The Social Economy as a Compromise between "Two Worlds"

The Social Economy as a Compromise between "Two Worlds" Michal Palgi The Institute for Research of the Kibbutz and the cooperative idea The university of haifa

What Two Worlds? • 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? • 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 Palgi - Social Economy 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.

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 Palgi - Social Economy • Changes in the homogeneity of ideology and population. • Economic failure of some kibbutzim at the time of the national economic crisis. • Aging population • 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.

The Direction of the Changes Palgi - Social Economy

The Chain of Changes Palgi - Social Economy 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?

The New SE of the Kibbutz Palgi - Social Economy 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

Conclusions Palgi - Social Economy 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.

Some Final Questions Palgi - Social Economy 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?

The Social Economy as a Compromise between "Two Worlds"