Abramitzky: This is not just like living in a neighborhood where people, a bunch of people decided to split things a bit more equally than otherwise. This is a radical experiment in the sense that it started with people who came from Eastern Europe, and they wanted to bring with them some of the things they liked about Socialism: From each according to ability, to each according to needs.
They came to a country full of uncertainty and it made sense for them to group together. They also had [strong] socialist ideology but also strong Zionist ideology, and the idea that people can, the Jews can only be saved by working on the land, as opposed to learning Torah and avoid work like they often did in the Diaspora.
But they also wanted this to be voluntary. So, they didn't want to force people to join there. And so the idea of voluntary Socialism. And, at first they set up these communes.
And, as you said, based on full equality in the distribution of resources. No private property at all. So, all property belongs to the commune. And, as you said, for many years it was a non-cash economy. So, equality was taken so seriously that basically they would be allocated things in kind. So, there would be like a clothing budget; and then there would be like a food, clothing, travel; and each person would get an equal amount of those. You are not able to save anything. You cannot leave anything to your kids. If you leave, you can only take with you your brain, but you cannot take with you your share of the factory and all...
They had communal dining halls. So, people did not eat in the comfort of their home, but they would eat their meals together with others in the communal dining hall.
They took equality so seriously that they wanted to also raise kids communally. And so, the system of special residences for kids started around the 1920s – where kids lived outside of their parents' homes. They would only visit a couple of hours, maybe from 4 to 6, their parents; but otherwise they would live together. There would be a nanny that would take care of their needs.
And the idea was to teach them the ideals of equality and to make sure that everybody gets the same opportunity, but at the same time follow a strict pressure to conform, and so on.
And why have kibbutz been able to exist for generations?
Abramitzky: I started to be more skeptical. And so I remember one day in particular when I was having a discussion with my uncle, and he described one of the path-breaking innovations of the kibbutz, say, it's a very good irrigation factory system in Israel, a very successful factory; and I decided to provoke him.
So, I told him, 'Uri, you know, according to economic theory, the kibbutz should not exist. Actually, the factory shouldn't be as good.' ... why would anybody work very hard if all they get is an equal share of the total resources?
I explained to him the brain drain problem that I learned at university. And then I said, 'And besides, Israel is the size of New Jersey. Why would any talented person ever stay in the kibbutz? Why wouldn't it be a great deal to move to Tel Aviv and earn a premium for your ability and efforts? Why would you stay and share your income with people who are less ambitious and talented than you?' ...
And then I told him, 'What about entry? I expect all the lazy people who can't make it outside to seek to enter a kibbutz, because what a great deal it is to enter a kibbutz and have other people subsidize your earnings.' And so I explained to him the adverse selection problem.
And then I continued with my annoying speech and told him that I also worry about his kids a little bit, because why – they don't have very much incentive to study hard, because why would you study hard if a high school dropout and a computer science engineer get paid exactly the same in the kibbutz? Why would you study hard at all?...
Of course he got upset, and we started to fight. And he explained to me how, 'You economists are so cynical, and all you can think about is the selfish person that only thinks about themselves.'
Roberts: Smart man, your uncle.
Abramitzky: He's a very smart man...
And he said, 'You are so cynical. Everybody that is familiar with the kibbutz knows that the founders of the kibbutz were anything but selfish people that cared only about themselves. They actually in fact wanted to create a new human being, the opposite of the Homo Economicus that cares only about himself.
And they wanted people to care more about the collective than themselves and besides, if you are so smart, then how can you explain that the kibbutz survived so successfully for almost a century?'