Death of an Icon

The kibbutz is the ultimate icon of Israeli socialism.  But the institution of the kibbutz is not economically viable.  During the past few decades, kibbutzim have been kept afloat with billions of dollars in subsidies.  Younger members have been abandoning them in droves.  These and related problems were documented in May 1990 in Policy Studies No. 5, “The Kibbutzim and Their Debt: Policy Considerations.”

Many kibbutzim are unable to pay suppliers, renew their supermarket inventory, buy or repair equipment, and are thus being forced to make arrangements with the banks that are their largest creditors.

What changes do the banks demand of the kibbutzim?  Fasten your seat belt!  The banks insist that kibbutzim (1) pay members according to their output, (2) separate property from the kibbutz so that it becomes an asset separate from its members, and (3) make the transition to proper business management.

The kibbutz is the Marxist, socialist ideal:  From each according to his ability to each according to his need.  No longer.  Now it must be to each according to his productivity.  The market, not egalitarian ideology, must dictate the distribution of rewards inside the kibbutz.  If, that is, the kibbutzim want further credits from the banks.

The banks in Israel have been partly to blame for permitting the money-losing kibbutzim to stay in existence for so long.  The banks were taken over by the government in the 1980s and remained in state hands for most of the 1990s.  The government is still a major shareholder is several of the largest banks.  Since a sixth of Knesset Members represented the agricultural sector, it’s not surprising that banks were pressured to keep the kibbutzim afloat.

Even with billions in aid and other free money, there is a limit as to how widely the Israeli government can spread subsidies to keep every money-losing sector of the economy afloat.  There is only so much money to go around.  Israel’s other money-losing industries now have priority over outdated oranges.  The value of agricultural output has been steadily shrinking as a share of GDP.  The kibbutzim are now on the chopping block.

Many leftist intellectuals in Israel and the U.S. will mourn the death of the kibbutzim, the symbol of the socialism they revere.  Ask not for whom the bell tolls; it tolls for thee.  Perhaps one day it will toll for the rest of Israel’s socialist system.