The following is a rough transcript which has not been revised by The Jim Rutt Show or by Ran Abramitzky. Please check with us before using any quotations from this transcript. Thank you.
Jim: Today’s gust is Ran Abramitzky, Professor of Economics at Stanford and the newly appointed Senior Associate Dean of Social Sciences in the School of Humanities and Sciences. His professional interests are focused on economic history and applied economics with focus on immigration and income equality.
Ran: Jim, thanks for having me. I’m happy to be here.
Jim: Great to have you here. Today we’ll be talking about Ran’s book, The Mystery of the Kibbutz, Egalitarian Principles in a Capitalist World this is an area I’ve been researching for a while, possible application in contemporary community building and society tuning. How can we get to a more egalitarian way of life? And I read another book on the kibbutz movement that, for people who want an absurd amount of history, probably more than you’d ever want to know, called The kibbutz Movement, the History, Origins and Growth by Henry Near, two thick volumes, though I would say for most people, Ran’s book will give you plenty and also will address some very interesting intersections between the ideology of egalitarianism and what we know from western style economics. And we’ll talk about that in a moment. But before we hop into that, I’d love Ran to talk a little bit about how his family and his family’s history intersects the kibbutz movement.
Ran: Yes, so thanks again, Jim, for having me. My interest in the kibbutz really came from the contradictions between my wonderful experiences of the kibbutz growing up and then my more skeptical self when I grew up a little more. I did not grow up myself in the kibbutz, but my entire life was around the kibbutzim. My grandmother was the proud founder of one kibbutz in the south, and she lived there for 55 years. My mother grew up there and left. My uncle and aunts still live there. My brother lived there, and so we would visit as children, my brother and I with the family, my grandmother every week. And it was wonderful. We loved the kibbutz, a society that is based on full equal sharing. At the time in the ’70s, it was this picturesque village with green paths and swimming pools and a dining hall. And we would play basketball and table tennis. We would wander around the kibbutz. Our parents didn’t have to worry about us, because it was so safe. It was just wonderful. And then when I grew a little older, when I became a teenager, I loved the kibbutz even more, because the idea of sharing everything equally seemed like the justice, the right thing, the fair thing to do.
Ran: But then as I grew a bit more, and especially after I started to study economics at the Hebrew university, I became a little bit like the other side of the cliché, that if you are younger than 20, and you are not a socialist, it means you have no heart. But if you are over 20, and you are still a socialist, it means you have no brain. And so I remember one day in the late ’90s, when we were visiting my uncle and aunt in the kibbutz in the north, and we would sit down, and my uncle would describe one of his path-breaking innovations of the irrigation factory of his kibbutz. And I decided to provoke him, and I said, “According to economic theory, your factory shouldn’t be as good. In fact, the entire enterprise of the kibbutz should not really exist.”
Ran: And he’s like, “What? What are you talking about?”
Ran: And I said, “Well you know, why would anybody work hard, if all you get anyway is an equal share of the total output?” So I explained to him the free-rider problem that we studied in economics. And then I said I expect that everybody would be lazy in the kibbutz. And then why would anybody that can earn more outside the kibbutz and is so talented and brilliant, why would he ever stay? Israel is the size of New Jersey. You can always leave and earn more, like in Tel Aviv.” So I expect, I explained to him the brain drain problem, whereby I expect all the brilliant people to move away from the kibbutz. And then I said, “Well what about entry? I expect that everybody that can’t make it outside the kibbutz, all the lazy people would want to enter the kibbutz. What a great deal it is to be subsidized by all the brilliant, more educated people in the kibbutz.” And I continued with my super annoying speech of mine, and I said, “Well I also worry a bit about the children in the kibbutz, because why would anybody study hard when a high school dropout and a computer science engineer earn just as much?”
Ran: Then he got upset, of course, and here we started a nice fight. And he said, “You economists are so cynical, and anybody familiar with the kibbutz knows that the founders of kibbutzim were anything but these selfish people. And if you are so smart, then how could you explain that the kibbutz survive for so long despite all these problems that you are describing?” And he got me thinking. And to begin with, wasn’t as cynical as I made myself sound. And that’s it. Ever since then, I studied, decided to study how come kibbutzim survive for so long despite all the economic contradictions and then, more broadly, how, whether we can create a more equal society and under what conditions it can succeed.
Jim: Exactly, yeah. When I read that, I go yeah. I definitely want to track this guy down, have him on the show, because it’s a wonderful contradiction. Because based on the same kinds of economics I learned when I was in college, you would say, “Nope, kibbutz, impossible.” And yet here they are, 100 years later. So there has to be something else that was missing from the analysis. Now what’d be real helpful for our guests, who no doubt know vaguely what a kibbutz is, is if you could do as you do in the book, in the first chapter or so, and go into a little bit of the history, just a relative, short arc of the history of the kibbutz movement and basically take it up to, say, 1977. Let’s not go to the crisis but up to about then.
Ran: Sure, let me do it briefly. Let me know if you want more details. So kibbutzim, plural of kibbutz are communities in Israel that were based for many years on full income equality in the distribution of incomes and on collective ownership of all properties that were indeed always a small percentage of the population of Israel. The first kibbutz, Degania, was established southwest of the Sea of Galilee in 1910 by a dozen Russian and Eastern European, Jewish immigrants. But really the majority of kibbutzim were established in the ’30s and ’40s, just before the state of Israel was established. Today there are about 120,000 members living in 268 kibbutzim, and they account for about two percentage of he Jewish population in Israel. At most, kibbutz members accounted for up to 7% of the population around the time the state of Israel was created. But nevertheless, they mattered a great deal, despite the low percentage. They mattered a great deal in the context of Israel and more broadly as social experiments that teach us about whether and how we can create more equal societies. So the kibbutz, it’s more broadly than just equal sharing. It was a way of life, if you want, a social unit that was created to fulfill a wide array of ideas, building the Jewish nation, creating the social and just society and being a part of a community that promotes equality and mutual assistance.
Ran: They took communal living so seriously that they had these dinging halls where people would not eat in their comfort of their own homes, but they would eat together in communal dining halls. They took equality so seriously that at some point they created these separate communal residences for children, whereby children would not live in their parents’ homes but rather would live in separate residences with a nanny. And they would visit, maybe, their parents a couple of hours a day, maybe from 4:00 to 6:00. It was a no-cash economy for many years and so no savings. And they took equality so seriously that even they distributed goods in kind rather than with money. So you would have a budget for traveling, for clothing. For food and so on. But always home to small percentage of the Jewish population, they had a huge impact on the rest of Israeli society. In the ’30s and ’40s they started the communal farms, but in the ’50s and ’60s, when Israel went through industrialization process, kibbutzim participated in this process. And since then they have a large industrial base alongside agricultural. In the ’70s and ’80s, when my brother and I would visit them, the quality of life there was quite high. It’s not that they were in crisis over the years. There was a ideological crisis in the ’50s around the support in the Cold War in Russia versus the United States.
