Utopia in Zion: The Israeli Experience With Worker Cooperatives (Suny Series in Israeli Studies) [Paperback]

Raymond Russell (Author)

Book Description

Publication Date: July 1, 1995 | Series: Suny Series in Israeli Studies

A historical, sociological, and economic analysis of urban worker cooperatives in contemporary Israel. Although less famous than Israel's cooperative agricultural settlements, the kibbutzim and moshavim, Israeli urban worker cooperatives have an equally long and rich history. Well over a thousand such organizations have been established in what is now Israel since early in this century. This book provides a historical, social, and economic analysis of contemporary urban worker cooperatives, focusing on processes affecting their formation and dissolution, their use of nonmember labor, and the evolution of their democratic decision-making practices over time. Raymond Russell examines these cooperatives for the light they can shed on worker ownerships and worker cooperatives in general, and on Israeli society in particular. Applying a range of sociological and economic theories to examine the dynamics of these organizations over time, he finds that both their formation and their later development have been strongly influenced by the uniquely utopian social and economic conditions that prevailed in Jewish Palestine in the first half of the twentieth century.

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About the Author

Raymond Russell is Associate Professor in the Department of Sociology at the University of California, Riverside. He is the author of Sharing Ownership in the Workplace, also published by SUNY Press.

Product Details

• Paperback: 350 pages
• Publisher: State University of New York Press (July 1, 1995)
• Language: English
• ISBN-10: 0791424448
• ISBN-13: 978-0791424445
• Product Dimensions: 9 x 5.9 x 0.7 inches
• Shipping Weight: 1.1 pounds (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (1 customer review)
• Amazon Best Sellers Rank: #2,066,269 in Books (See Top 100 in Books)

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4.0 out of 5 stars My Review, soon to be re-edited (work in progress), January 9, 2006

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This review is from: Utopia in Zion: The Israeli Experience With Worker Cooperatives (Suny Series in Israeli Studies) (Paperback)

Those of us that live in Israel and use public transportation have an almost everyday contact with some of the most populous and successful cooperatives in human history. That we use the services they provide unknowingly of their uniqueness is a symptom of the changes in the values and interests of a society which in its inception was amply supportive of such kind of enterprises and, after some fifty or sixty years, seems to have forgotten about their existence. Differently from their well known cousins -the collective community called "kibbutz" and the agricultural cooperative called "moshav"- the Israeli industrial or service worker cooperative (wrongly called "urban" more than once) hasn't been subject of scrupulous study.

Many could be the motives of this forgetfulness: academic preferences for the unusual find the Israeli cooperative experience of this type to be superficially similar to others around the globe; ideological motives backed by an overwhelming theoretical production put cooperatives into the basket of economic utopian failures. Raymond Russell's "Utopia in Zion" answers to these two objections swiftly if not ever successfully . The response to the two objections is founded in the institutional perspective Russell utilizes in his description and analysis of the phenomenon. The unique institutional arrangements that allowed the unparallel development of so many cooperative projects in such short time at the start of the 20th Century are the same ones that can be used to debase typical neo-classical economic explanations of cooperative failure and capitalist victory.

Sympathetic to the cooperative enterprise but starting from the prevalent neo-classical perspective Avner Ben-Ner wrote in 1988 a seminal article about the typical life-cycle of this kind of organizations, grouped under the concept of "Worker Owned Firms", or WOFs . In this widely cited paper he supposes the transformation of WOFs through degeneration into capitalist owned firms (KOFs) or their demise based on their structural weaknesses. The central weakness of a cooperative is the selfish attitude of the cooperative members concordant with Adam Smith's homo economicus: each member will act according to his personal interests, looking for the maximization of his profit and disregarding the collective good. In this model, WOFs are formed only in response to dire economic circumstances or the prospect of higher personal incomes than in capitalistic firms. Once formed, WOFs' management tends to hire workers who only receive wages and don't take a part of the company's profits. If this individualistic selfishness is attacked, the self-destruction tendencies attributed to worker-management could be subdued. In fact, the publicly criticized nepotism of many of these and other organizations (as for example, state-owned companies as the Israeli Electrical Company) could signal the prevalence of collective over individual egoism. It seems to me that a simple change of the unit of analysis (even from the individual to the nuclear family) could do away with the theoretically "natural" mechanism by which capitalist firms take back whatever little fragments of market share were occupied by other forms of ownership.

