I found this on one of the forums I frequent, but it appears to have been originally posted here: http://volokh.com/ (scroll down almost half-way to find the article)
Formerly Socialist Israeli Kibbutzim Discover the Virtues of Private Property
Ilya Somin • January 26, 2010 4:22 pm
Israel’s collectivist kibbutzim were once one of the world’s most highly touted experiments in socialism. But, as the Financial Times reports [HT: Tyler Cowen], they have increasing switched over to private property rights:
Set amid rolling hills in central Israel, Kibbutz Nachshon is a cluster of simple houses shaded by pine trees and surrounded by gardens and fields. The midday calm is broken only occasionally, when a tractor rumbles towards the grain silo or children pass by on their way from the nursery.
To the casual visitor, Nachshon presents a facade of quiet, rural simplicity that conforms perfectly with the image of the kibbutzim, the collective farms unique to Israel.
In truth, however, Nachshon has spent the past four years in the grip of a social and economic revolution that swept away most of the socialist ideals and egalitarian practices that marked this experiment in communal life. The buildings and fields are still the same, the left-wing leanings are still there, as is a sense of solidarity. But in most practical terms, the lives of kibbutzniks like Jane Ozeri have changed beyond recognition....
Equality, once at the core of the kibbutz ideology, has been breached in other ways, too. Tasks that used to be performed by kibbutzniks regardless of their education and background — such as washing the dishes — are today largely the preserve of hired workers from outside the community.
Attitudes towards business have also changed radically. As recently as the 1980s, Nachshon members voted down a plan to open a petrol station on a nearby highway, because it would force the proud kibbutzniks to “serve” motorists.
Today, many kibbutzim not only have thriving businesses — including in the tourism industry — that operate exactly like other private enterprises, but some have even decided to embrace the capital market: 22 kibbutz companies are currently listed on stock exchanges in Tel Aviv, New York and London.....
“The kibbutz was never isolated from society,” says Shlomo Getz, the director of the Institute for Research of the Kibbutz at Haifa University. “There was a change in values in Israel, and a change in the standard of living. Many kibbutzniks now wanted to have the same things as their friends outside the kibbutz.”
Ms Ozeri says: “People wanted more control over their own lives and economics. They wanted to make their own decisions, and have their own car and their own telephone. It is very difficult to live this strong communal life. It is very tiring.”
Just as these social trends were gathering pace, the kibbutz movement was dealt a knock-out blow from a different direction. Keen to diversify away from farming, more and more kibbutzim had started dabbling in industry, setting up businesses that — often burdened by a lack of management expertise and capital — made hefty losses.
The result was a debt-crisis, a government bail-out in 1985 — and a wholesale re-examination of the kibbutz economic philosophy.
“Israeli society had always looked to the kibbutzniks as an elite group. But now they were regarded as a mere interest group that depended on money from the state,” says Mr Getz.
The answer to this dilemma — and to the communities’ financial woes — came in the form of privatisation — a process that started slowly in the 1990s and has gathered pace ever since.
Nachshon, for example, finally decided to abandon collectivism in 2006. In a so-called “privatised kibbutz”, members are free to keep their salaries, but in return they have to pay for all the goods and services that the kibbutz used to provide for free.
More often than not, kibbutzniks found they would rather do their own cooking and washing and have their own car than use communal facilities. Even the dining hall — once the heart of every community, where members used to meet, eat and talk on a daily basis — became a victim of privatisation: in some kibbutzim, attendance dropped so sharply that communal dining was abandoned altogether. [emphasis added].
In this post, I explained why the failure of socialism in the kibbutzim is important to broader debates about markets and property rights:
As [Gary] Becker puts it, “nowhere is the failure of socialism clearer than in the radical transformation of the Israeli kibbutz.” If a socialist experiment could ever succeed, it should have done so in this case. Most kibbutzim were founded by highly motivated volunteers strongly committed to socialist ideology. For many years, kibbutzim had great prestige in Israeli society, and many of the nation’s early leaders were kibbutz members. After Israel became an independent state in 1948, the kibbutzim also benefited from extensive government subsidies. Unlike other socialist experiments, the failure of the kibbutzim cannot be ascribed to lack of ideological fervor, inadequate resources, or hostility from the surrounding “capitalist” society. Despite these advantages, kibbutzim failed to achieve a high level of economic productivity, and even failed to retain the loyalty of many of their own members. Over time, many kibbutz residents became frustrated with the perverse incentives created by socialism, and many also yearned for the individual freedom and privacy created by private property rights.
Only by watering down or abandoning their comitment to socialism have kibbutzim been able to survive. If socialism cannot work under the highly favorable circumstances of the Israeli kibbutz, it almost certainly cannot work anywhere.