Ran: There was a discussion about whether members should be allowed to work outside or not. There was a discussion, a crisis about whether they should allow private allowances that kibbutz members can buy stuff. But despite all these crises, the quality of life in kibbutzim in the ’70s was higher than many other cities in Israel. And that’s despite full equality and no communal ownership of property. So I’m happy to go into more details.
Jim: Yeah. I’ll also make the point, I just looked up, unfortunately data isn’t totally current, but on Wikipedia this morning it said that the kibbutz is, as of 2010, while only 2% of the population, are 9% of Israel’s industrial output, worth about $8 billion, and 40% of the agricultural output, worth 1.7 billion. So while a small percent of the population, economically they punch way above their weight, particularly in the fundamental production of goods. And indeed, as I recall, the ideology of the original founders of the kibbutz was to encourage the Jewish people to return to fundamental production rather than living in more professional, more abstract types of occupations.
Ran: Exactly. So they were at first exactly like you say. They were meant to, they thought that the only way for the Jewish people to survive is to return to the land and work in the kind of productive, quote, unquote, occupations like in agriculture and so on rather than study the Torah or working in more professional occupations. But then again, they started to all build factories in the ’60s and ’70s. And as you mentioned, despite the small percentage of the population, they are a higher percentage of industrial production in Israel. So they had high economic, social, military status kibbutz members, and they had a disproportionate impact on the ideological, political and military leadership of Israel. They produce some of Israel’s elite, from famous generals like Yigal Allon and Ehud Barak to famous musicians like [inaudible 00:11:17]. It’s full of former kibbutz members.
Jim: Yeah. We’ll return to that later in that the kibbutz is interesting and somewhat unlike a lot of other communal attempts elsewhere in the world. And at least after the early days, the kibbutzniks were not marginal. I mean these were, in some sense, the elite of Israel. As you point out, they disproportionately into military leadership and the arts and all kinds of interesting things. And that’s worth the audience keeping in mind. These were not a bunch of rejectionist hippies. These were people playing the game seriously but just in a different way.
Ran: Exactly. This is what got me so interested in them, because unlike a lot of other communes in history, as you said, they were never in the margin of society. They always influenced and were influenced by society around them. They would go to schools, high schools with non-kibbutz members. They would serve in the military with non-kibbutz members. And so at some level it’s small interest. It’s not like the Amish or like other communes, that maybe they have such different belief system than society around them that it just makes sense for them to group by themselves in a somewhat isolated place. Kibbutz members, at some level, they are so interesting for me to study, because despite being so central, they chose to live in that way, even though many of them can live elsewhere and even though they do see society around them and how other people live.
Jim: Yeah. And that makes them, to my mind, more interesting, actually as a model.
Jim: And it shows that it may well be possible to build egalitarian bubbles inside even a capitalist society and make them sustainable. The kibbutz did it quite successfully for quite a while, and some of them are still working, doing it successfully to this day. Another little bit about the history which I found utterly fascinating, which is that the kibbutz was not a monolithic movement. There were different flavors of kibbutz. There was Kibbutz Artzi, which was more ideologically pure. And then there was Kibbutz Meuhad. Is that it? Is that how you pronounce it?
Ran: Yeah, Meuhad.
Jim: Then came the United Kibbutz Movement, which was more pragmatic, I suppose, and political. And then there was a Kvutzat Association that argued for no more than 200 members per kibbutz, while the Meuhad said, “Make them as big as possible.”
Jim: So there were, from my Jewish friends, they say, “Hey, if you get two Jews together, there’ll be three opinions at least.” Seems to have been true about, essentially, the style of kibbutz. And some of these things merged, and they’d split again. And then there was always a small, Orthodox Jewish, religious-oriented kibbutz movement that really didn’t have much to do with the other kibbutzes. So maybe just talk a little bit about those organizations and styles of kibbutz.
Ran: Yeah, absolutely. I would first say, though, to your previous point that another thing that is interesting about the model is, beyond, let’s say, the other communes in history. It’s also they didn’t choose the model of the Soviet Union, for example, or other socialist countries that are totalitarian and would, in a Russian [inaudible 00:14:25], for example, if you exit, they would kill you. Well that’s not a very interesting economic decisions then of whether to stay or leave rather than the more voluntary model [inaudible 00:14:34]. As for the movements, the movements have a fascinating history that they discuss in some detail in my book. Interestingly, they were never very important in the day-to-day life of kibbutzim. They didn’t have any say on how each individual kibbutz exactly handle their businesses. Well they did some but not a lot. But mostly they coordinated their actions, and kibbutzim affiliated themselves with movements of different ideological bend. So as you mentioned, some of them are more ideological than others. That’s the Kibbutz Artzi. Others are more practical. That’s the Kibbutz Meuhad, as you said. And for many years, in the eyes of the outside world, even outside Israel, people never understood, really, what it means, whether you belong to that movement or this movement.
Ran: But then it was interesting, especially in the ’50s, around the Cold War, when there was a really fierce debate among kibbutz members of whether they should support the US or the Soviet Union in the Cold War. And kibbutzim actually split over these ideological decisions. And then they became Meuhad versus Ihud. Really, in fact, there are stories of families even splitting into two over this debate. And this was kind of like people outside of the kibbutz, Israelis were scratching their heads, saying, “What are they talking about? Why is that important for the way they live?” But then later in the book, I do find that kibbutzim that were associated with the more ideological movements were less likely to undertake reforms, and they were slower to adopt the changes that we were going and the shift away from equal sharing that we may be talking about a bit later in the talk.
Jim: Okay, and again, it makes fascinating reading and the ebb and flow with the relationship with the politics.
Ran: Yeah, it’s fascinating.
Jim: We won’t go into it today, but I would say people that were interested in that is included in the book. And then the Henry Near book goes into it in exhausting detail, which I found interesting. But as you said in your speech to your uncle, there are seemingly some contradictions from an economic perspective about the kibbutz, free-rider problem, adverse selection, brain drain. And we’ll get to those later, but before we do, you had a nice section in your book where you kind of stood it on its head and said, “Why might an economist create a kibbutz?” So what are the economic advantages, at least in theory, and as it turned out, I think, in practice, at least in part, of something like a kibbutz?
Ran: So you mentioned the founders of kibbutzim would decide to get the advice of an economist about whether and how they should create their kibbutz. Well if the economist was a very narrow minded, cynical as I presented myself to my uncle, he would say, “That’s a terrible idea. It would collapse very quickly. Don’t do that.” But if this economist had the foresight of how economics would develop over the next century or so, and if he was humble enough to borrow insights from some of the other social science and from history, then it’s very likely that he would tell them to create the kibbutz pretty much the way they ended up creating it. Well not exactly, he would for sure give more voice to women, avoid some of the corruption that took place in the higher ups of kibbutzim sometimes but pretty much the way the created. And so maybe he would say at first, he would say, “Well now that I get over my instincts that equality might create incentive problems, beyond all the other reasons that you mentioned to me like the socialist ideology, altruism, fairness considerations, maybe philosophical ideals like the [inaudible 00:18:16] ideals of equality, I can actually see an economic advantage of creating kibbutzim, purely an economic advantage. And that is that a kibbutz gives you a terrific insurance, a safety net against all the problems and miseries that life can bring you.”