This "collective egoism" (which can also be called "collective solidarity") finds its stand in common characteristics of its members as can be a shared trade, kinship connections or, essential for the case under study, ethnic considerations. In the first chapter of his book ("Worker Cooperatives in Israel's Labor Economy"), Russell describes the birth and development of Israel's WOFs out of the mixture of peculiar economic conditions and ideological push. His institutionalism situates between reductive economic views and those who give ideology all the respect for what transpired in the land. The difficulties that the immigrants of the second and third "aliyahs" (immigration of Jews to Mandatory Palestine) found in the local restricted economy prompted the alliance of ideologically Zionist external sources of finance -World Zionist Organization- and (already) local socialist parties -Labor Party and the Histadrut (Israel's Workers Union)- who saw the creation of cooperatives as the solution to both of their problems. The objective was to populate the land (of course, by people of Jewish descent) and cooperatives offer in this sense a double prize: the wheels of the local economy were rapidly put into motion with low levels of capital need and Jewish work was given preference over the cheaper Arab wage labor. The Labor Party and the Histadrut received from them a certain control over some of the more individualistic, urbane and petit-bourgeois sectors through the WOFs affiliation to the Cooperative Center (Merkaz HaCooperatzia) and their use of Histadrut, Chevrat Ovdim and Bank HaPoalim services.

If this analysis is seductive, is still incomplete. The word "Utopia..." in the title can indicate easily not the dreams of WOF founders but the uniqueness of the set of causes that gave them birth . Russell fails in this sense to include the additional parts of the economic picture. Other than a simple line, the Arabs displaced by cooperative work disappear from the book until is necessary to clear them of the data to obtain certain statistically significant result in the quantitative second chapter. Capitalist enterprises are not to be found, and so their influence into the cooperative movement is only felt as a "natural" tendency to which WOFs falls when not institutionally backed. As known by social scientists: "no market is possible without a complex set of social conditions" , meaning that a set of institutional preparations are also needed by capitalist firms to be born, prosper and multiply. These arrangements are felt to be external changes whose causes are not investigated: in the last chapter (chapter 6: "Future as well as past") Russell point to many variables but is not conclusive. The influence of immigration waves is highlighted because of statistically significant results from the quantitative analysis of WOFs births and deaths (chapter 2: "The formation and dissolution of worker cooperatives in Israel, 1924-1992"), but when the moment comes to explain the failure of the last big wave of immigrants from the Soviet republics (1990-2000) to re-create the explosion in WOFs births, Russell takes the easy way out pointing that the "conditions" (institutional, social, economic) have changed. Only a profound investigation of this "change" can take the Israeli experience out of anecdote and into the basis of a constructive theory of the cooperative movement.

It would be unfair to criticize Russell only for his unwillingness to expand his analysis to neighboring areas of economic activity. But his internal scrutiny of cooperatives is also faulting. In two chapters (Ch. 3: "The use of hired labor in Israeli worker cooperatives, 1933-1989" and Ch. 4: "Democracy and oligarchy in Israeli worker cooperatives", both of them written with Robert Hanneman) he charges against the two most common objections to collective ownership: the tendency of WOFs to degrade hiring wage labor instead of expanding membership and the supposed inefficiency derived from democratic management .

Russell and Hanneman conclusions about "degradation" are not satisfactory. Using the "method of difference" to compare historical periods they reach the conclusion that the factor that explains the increasing use of hired workers is the change in the Histadrut's strategy and its waning power . It seems that institutional explanations are utilized only to explain the existence of cooperatives but when they degrade "market forces" which need not to be institutional-dependent are the responsible party. The only option let for WOFs' members which desire to maintain their cooperative is to sustain it by ideological commitment, always susceptible to changes in members' attitudes. A better use of theoretical models as the one formulated by Ben-Ner could have centered into the internal structure of the cooperatives and the way by which workers become members and how are they recompensed for their work , .

Is in the democratic character of cooperatives where we find hope. In this chapter the authors show us a vibrant representative democracy dependent on size that makes of Egged (and to a lesser degree also Dan) a kind of small republic whose results are nothing short of pleasing. In the meantime, smaller cooperatives function efficiently under the guide of direct democracy (joint management). If oligarchic encroachment is not the inevitable result of age and growing size in WOFs we can at least be happy by the fact that degeneration occurs by members' majority choice.

What is to be done? There is place to better the use of institutional theory in the quantitative analysis of WOFs' failure . Textual and discourse analysts can dedicate efforts to decode the repeated intents at denigration that the most successful cooperatives of all (Egged and Dan) suffered during and after the 1970's from the public, the media, the Histadrut and the government . Those social scientists with historic leanings can verify the influence of WOFs over Arab labor; economists can attempt to include the Israeli experience into modeling in an effort to eliminate the "utopian" character of an extraordinary occurrence. The principal lesson to be learned is that the Israeli cooperative experience was a thriving collective enterprise that allowed (and to an extent still does) to great numbers of people to work and receive an income having at the same time a saying into the way those place where they spend so much of their lives are organized. It is essential for us to make sure that such thing can happen again and under a varied set of circumstances. Without the possibility of laboratory experimentation, the Zionist venture (with all its known negative consequences) gave us a field where we can test our theories and look for the best way to bring about this kind of economic organization to the fore of human activity. We can only benefit from it.