The Renewal of the Kibbutz: From Reform to Transformation

Chapter 2. From Crisis to Reform, 1985– 2001

39 By the 1980s, Israel’s kibbutzim differed in many ways from what they had been in the pre-state period. Most kibbutz members now worked outside of agriculture, in increasingly diverse tasks. They now slept in familybased households. The trees and plants growing on many kibbutzim were now mature and well-tended, giving their grounds a park-like atmosphere. Since the 1970s, visitors were reporting that the overall look of the kibbutzim was “becoming bourgeois” (Near 1997, 249). Despite these outward signs of affluence and embourgeoisement, the kibbutzim in the 1980s still retained most of the communal and democratic structural features and practices for which they were famous. All important decisions continued to be made by the General Assembly of all the members. Managers continued to be rotated out of positions at the end of their terms. The kibbutzim continued to decide where each member worked, and continued to meet members’ basic needs collectively, feeding them in communal dining halls, and providing them with housing, medical care, and education for the children. The supplemental incomes that members received in addition to these collective goods continued to be based not on work but on need. By the end of the 1980s, all of these previously unchallenged practices would begin to be questioned. But before these traditions came under assault, the kibbutzim would be struck by a series of shocks. In the early 1980s, the government’s economic policies had been expansionary, making credit available on easy terms. These policies fueled inflation, making 2 From Crisis to Reform, 1985–2001 40 THE RENEWAL OF THE KIBBUTZ it even easier to pay off old loans and obtain new ones. During this period, the kibbutzim, like most other Israeli enterprises, became heavy borrowers . In 1985, the Israeli government suddenly shifted its economic policy from inflationary to deflationary, to stabilize the declining value of the currency . As part of the government’s emergency price stabilization plan, all debt in Israel would henceforth be indexed to the rate of inflation. The kibbutzim , like other Israeli borrowers, saw their debts grow larger with each increase in the rate of inflation just as their ability to repay those debts was declining, because the national economy had gone into a recession. Businesses throughout the Israeli economy found themselves caught between upwardly spiraling debts and downwardly spiraling incomes. Many became bankrupt, including the nation’s largest banks. Increasing numbers of individual kibbutzim found themselves unable to pay their debts. Because the kibbutzim were guarantors of each other’s debts, the kibbutz movement as a whole fell into bankruptcy. The account given so far portrays the kibbutzim as passive victims of macroeconomic forces beyond their control. Defenders of kibbutz traditions remained loyal to such accounts well into the 1990s. But growing numbers of critics pointed to many ways in which the kibbutzim had brought their economic problems on themselves. Many investments made in the early 1980s appeared with hindsight to have been unwise. These included both risky economic ventures that later went bad, and the high proportion of capital resources used to build the larger living quarters required by family sleeping. The first and loudest voice to blame the kibbutzim for their own problems was the Likud government. Within Israel, the Likud government, which had held or shared power since1977, represented the victory of probusiness parties over labor parties, and of Israelis with roots in Asia or North Africa over those with roots in Europe. Internationally, the Likud leaders were ideological allies of Margaret Thatcher and Ronald Reagan, and shared their agenda. The Likud leaders were quick to label the economic difficulties of the kibbutzim as additional examples of the failure of socialism. Like their allies abroad, they prescribed privatization as the only solution to troubled economies. Critics outside the kibbutz movement were soon joined by voices within. In kibbutz managerial training centers like the Ruppin Institute, and FROM CRISIS TO REFORM, 1985–2001 41 in the Takam Federation’s archive and publications center at Yad Tabenkin, researchers began to identify practices of the kibbutzim that might have contributed to the recent poor performance of their economic ventures. Critics like Reuven Shapira (1990), for example, argued that the rotation of managers in kibbutz factories was depriving those enterprises of the services of their most skilled and successful leaders. For Gideon Kressel (1991), the problem was that the collective ownership and decision...