Ran: “So in a kibbutz you know that, regardless of what happens to you, whether you become disabled, whether your profession is becoming out of style, whether you get injured, whether you have children that face some problems, regardless of your circumstances, you and your family would always be getting paid the same. And this is a terrific insurance that no other place can offer you. And so, though he would of course say you should still worry about all this incentive for us, because the insurance arrangement can collapse, if you don’t worry about it.” And then he would say, “Well I have some advice for you.” He would say, “First of all, I really strongly suggest for you to bring highly idealistic people to your effort. So don’t just bring these cynical people that are so selfish that they only care about themselves. But rather try to bring people that share the same ideological and vocational training, that are idealistic, that they have shared and common goals, those kind of people. Idealistic people, they don’t share.” My grandmother did not miss a day of work in 55 years she lived in a kibbutz. Idealistic people, they contribute anyway, even when there are not incentives. And then he will tell them to, though, build the kibbutz in such a way that would avoid all this incentive.
Ran: He would tell them, “Don’t trust, though, on the idealistic nature of people, because the second generation, like often happens for the children of the founders, living in the kibbutz is no longer a choice. It’s a default. You grew up into this. And when this happens, practical considerations often become more important than idealistic considerations. And so you should build your society in such a way that will help you avoid all these incentive problems in way that,” pretty much like they did. And I can go in details to that, but I will let you … Do you want me to continue to talk, or do you want to ask a question?
Jim: Yeah, why don’t you continue to drill into it a little bit. I’ll just point out too that you mentioned, one is, and you can go into the examples, there’s opportunities for increasing return to scale in some activities, classic microeconomics. And then also there’s certainly some opportunities for public goods, if you design your kibbutz correctly. Maybe you can talk about those and other economic forces that work to hold the kibbutz together.
Ran: Great. So imagine, so the economies would say, “Okay, how should you build the kibbutz?” Let’s think about the free-riding problem, the tendency of people to not pull in their way with their weight when there is full equal sharing. Well how about social sanctions? In a kibbutz, everybody knows everybody. You work in the same place you live in. Your kids go to the same schools. Kibbutzim are all the size between about 100 people to 1,000 people. The average size of a kibbutz is around 440 members, which is about 150 or 200 families. So they can, in the kibbutz, they can make your life sufficiently miserable that you are better off leaving rather than not working hard. You don’t work hard, they wouldn’t sit next to you in the dining hall. They would let you feel awful. But of course the things is that, for social sanctions to be effective, you kind of need to design a relatively small community, because social sanctions don’t work in a huge country, where not everybody knows everybody. And this is despite, as you say, there are many reasons for why creating one large kibbutz has benefits over creating many small ones.
Ran: There are what economists call returns to scale. Some services like laundry and food are cheaper to produce in large quantities rather than in small quantities. And in fact there was a debate in the kibbutz at some point about whether they should, as you mentioned earlier, whether they should allow only 200 people or whether they should make it larger. And it always gets to, well, let’s keep them. We still have to keep them small enough in order for everybody to know everybody and for social sanctions to be effective. That’s essential. You don’t find a job, no problem. The kibbutz work organizer will send you to peel potatoes in the chicken. So there is no such thing as unemployment in the kibbutz. Everybody is working. And of course the other side of social sanctions is social rewards, if you want, so rotations in leadership. So unlike in other communes, it was never, in the kibbutz, it was never one charismatic leader that is the leader of the kibbutz for 50 years. Leadership is rotated. So the kibbutz manager, the farm manager, the kibbutz secretary, those are jobs that are rotated. And they are always given to people who are perceived to be doing more than their share.
Ran: Now adverse selection, you worry about people that are lazy or didn’t make it outside. You worry that they might enter the kibbutz. Believe me, the kibbutzim are well aware of this problem. And in fact, if you want to enter, they have tough screening processes for people who want to join. You have to show that you’re able to make a living in the kibbutz, that you have a high enough education. Even once you get in, even once they let you in, you are on a probation period for a year or two until they vote. They get to know you, and they vote whether to allow you to stay. Of course in the founding generation, this was an easier problem, because the founders were all young people who share similar ideology and training. And they had, if you want similar prospects, and so it’s the homogeny of people that were very similar, that naturally solve their adverse selection problems. But it’s less likely that a computer science engineer would want to create a kibbutz with a high school dropout. And this is why they go through the screening.
Ran: Now the tougher problem is the brain drain. What about brain drain? How do you make sure that people who are in the kibbutz, members of the kibbutz, maybe they joined when they were young. But at some point people realize, if they are very bright, or they have an ability to earn much more in Tel Aviv. How do you make sure they stay? Well the economists will tell them, “Why don’t you abolish all private property, have all property owned collectively. And if you want to leave, no problem. You can take your brain with you, but you cannot take your share of the kibbutz. You cannot take your part of the factory. You cannot take your house. You cannot take the swimming pool and the dining hall, and so that makes exit costly. There is no money for many years, and so there is no ability to save. And so there is no bequest, so it makes it difficult to leave, even if you are very ambitious. You want to study? No problem. The kibbutz would allow you to study agronomy but not law. So they would let you study stuff that is more valuable in the kibbutz. And all these things make exit costly.
Ran: Now I just want to say that of course I am not saying that all these norms and rules in the kibbutz were decided just in order to solve the incentive problems. There are many ideological and other reasons for communal ownership of property and communal education for children and dining hall. The point is that, whether they meant it or not, whether they designed it on purpose or not, they created a society that was very helpful for them to maintain their equality for a long period of time.
Jim: Yeah, so it seems like they probably didn’t study economics to come up with these. And as you said, these innovations were probably emerged for a whole bunch of reasons. But interestingly, they tended to address these fundamental economic problems that you suggest.
Ran: You know the Milton Friedman story of the billiard player, right? Even though the billiard player doesn’t know physics, doesn’t have to know physics in order to be an excellent player. It doesn’t mean that the rules of physics don’t apply on the table. You still have to hit the ball in a certain angle, taking it into account the friction in order for the ball to land in the hole. So it is like they acted as if they know economics, if you want, and created their society to deal with that in a way that was helpful to deal with incentive problems.
Jim: Makes perfect sense to me, though of course there are trade-offs around quality of life. For instance, you point out, and others do as well, that one of the most important ways to manage the free-rider problem with social sanctions is privacy has to be pretty limited. And in the early days, one of the core phenomena at the kibbutz was the dining hall. Life in many ways seemed to be central around the dining hall. That’s where arts events happened, et cetera. But then over time, at least some kibbutzes allowed families to have their own kitchens, et cetera. And so presumably sort of radical transparency started going down a little bit. And I suspect free rider problems could’ve gone up. Any thoughts on that?
