Collective Defense by Common Property Arrangements: the Rise and Fall of the Kibbutz

Abstract

Common property arrangements have long been considered inefficient and short lived, since they encourage high-productivity individuals to leave and shirking among those who stay. In contrast, kibbutzim | voluntary common property settlements in Israel | have lasted almost a century. Recently, about 75% of kibbutzim abandoned their equal-sharing rule and paid differential salaries to members based on their contributions. To explain the long persistence of the kibbutzim, as well as the recent privatization of income, a model of public defense is developed, which predicts that defense depends on equal sharing, and that income privatization depends on external threats. Using settlement level data, it is shown that kibbutzim made the largest contributions to defending the Jewish territory under the attacks of surrounding Arab countries.