbutz can lead to skepticism about socialism. As I recounted in a post last year, economist Meir Kohn has written a compelling memoir of how life on a kibbutz led him to a new appreciation of the virtues of markets and private property. Margaret Thatcher's daughter Carol had a similar experience when she spent a summer as a volunteer at a kibbutz.

But the Abramitzky study is an advance over such anecdotal accounts because it is is far more systematic, and includes people who were committed enough to kibbutz life that they did not choose to leave. On average, such people likely had more attachment to socialist values than those who departed, as Kohn did, or only ever intended to stay for a short period, like Carol Thatcher.

As Abramitzky and his coauthors emphasize, most of these kibbutzniks did not become thoroughgoing enthusiasts for laissez-faire, and they continue to support welfare-state redistribution, sometimes even more than before. But the shift in their attitudes is nonetheless striking.

It is notable not just because kibbutzniks are predisposed to be hostile to market institutions, but also because the kibbutz setting was an unusually favorable one for socialism, as discussed in my earlier post on this issue:

Over time, the flaws of the socialist kibbutz model became sufficiently glaring that most kibbutzim gradually abandoned key parts of the socialist model, such as equal pay, rejection of private property, and communal child-raising. See also this 2007 discussion by Nobel Prize-winning economist Gary Becker, who himself spent some time on a kibbutz during its pre-reform heyday….

For reasons mentioned by [Meir] Kohn and Becker, kibbutzim present the best-case scenario for socialism. At least initially, most participants were self-selected, highly motivated volunteers. Abuses of power and information problems typical of large-scale socialism were mitigated by the right of exit and the relatively modest scale of the community. Strong support from Israeli government and civil society helped alleviate financial and resource problems. Nonetheless, kibbutzim eventually had to adopt market incentives, expanded property rights, private child-raising, and other "capitalist" institutions in order to survive.

By contrast, "moshavim," Israeli agricultural settlements that reserve a much greater role for markets and private property rights, have proven far more durable and successful, even though, as one moshavnik lamented when I visited her community in 2016, "the kibbutz has better PR" than moshavim do. The kibbutz has become famous around the world. But few people outside of Israel know what a moshav is, other than a few experts on property rights.

The lessons of the kibbutz and moshav are worth considering at a time when socialist ides are enjoying an undeserved revival in many parts of the world.