Ran: Yeah, exactly. So you ask yourself, if it’s so amazing, and they provides you such a terrific insurance, and the equality is a value that many of us like, and we want to live that way, how come kibbutz always exist in Israel? Although if you are me, you see elements of kibbutzim everywhere. We can talk about that later. But how come they are such a small percentage even of the population of Israel? Two percentage of the population, at most they were seven. And one of them is that in order for this to work, you need social sanctions, for example. It makes lack of privacy. Everybody in the kibbutz knows your coming and going. You need to have communal ownership of property. That is something that many people don’t like. Until this day, you ask my mom, “Hey Mom, where are you going?”
Ran: She says, “You know what? I stopped answering that question 45 years ago when I left the kibbutz. Don’t ask me what I’m up to, where I’m going. I want to live my life without people knowing my coming and going.” And so if you want, that lack of privacy and the lack of private property, which were so essential in the traditional kibbutz to help solve some of the incentive problems, are stuff that many people don’t like. And maybe that explains why it is so. And if you want, the kibbutz is almost like an experiment to know how many people would like to live that way. So you can ask yourself the question, if people were given a chose of whether to live in a society where all incomes and resources are shared equally, how many people would choose to do it? And if you want, the kibbutz gives you some answer, like up to 7% of the population.
Jim: Interesting. And of course you also have to adjust that by how many are rejected by the adverse selection screening. It might be higher, but if you make the intersection of those who would like to and are capable of.
Ran: Yeah, exactly, that’s right. So it could be larger, if it would be the perfect experiment, would be to allow free entry to the kibbutz and to see how many people would join.
Jim: And I think a few kibbutz tried that in the early days and found it was a disaster.
Ran: Not so much in the early days as much as in the early 1980s. There are stories of some kibbutzim trying to open their doors and were not very happy with their decision. At some level, though, if you want, that’s another price, if you want, of creating an equal sharing society, is that the kibbutzim were never very inclusive. So if you want, the price of equality inside a kibbutz means also inequality across groups, because you have to show that you can earn a living in the kibbutz. They wouldn’t let you in if you don’t have enough education. If they didn’t accept Arabs, if the kibbutz is a Jewish phenomena, even it’s mostly Ashkenazi Jewish phenomena, even though today they would accept you, even if you are not, of course. But if you want, the screening, the kibbutz points to a price of equal sharing, which is that it is not very inclusive in its equality.
Jim: And I did extract that, actually, while I was reading, is that again it seems like the billiard player, they probably may not have thought about this explicitly, but a certain amount of coherence and similarity of people and the ability to read people so that you can understand them helps maintain this kind of system. And I suspect that that may have been part of the driving force, why it’s almost early Ashkenazi, at least for a long time, and relatively few Sephardim.
Ran: The homogeneity at some level, if you think about it more broadly, it is not … Homogeneity makes it easier to maintain equality. And it is not surprising that there is more equality in countries like Sweden and Norway, where the population is more homogenous, than in the United States, where the population is more heterogeneous, and it is more difficult to define common goals, if you want.
Jim: Yeah, and I think that’s an important point. Unfortunately, I think it’s just the reality that diversity is a value, but it’s not a monotonically increasing value. I give the example, suppose you lived in a community of 150 families, and every single one of them was from a different culture and spoke a different language, and none of them knew two languages. That would not be a very pleasant place to live. So there’s an optimal amount of diversity, like there’s an optimal amount of everything. And I suspect that in a mission like a kibbutz, the amount of diversity that is tolerable to keep the high enough level of coherence is probably smaller than an open, market-driven society.
Ran: Yeah. The diversity does make it more difficult for them to create, although this is one reason why, for example, if you think about national insurance programs, they typically are mandatory. So social insurance is mandatory exactly because you worry that only the healthiest, wealthiest people would join you. And so for sure it is diversity makes it more difficult to sustain equality. But it also brings the broader question about how much really we should consider it equality if it is only equality among such a small and homogenous group of people so how fair it is to call it that you live … If you want to do equality, because you believe in fairness, and you believe that everybody is equal, and you believe that everybody should have equal opportunity, then how serious we should take you if you are only doing it among a small group of homogeneous people.
Jim: Yeah, that’s certainly a real issue for people that are trying to, say, think about launching such communities today. Now there’s another economic conundrum that you pointed out, a little bit more subtle, perhaps, than the other ones, which were relatively straightforward. And that is the problem of human capital investment. Here’s the words you used. Why should kibbutz members study hard if a high school dropout working in a kibbutz kitchen and a computer scientist running the most profitable business in the kibbutz enjoy the same living standards? Maybe talk about that a little bit and how the economic forces at least would have a tendency to impact human capital investment.
Ran: Yes, so this is a very interesting question, and as you say, it’s a bit more subtle. My first intuition for my skepticism came again from this conversation with my uncle, where I said, “Why would you study hard in school? Why would you stress over exams? Why would you choose fields of study that are difficult, if you have no returns to your education?” If you want, there are zero returns to education in an egalitarian kibbutz. The financial returns to education are zero, because if you are a high school dropout, or if you are a computer science engineer, you get paid exactly the same. Now that’s from the individual perspective. From the kibbutz perspective, in addition to that, they have conflicting incentives. Because on the one hand, if you want as extended family, they would like to have their children study whatever it is that they want. But on the other hand, as an employer, they also want their employers to be educated. That’s another reason to want high level of human capital. But on the other hand, they might worry that if you are really very educated, you might want to leave. And if all the bright, all the very educated people leave, this is a problem for the kibbutz. And so this is kind of, if you want, the theory.
Ran: Now I looked at the numbers. I looked at the data, and a lot of what I’m doing relies on the large datasets that I collected for the 100 years of kibbutz existence. And one of the things I do in terms of human capital is I ask the simple question. Well then, are kibbutz members less educated than the general population? So in order to make a fair comparison I say, “Okay, kibbutzim is a Jewish phenomena. They mostly have Ashkenazi Jews. Well, are kibbutz members much less educated than the Ashkenazi Jewish population outside of kibbutzim, if there are such lack of incentives to study?” And the answer is, not really. So the average kibbutz member, even in the periods of equal sharing, on average, they are similarly educated to the Ashkenazi population outside. Of course in the margin, there are differences. So for example, less of them are completely uneducated relative to the general population. But also, fewer of them have maybe very advanced degrees. But this is one thing that I take as, if you want, suggestive against this simple economic theory of studying because of the financial returns. Kibbutz members were always educated, even when there were no financial returns to it. And this is suggesting that, of course what many people know, that you don’t just study for the financial returns. There are other reasons why you want to study.” Now the economic theory is not completely wrong here.
