MICHAL PALGI THE INSTITUTE FOR RESEARCH OF THE KIBBUTZ AND THE COOPERATIVE IDEA THE UNIVERSITY OF HAIFA The Social Economy as a Compromise between "Two Worlds"

Palgi - Social Economy What Two Worlds? a. Ideal socialist type is characterized mainly by: Collective ownership Democratic decision making Motive for producing goods and services is to satisfy people's needs: "from each according to ability, to each according to needs" Mutual aid among members and communities

Palgi - Social Economy What Two Worlds? b. Ideal capitalist type is characterized mainly by: Class division –private ownership Decisions are made by the owners Motive for producing goods and services is to maximize profit Free market – laissez faire

Palgi - Social Economy The Two Worlds The majority of the countries concentrate closer to the capitalist pole than to the socialist. The adoption of capitalist ideas + modernization + globalization = increase in people’s untended social and economic needs. This gap was the impetus for the growth of the social economy.

Palgi - Social Economy What is Social Economy? "The social economy refers to all initiatives that are not a part of the public economy, nor the traditional private sector, but where capital and the means of production are collective“ Neamtan, (2002). It concentrates on socially necessary activities where state and market have failed. Aims to serve its members and the community rather than to accumulate profit

Palgi - Social Economy Characteristics of SE Democratic decision making, therefore, Activities and the use of surplus are determined by members Collective ownership Members are relatively dominated in their daily lives In general, its activities are committed to empowerment, participation and collective responsibility

Palgi - Social Economy The Kibbutz Communities There are 267 Kibbutzim in Israel. The Kibbutzim constitute 1.8% (102,000) of Israel’s population, yet their contribution to the national economy amounts to 40% in agriculture, 8.4% in industrial output, and 7.5% in industrial export. Their basic values: Equality, democracy, social ownership of goods, mutual guarantee for each other and each community.

Palgi - Social Economy The Kibbutz Social Economy Martin Buber (1949) referred to it as “the experiment that did not fail”. Its basic values are similar to those of the SE. It can boast to be the first type of such democratic, egalitarian communities. 100 years since its inception it knew ups and downs. It introduced many changes – but has it managed to maintain its SE? Has it put the basis for another type social economy?

Palgi - Social Economy Main Reasons for Introducing Changes 1. Changes in the homogeneity of ideology and population. 2. Economic failure of some kibbutzim at the time of the national economic crisis. 3. Aging population 4. Changed milieu around the kibbutzim, that affected also the type of changes they made. In order to survive the Kibbutz introduced changes – many led towards the capitalist pole.

Palgi - Social Economy The Direction of the Changes The Base LineThe Changes - Equality in rewards - Direct democracy - The needs of the individual and community converge - Equal standard of living - One type of membership - Community ownership - Equity in rewards - Representative democracy - The needs of the individual are prior to community’s - Gaps in standard of living - Two types of membership - Individual ownership

Palgi - Social Economy The Chain of Changes Some of these changes are planned and others are not. Each such change instigates additional changes in the community and the individual. In order to cope with the changes additional changes are needed. But has it managed to maintain its SE, how?

Palgi - Social Economy The New SE of the Kibbutz Equality – in addition to state taxes high community taxes Distribution of Property – home ownership – how? Production means and other property Care for the weak: children, old, handicapped via profits from common production means or taxes Democracy – direct: for long-range decisions; representative for medium and short range But how long can this SE keep?

Rewards Dilemmas Palgi - Social Economy DilemmaCollective optionIndividualistic option 1. Material Rewards Dilemma  All my rewards are the kibbutz’s rewards.  I want personal rewards from my efforts and success. 2. Social Rewards Dilemma  All types of work should have the same value.  A person should be evaluated by the type of job/position he/she holds. 3. Power Rewards Dilemma  Self-management and direct democracy.  People in power positions should make the decisions.

Rewards Dilemmas Palgi - Social Economy DilemmaCollective optionIndividualistic option 1. Social Security Dilemma  All members should have the same social security.  Social security should be differential, according to one’s contribution. 2. Equality / Equity Dilemma  Each person should get according to his/her needs and contribute according to his/her ability.  My rewards should be according to my input and no less than the rewards given to others whose input is similar. 3. Quality of Life Dilemma  I want every one in the kibbutz to be able to enjoy the same quality of life.  I want to have high quality of life, as high as I can get even if others in the kibbutz have lower.

Palgi - Social Economy Conclusions The Kibbutz is changing its SE principles. Two extreme groups pull in opposite directions: Individualistic vs. Collectivistic. The decisions are affected by: The value orientations of members, by the economic situation of the kibbutz, fashion, and by the surrounding society. Up till now, decisions are reached democratically and equality between members is relatively high.

Palgi - Social Economy Some Final Questions The adaptation to the change is usually good, but there are those who feel that the change was unjust. Can there be open system democratic and egalitarian communities within a capitalist society? Will the present SE continue when the founders and their children are no longer there?