Utopia in Zion: The Israeli Experience with Worker Cooperatives. - book reviews

Administrative Science Quarterly,  Dec, 1997  by Paul Ingram

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Utopia in Zion presents a theoretically grounded, multimethod analysis of the rise and fall of worker cooperatives in Palestine and Israel. These organizations are the (typically) urban, nonagricultural counterparts to Israel's more prominent cooperative organizations, kibbutzim and moshavim. Worker cooperatives have never accounted for more than a very small portion of the Israeli economy, but their experience provides lessons on the viability of cooperative organizations, on the possibility of workplace democracy, and on the effect of institutional context on the evolution of organizational forms. The book combines an engaging account of the role of worker cooperatives in the Israeli economy with thorough analyses of the founding rates and the cooperatives' tendencies to hire labor. I found the book valuable for both its insight into organizational theory and its insight into the political economy of Israel. I expect that readers interested in either of those topics will enjoy the book.

Utopia in Zion is divided into six chapters. In chapter 1, Russell addresses the question," Why do workers form cooperatives?" His answer is that the formation of worker cooperatives is an economic act but that, often, the interests pursued by those who form cooperatives are not just narrow self-interests but are also collective interests, such as the sense of community that might be felt by those who share an occupation or an ethnicity. This idea results in the reasonable assertion that the founders of Israeli cooperatives were motivated by both economic necessity and Zionist ideology. Chapter 1 ends with a description of the institutional context immediately relevant to Israeli worker cooperatives and some demographic data on the population of worker cooperatives, which has declined since peaking in the 1950s. Of particular importance in the institutional context is the relationship between the cooperatives and the Histadrut (a labor-union organization that is central in the Israeli economy). Russell attributes many of the problems of worker cooperatives to neglect and interference from the Histadrut and from Merkaz Hakooperatsia, the organization established by the Histadrut to oversee the worker cooperatives associated with it.

Chapter 2 (written with Robert Hanneman) provides an analysis of the founding rates of worker cooperatives. The analysis uses theory and methods from organizational ecology. The results contribute to organizational ecology by illustrating the simultaneous effect of two types of institutional influences. The models show evidence that both density-dependent legitimation and social-political factors, such as immigration and the historical waning of Zionist ideology, affect the founding rate. The chapter also includes some analysis of failure rates, but this is less satisfying for two reasons. First, the analysis focuses on the age dependence of failure, but since the data do not include measures of the size of the cooperatives, it is impossible to have much confidence in the findings on age dependence. Second, the density, social-political, and economic variables that were the basis of the founding analysis are not included in the failure analysis.

Chapter 3 (with Hanneman) considers the use of hired labor by worker cooperatives. In 1933 around 20 percent of the participants in worker cooperatives were hired laborers, but by 1988, the representation of hired laborers had grown to 55 percent. The idea that all labor should come from members is central to cooperative ideology, so the move to hired labor can be seen as the degeneration of a worker cooperative. The authors describe the efforts of the Histadrut and Merkaz Hakooperatsia to discourage the use of hired labor. They analyze the use of hired labor by sector and find that only in the transportation sector was hired labor below 50 percent in the 1980s. This is significant, because Israel's largest and most prominent worker cooperatives are two bus companies, Dan and Egged, which have been strongly criticized for their use of hired labor.

Chapter 4 is based on interviews with officials from fifteen cooperatives and considers the tendency of these democratic organizations to drift toward oligarchy. Even though the evidence presented is thin, this is an exciting chapter. Russell's conclusion favors democracy. Even after years of existence, and even among the largest cooperatives, it seems that there is substantial democracy in these organizations. Some members even suggest that there is too much democracy, pointing to the slowness of democratic decision making as inhibiting competitiveness. Chapter 5 is broader, describing the problems of other cooperative organizations in Israel over the period that worker cooperatives have declined. Chapter 6 considers the future of Israeli worker cooperatives and is not optimistic. Russell concludes that worker cooperatives as they have historically existed in Israel are not viable in the current institutional and economic environment. He maintains some hope, however, for other forms of employee ownership and workplace democracy in Israel and provides some ideas to make cooperatives more practical.