Ran: So for example, we do find in the work that I’m doing with my collaborator, Victor Lavy from the Hebrew university and then later also with [Myon Sergev 00:36:32]. We loot at what happens once the kibbutzim shift away from equal sharing. Maybe we can talk about that. And we do find that kibbutz students do start to take school more seriously once their kibbutz shift away from equal sharing. And they do start to take fields that are more potentially profitable. So they do respond to incentives. It’s not like the incentive problems stop at the gate of the kibbutz. But maybe economic incentives to study are not the main reason of why people study hard and what fields they choose.
Jim: And as always, it’s a mix. I mean the idea to declare humans to be homo-economic almost always fails. But on the other hand, homo-economics is a part of who we are. I would hypothesize, I wonder if you have the answer to this, is that in the full equal earnings period, was there a bias away from the liberal arts, say history and literature, versus, say engineering or nursing.
Ran: Yes, exactly. So that’s what we tend to find there. There is actually, once the kibbutz shift away from equal sharing, later in a period we didn’t talk about yet, but once the kibbutz shift away from equal sharing later, you start to see that the young adults in the kibbutz become more likely to study fields like engineering and sciences in general as opposed to liberal arts. In the equal sharing period, they were more likely to study history and arts and humanities that have lower economic financial returns outside of the kibbutz.
Jim: Very interesting. Yeah, we’ll get to, soon, the crisis and then transition. But before that, I want to talk about just a couple of interesting issues that came out, that don’t really fit into either the pre or post bucket. I guess they’ve actually occurred in the pre period. One is the ideology versus the reality of gender equality.
Ran: Yeah, so the kibbutz, it’s exactly the way you say. There is a very big gap between the ideology and the reality of gender equality in the kibbutz. As people who companies themselves taking equality very seriously, many kibbutzim also were striving for gender equality. And that mean that women were fighting in the wars. They were supposed to working in all those occupations that men work in. And most importantly, one of the arguments for creating a real gender equality is to free up women from their traditional role in society of raising kids. And that gave rise, one of the reasons that gave rise to the separate residences for children, where children all grow up outside of their parents’ homes. And the parents get to see them a couple of hours, but then every couple in the kibbutz get a small apartment just for the couple. And that should free women from the traditional roles in society. Now one thing that we already know from the history is that all kibbutzim thought that that was a very bad idea at some point. And all kibbutzim in the late ’70s and early ’80s, they cancel, basically. They bring kids to back home.
Ran: But more than this, the reality of the life in kibbutzim, even in the period where children lived communally, was that women ended up working more in the traditional, stereotypical female occupation. The nanny in the children residence was always a woman, and women ended up working more in the services and less in the productive branches. And also many people say that actually the voice of women, the general assembly was less important. So it was mostly the men that were doing the talking, and women were not taken very seriously into account. And this is one reason when I told you that the economists would tell the kibbutzim to create the kibbutz just very similar to the way they did but not exactly. That’s one of the reasons, is because it for sure would give more voice to women. And so it created this contradiction between the equalities that they strive for and the reality of women working and doing the traditional works.
Jim: Yeah, and frankly, that doesn’t surprise me. To be honest, we were emerging from 10,000 years of patriarchy at that time. To expect the switch to be thrown was probably a bit unrealistic. Obviously the world has come a long way since then, but we’re still not all the way there. So like anything, it’s a process of maturation and understanding and change. You touched on this, which is the bringing the children back to the family. And one of the things, I don’t remember if it was your book or Henry Near’s book. But I do recall that some of the earliest kibbutzes were radically and ideologically anti-bourgeois family. And some of them even advocated free love and not even having couples in housing, et cetera. And certainly all the children being raised together from very young ages was part of that. But over time, quite the opposite occurred. If anything, kibbutz people may be more bourgeois in their family structures than average in Israel. And as you point out, the return of at least the younger children, though as I understand it, older children still live communally in 12 or over, something like that in many kibbutz. So part of the early ideology, at least for some, was radical anti-bourgeois family, but that didn’t really work out so well.
Ran: Right, so I think that even a deeper reason for the children’s residence was the idea that they wanted to educate children to the kibbutz ideals and to the kibbutz communal way of living. And they thought that one way of dong it was to have them all equal and give them equal opportunities and to talk to them about equality from a very early age. And the literature on the communal residences of children is large and somewhat complicated. It’s not a very simple story of it was great, or it was terrible. It’s a little bit like a summer camp in the US. You know how some children love it, and they think it was terrific. And they got to hang out with all their friends, and they didn’t have to worry about their parents all the time. And other, the more sensitive children find it terrible, and they want to go home. And so it’s a little bit a mixed experience. It was a mixed experience like that.
Ran: At some point it was mostly the parents that just wanted their children. They just kind of felt that it was just not natural for them to have their children not grow in their houses. That led to a push to abolish them. I would say I would touch on another thing that you said, that is a bit more broadened than the children residences, the bourgeois idea that you mentioned. So at some level, the most puzzling period of kibbutzim, the most interesting one, if you want, is exactly those middle years in the ’60s and ’70s, when they were no longer based on agriculture, only they had industry. There was more heterogeneity. People worked in all sorts of different occupations. They had factories. At some level it’s not very surprising, maybe, that a small group of people who come in a young age to a country full of uncertainty from socialist backgrounds create for themselves a community that is based on equality. It is most surprising that, by the second generation and third generation, people who grow up into it didn’t decided intentionally to join. And now many people working in many different occupations that are rather heterogeneous relative to their parents, they still choose to live in an equal, sharing society and create one that is rather successful.
Ran: But that was exactly when, in the eyes of Israelis, some of the contradictions of the kibbutz started to emerge. So you are talking about equality and simple life, but all I can see is that you have nice swimming pools and beautiful paths, and so you are more bourgeois than even the rest of us. There was some contradictions around the time when people started to come to Israel from more Middle Eastern countries, Sephardi Jews. The prime minister at the time, Ben-Gurion asked kibbutzim if they can host some of these people as a first house in the … let them work and adjust to the new country. And what you hear a little bit when you hear the Sephardi Jews talk about their experience, you hear many people say things like, “We were very welcome in their fields but not very much in their dining halls,” again creating the sense that in the eyes of some people they were more like a club, elitist club than they were an inclusive society for everybody. To be fair for them, it’s a very tricky business. And the social and Zionist ideology often clashed with one another. So if on the one hand, as Zionists, they wanted to even Jewish people come, they wanted to host them. But on the other hand, as socialists they are not allowed to exploit outside labor.
Ran: And so I think that kibbutzim have a number of contradictions built in them. At some level, a lot of their beauty is that they are flexible enough to adjust their rules to the practicality of life in order to survive rather than, like many other communes in history, just collapse as soon as there are some practical difficulties.
Jim: Yeah, and I think that’s actually a very good takeaway, that even the ones that were very ideological were not insane about it. Or I suppose the ones that were insane probably just went away, but they were pragmatic. They were empirical. They responded to reality. Let’s move onto our next section here. A lot of what we’ve been talking about is the pre-crisis period. And as you said, the high water mark, probably, of the kibbutz movement was in the ’60s and ’70s. And then came the 1977 election of the Likud Party. History all of the coalitions that had governed Israel had had, as a very significant component, the Labor Party or its antecedents. And those parties had always been pretty strongly aligned with one or more of the kibbutz movements and had, in various ways, helped subsidize the kibbutz movement, provided favoritism for kibbutzniks to enter the government and the military, et cetera. But with the election of the Likud, that started to change. And then the debt crisis of the ’80s, maybe talk a little bit about that.
Ran: Yeah, so the kibbutzim were successful in the ’60s and ’70s, and they had high quality of life in part because they were able to successfully solve the incentive problems. And they were able to create successful factories, and they got it right at some level. But we can’t forget that in part the economic success was because of governmental support. So the kibbutzim have always enjoyed the support of the government and, before the state of Israel was established, Jewish agencies in the form of land, in the form of subsidies for water, in the form of tax advantages and so on. There was somewhere an explicit and implicit understanding between them and the Jewish agencies that if things go wrong, they have access to credit from the government. Now over time, especially starting the ’80s, a number of factors started to make it seem less attractive. One of them is the one you talk about, decline in governmental support with the rise of the right-wing government for the first time in Israel’s history in 1977. That government no longer viewed kibbutzim as so special. They viewed them more as the creation of the Labor Party that came before them. And that definitely was one reason that made kibbutzim less attractive.
Ran: Other things were declining idealism in the second and third generation so again the idea that, when living in the kibbutz is not your choice but your default, you’re born into it, the second and third generation were no longer as idealistic as the founders of kibbutzim. There was declining governmental support, but there was also a high-tech boom in Israel. Israel in the ’90s have this high-tech boom that make it more attractive for kibbutz members, especially ones that can earn more outside, that gives them an increased incentive to live. If you want, Israel itself was a relatively egalitarian country before the ’80s, and it becomes less egalitarian. And so all these reasons made kibbutzim less attractive. And then of course there was the financial crisis. The financial crisis, it’s probably too complicated to talk about it for too long here. I talk about it a lot in the book, but there were a number of reasons for the financial crisis. One of the, Israel in the time was in a period of high inflation. Israel in the ’80s was in a period of very high inflation, 400% yearly influence. And the kibbutz always had, as I told you, always had this credit in the government.
Ran: They took large loans. They took loans in part to bring the children from the children residences back home. They needed to expand the housing stock. So they took loans. They took loans to expand their industries. And loans will not link to inflation. So it’s very easy to repay a loan when it’s not linked to inflation, and the inflation is 400%. But then at some point the government decided to take action, and they had a stabilization program. And as part of it, they left interest rates very high and make the loans that the kibbutzim were taking, very expensive and very difficult for kibbutzim to repay. And then kibbutzim at some level were too big to fail. And so they had a number of agreements with the government and the banks and the kibbutzim that basically restructured the loans, postponed some of the loan payments and erased some other parts of the loans and essentially, though, required kibbutzim to reduce their living standards by quite a bit. So that’s about the crisis. I can stop here, or I can talk more about the reforms that came later.
Jim: Yeah, I think that’s a good place to stop for a second. And then what happened was quite interesting and probably predictable. I’d love to get your thought on that, which is beginning with these crises. There was much more of a movement away from pure, radical egalitarianism. But at least by my read, it was on a continuum. Some stayed pure egalitarian or damn close to it. Others ended up almost pure capitalists, and then a bunch were in between. And it strikes me, what a wonderful found experiment for an economist. Here you go from radical egalitarianism to a spectrum of moves away from it or staying with it. And as you have done, you collected a lot of data and were able to find out what the different alternatives to radical egalitarian led to with respect to some of your predictions. So maybe talk about that just a little bit, maybe how you gathered the data, and then talk about some of the findings.
Ran: Yeah, so Jim, so this is exactly what I thought when I was doing my PhD at Northwestern. And so that’s what I decided to write my dissertation about. I noticed that kibbutzim, they had very different experience with the financial crisis. Some were hit a lot. Some were hit a little bit. And then later they had very different experience with a shift away from equal sharing. And so after, just to give some context, a few years after the financial crisis starting the mid 1990s, kibbutzim started a process that is called privatization. I put privatization in quotation marks, because privatization in kibbutzim doesn’t mean completely privatize everything. It really means just a series of reforms, starting first with just reforms that were meant to avoid waste and increase productivity, things like you have to pay for your food and electricity. So if you don’t leave your air condition on all day and don’t fill up your plate with too much food and things like taking some of the kibbutz branches and bring some outside managers that actually know how to manage, rather than kibbutz members that maybe don’t have that much experience with management.
Ran: So this was the first, early waves of reforms. But then later they started with really deeper reforms of differential wages so shifting from the very idea of the full equal sharing shifting away from equal sharing to various degrees, as you said. Some kibbutzim shifted to a large degree away from equal sharing, others to just a small degree. And others, about 20% of kibbutzim remain completely egalitarian. And so I decided to start by writing about that. At some level, if I go back in the way my thinking evolved on the kibbutz, at some level the idea of how we create an equal society and all those questions I was at first interested in were a little bit too big for me to get started with. And so I started with smaller question, collecting data, really the sociology, the history, the economics of kibbutzim, talking to kibbutz members of all ages to reading a lot of the history but also collecting data on all the 120,000 members in the 260 kibbutzim over the last many, many years. And one of the first questions I started with is asking the questions of which kibbutzim decide eventually to stay equal and which kibbutzim decide to shift away from equal sharing.
Ran: And the main thing that I find is that once the financial crisis hit, and this was as you said. At some level it’s a great experiment to understand what are some of the limits of equality. And one of the things that I find in the data is that after the financial crisis and once kibbutzim were required to reduce their living standards quite a bit, a massive process of brain drain started. So I take the data, I take two censuses of population before and after the financial crisis, and I link them. And I find that people that were more educated and skilled were much more likely to leave kibbutzim. And about 20, 25 percentage of skilled people leave kibbutzim. And then what I find, more interesting than that, I find that kibbutzim that remained rich after the financial crisis, so some kibbutzim were not hit very much by the financial crisis. They remained richer. They were not required to reduce their living standards by a lot. They are the ones that tend to remain equal. So rich kibbutzim maintain their high degree of equality. Kibbutzim that were hit by the financial crisis and were required to reduce their living standards are the first to shift away from equal sharing. And once they do, fewer and fewer of the talent, of the educated members exit.
Ran: And so that was my main finding, that richer kibbutzim maintain a higher degree of equality. And again, in my mind, this raised the question of to what extent the sum of the social democratic countries like, again, Norway and Sweden that of course are different than kibbutzim. They are based on the free market, but they have a higher degree of equality. To what extent they are able to maintain such a generous welfare state, because they are so rich. What would happen if there was an online crisis in Norway, and Norway would become less rich? Would there be more … If the kibbutz is any guidance, perhaps there would be more brain drain, and they would have to struggle more with the welfare state.
Jim: Yep. That’s a very interesting insight and probably a very important insight for anyone who wants to build a community, which probably is to the degree you want to be able to maintain equal sharing, egalitarianism. You better figure out how to be really successful in the world, because it’s hard to maintain that in poverty. A question I had for you, in fact I don’t recall if you looked into this or not. I think you did, which is, did ideology have a measurable impact? For instance, did the Kibbutz Artzi folks move less far from equal sharing or not?
Ran: Yes, ideology did have a role. So kibbutz members from the Artzi movement, the one that is more ideological was slower to shift away from equal sharing. They were less likely to shift away from equal sharing. Kibbutz members in kibbutzim where the voting was more to the left, if you want, in national governments were less likely to shift. So there is some evidence that the ideology play a role. In fact, the 20% of kibbutzim that maintain equal sharing are now … They call themselves the communal stream, and they are rewriting, if you want. Not rewriting, but actually they say that the other kibbutzim are rewriting the original ideology. And they restate their commitment to their ideas of equality. So ideology did play a role, but I have to say that I concluded that if ideology maybe had a bigger role in the creation of kibbutzim, to some degree in their long success. But economic factors were more important in explaining the shift away from equal sharing than ideological factors.
Jim: Okay, that’s interesting. A couple things that you talked about for sure were … You analyzed it in the book. We hit it about earlier, which is the increase in financial return to education changed a fair amount about how education, particularly higher education, was consumed but also how seriously people took education at the secondary level.
Ran: Yeah, so maybe that’s one place where I can explain a little bit in more detail some of the data work that we do, if it’s interesting for your readers.
Jim: Let’s do it.
Ran: So again, this is work always with Victor Lavy, who is one of the world experts in economics of education. And basically what we do is we collected data. Imagine you want to know what happens when kibbutz shift away from equal sharing. So you know that economic theory says that people, let’s say, invest. One of the reasons why people invest in education and why they study hard and why they choose certain fields is because of the expected financial returns. But usually this is very difficult to test in the data, because it’s very difficult to test, because we very rarely see strong changes in the rates of returns to education. Yes, we have some indications that as the returns to education increase over the last 20 or 30 years in the US, whether or not people study more. But it’s very hard to observe sharp changes in the returns to education. So kibbutzim many of them shifted away from equal sharing, and some of them didn’t. And they shifted there in different time, and so what we can do is we collected data on all of the high school students in kibbutzim, data from the ministry of education and from the labor bureau of statistics where we can see actually how seriously did kibbutz members study before the reform and after the reform in kibbutzim that were formed late, in kibbutzim that were formed early.
Ran: And then we can actually look at whether the cohorts of students of kibbutzim that were formed earlier start to take more seriously once the kibbutz reform. And basically what’s the first things we find is that, yes, once the kibbutz reform, high school students start to get better grades. They are more likely to get a matriculation certificate and more likely to continue into higher education. And then we ask the question, what happens to people who were young adults at the time that the kibbutz reform. And that’s where we find that they start to shift away from humanities again and towards sciences. And that was suggestive that maybe the returns to education aren’t everything. But it’s certainly the case that once the returns to education increase, kibbutz members, kibbutz students started to take school more seriously. And kibbutz members become more likely to acquire education in fields that offer higher financial returns.
Jim: Makes sense. Another one I found very interesting was that you studied the impact of inequality with respect to the number of children families chose to have.
Ran: Yeah, that’s a very interesting one. That’s actually not one of my studies. I describe this study in my book, but it’s a study by [Abby Ebenstein 01:01:00] and Moshe Hazan and a number of authors in there from the Hebrew university, where they look at what happens once the kibbutz shift away from equal sharing to the number of children. And the idea again is, if you think about it, in a fully egalitarian kibbutz, it is cheaper to raise your own children. So imagine that you, whether you have two children or four children or six children, if you get an equal share anyway, then it’s less expensive to raise children. And so they test this idea and find that, once kibbutzim shift away from equal sharing, you start to see a decline and families have to pay for raising their own children. They start to see fewer number of children.
Jim: Interesting. Another study, again I don’t remember if it was yours or somebody else’s, was you were able to do a, or someone was able to do a measure of work ethic and how that varied within equality.
Ran: Yeah, so the work ethic, that gets us to the more suggestive world rather than conclusive world. But it’s based on some surveys of public opinion in kibbutzim. You see some suggestive evidence, although here we don’t have the clean design that I was describing to you earlier about comparing kibbutzim that were formed earlier and later and things like this. This is just suggestive evidence that shows that, on the one hand, the self-reported work ethics seems to be higher in kibbutzim that reformed than in kibbutzim that didn’t reform, suggesting that maybe work ethics improved. Although at the same time, if you asked people how they feel about the social life and the social atmosphere in the kibbutz, you see that the more egalitarian kibbutzim actually have a higher reported degree of happiness from their social life and so again indicating that it’s a trade off between incentives and equality.
Jim: Yeah, you got my next one I was going to ask you about, which was the happiness rating. And so it’s a trade off between work ethic and happiness.
Jim: Interesting. Why is that not surprising?
Ran: Yeah, yeah.
Jim: And of course the magnitude of some of the efficiencies that were squeezed out by some of these reforms were quite substantial. I think I recall reading that in some kibbutz, the electricity use went down 40% when people had to start paying for it. And there were significant savings in food when, for instance, people either had to pay for the food, or they outsourced the dining hall to companies that optimized in running dining halls, things of that sort.
Ran: Yeah, but at the same time I remember when I started to visit my uncles and aunts later, after the kibbutz reformed. In the beginning I remember that there was a sense in which the neighbors that before were so important, and it was very important social aspect of life. And there was some disillusion at first of … Before I appreciated you, because you actually earned the same as me, even though you were the secretary of the kibbutz. But now you earn more for it, so why should I appreciate it? So there was some period in which especially the older generation, the one that didn’t really love the idea of the reform, felt that there was a sacrifice in terms of happiness and in terms of the social atmosphere.
Ran: But I do think that there is a revival in kibbutzim now. And both kibbutzim that reformed and kibbutzim that didn’t reform, they now have good social life, and they are all happy. And even kibbutzim that did reform, by the way, they are still based on mutual ed and mutual assistance. And the equality and helping others is still a building block. And it’s still important to them, even if they shifted away from equal sharing. So I think the kibbutzim did get to a sweet sport, whether or not they reformed. And they are an example of how, if you’re flexible enough to respond to the changing world around you, you can actually make equality work for you.
Jim: That’s good. Getting a little short on time, I would kind of like to have jumped in on where things are today. But let’s instead go to how your insights provide some information about other attempts at communal living around the world and through history.
Ran: Yeah, so again, if you are me, you risk seeing kibbutzim everywhere. So while they are only in Israel and only a small percentage, I think that I see elements of kibbutzim in many places. So we talked a little bit about the social countries, social democratic countries. I see elements of kibbutzim. I see elements of kibbutzim in developing countries, in village economies. I see them even in partnerships that are based on more revenue sharing. I see them in the arguments between Democrats and Republicans about high taxes versus low taxes. If you want, the egalitarian kibbutz is 100% tax rate. I see them everywhere, but I think that if we are short on time, maybe I will say that the general lessons from the kibbutz are maybe even broader than each of the examples.
Ran: The way I see them, if I circle back to that question of, could we create an egalitarian society, and what we learn from kibbutzim about it, I think that my lesson is that, yes, full equality is possible, but it has a price. It is possible, because kibbutzim survived for more than 100 years, and they are one of the most important social experiments in equal sharing. And they survived for a long time, and they were successful. It is possible because even today in the 21st century, there are 30 or 40 kibbutzim that are still based on full, equal sharing. And it is possible, because even reformed kibbutzim are still taking care of their weak and the old members. And they are based on the safety net and otherwise on the mutual ed and assistance.
Ran: But it has a price in the sense that kibbutzim are small community. Full equality has a price, because kibbutzim are small community. And when you try to implement equality and socialism at the country level, you very quickly get a Soviet Union or something with heavy restrictions on individual freedom and otherwise. It has a price because of what we talked about, that lack of privacy and common property that were so important to deal with incentive problems are also sacrifices that many people are not willing to make. And that explains why they are so rare. And again, it has a price because of the screening and entering into the kibbutz means that the equality inside the kibbutz does come at the pice of excluding many others from the equality arrangement.
Jim: That’s all useful insight. You also looked with some care at some examples in the United States, which despite its capitalist roots, has also always been a hotbed of utopian style communes. You looked at some non-religious ones, most of which failed, as I understand, and then you looked in some detail at the Hutterites, which is very successful but rather extreme example. Maybe you could talk a little bit about both the nonreligious utopian ones and ones like the Hutterites.
Ran: Yes, so I have a chapter in the book about the stability of communes, and I find many, many of the inherent problems associated with equal sharing of resources that is very similar in kibbutzim and other communes, it did mean that most communes in history have been short lived. And communes that were better able to structure themselves to solve this problem lasted longer and were more successful. Religious communes, for example, ended up being more successful than secular ones oftentimes. There is interesting work by [Ovid 01:08:43] and by [Socis 01:08:44] about these religious communes and others. I find that one characteristics of short-lived communes is that members did not share ideological training and had very different backgrounds. And maybe communes that collapsed early were formed in a haste or with little ideological preparation and so on. So the brotherhood of cooperative and the new harmony and others, other communes that were more long lived had more shared ideology. They were able to adjust their structure as life around them changed like the Hutterites and the [Hamana 01:09:19] and the shakers and others.
Ran: And one of the interesting things that I find there is, as the society around, so if you focus on successful communes, for example, you look at what happens when society around them changes. And typically the way it works is there is modernization in society out around you. The returns to skill in the outside world increases, and it becomes more difficult to sustain your commune. What do you do? So if you want, the successful communes took one of two ways. One is the kibbutz way. The kibbutz way is you become more like society around you. So you’re like okay, it’s becoming more difficult to sustain full equality, because people want to leave. Then why don’t we become somewhat less egalitarian? And we offer members more options like society around us. There is also another way that successful communities have taken, which is to become more inward looking, if you want.
Ran: So rather to become even to stick more to your original principles, maybe to not allow your members to see what their outside option and how the outside world is like, this is maybe a little bit more like the Hutterite example.
Jim: Yeah, of course the Hutterites are physically quite remote, and they even speak their own language. It’s sort of a dialect of German, as I understand it.
Ran: Yes, and that makes it more difficult for people to evaluate how successful they might be in the outside world, for example, if they decide to leave.
Jim: Yeah, I will say, those kinds of things strikes me as more cult like than healthy societies, where try to isolate people, make it really difficult to exit, et cetera.
Ran: Yeah, but many of them, but to be fair, and you should read it in my book in others, they have been adapting themselves to the changes in the modern world. And they have been doing it in such a way that many of their members and even the young ones are happy about it. So they are doing their best to adapt as well.
Jim: Okay, sort of a last topic here before we wrap up. Between radical capitalism on one side and equal sharing on the other, there’s lots of other settings. One I stumbled across in my reading various books on the kibbutz movement was a movement in Israel called Moshav, I think it is, where individual family units operate their farms or their businesses, but they cooperate in marketing and buying. The Amish and Mennonites to that to some degree. In the United States we have things like co-ops, and we have companies that have large amounts of profit sharing, et cetera. What are some of the broader lessons from your work about thinking about how to increase egalitarianism in society in general without necessarily going all the way to small, sub Dunbar number units?
Ran: We can talk about the examples that you gave, the Moshav and the cooperatives, but I think that if in the last cup, I think I would focus even on the bigger picture, on society in general. And I think that one of the things that the broader lessons that I learned and the way I want to relate it to lessons to other societies is that in a world where there is such an increase, such a rise in income inequality, and in the United States today the top 1% owns, I don’t know, like 30% of the wealth. It is very natural that people start to ask themselves the question of whether and how we can create more equal, sharing societies. And at some level, the kibbutz, the way I viewed it in my book and in my research is that it is an experiment of a social experiment that went exactly the other way. So it went to the full equality way and nevertheless was able to be successful subject to sacrificing in privacy and in some other way. But if the kibbutz as a full equal sharing was able to be successful but probably not in a way that most people would like to live in. But there are egalitarian societies in countries.
Ran: Like again, I’m always thinking Norway and Sweden and the Nordic model that were able to successfully take what many of us instinctively feel is good about equality and about making sure that people have sufficient living, and there is no poverty. There is a general welfare state. You don’t let people die of hunger, and people in general feel that they are happy and have a fulfilled life with the market forces, because Norway is a market economy. And it’s not like a centrally planned economy. And so somehow I’m hoping that my research helps us, nudge us a bit more towards thinking about how we can enjoy the benefits of equality while thinking about the incentives and the free market. And the Nordic model is one place that is doing it very well.
Jim: All righty, Ran, thank you very much. This as been an incredibly interesting conversation. And again, I would point listeners who want to learn more to Ran Abramitzky, I’ll get that right, and his very interesting book. I mean I was really fascinated with this book. I was about halfway through, and I started Googling, said, “I got to track this author down, God damn it.” The Mystery of the Kibbutz, Egalitarian Principles in a Capitalist World, thanks for being here.
Ran: Him, thank you so much for having me. It was fun.
Production services and audio editing by Jared Janes Consulting, Music by Tom Muller at modernspacemusic.com.