The Local Economic Vehicle
This is a layman's attempt to take a look at
the legal commercial outlines of a range of cooperative modes
of village life. The object is to help organize one's approach
to developing a working model for cooperative activity.
The term "Local Economic Vehicle" could
mean one or more "service cooperatives" such as we have
in the U.S. for marketing certain products or buying others.
This sort of cooperative movement is fairly widespread in most
countries and probably available to most ICA projects. It is largely
a question of the village "plugging in" to the system
and building awareness on the part of villagers.
At the other end of the spectrum you have the
Israeli Kibbutz or collective, the ultimate in a cooperative community.
The generic terms for the two extremes might be called Service
Cooperatives and the Comprehensive Community Cooperative. (CCC)
The Israeli view appears to be that one must
eventually go beyond the service cooperative for the following
1) To induce basic change
2) To prevent the rich poor gap
On the other hand the CCC is always resisted
by the population so Israelis recommend caution and patience.
The Israeli models of the CCC are described briefly
1. Moshav Ovdim
This is the loosest and most individualistic
of the Israeli CCC's. It is a community of individual small holders
who each have equal land, water and other production assets. The
Moshav controls all municipal and cooperative affairs, City Hall
and the economy. (In Israel, most CCC land is owned by the state
which leases it out on 50 or 99 year terms)
Each member pays $60 a month to the Moshav as
tax (one example) and must sign his proportionate share of any
debts incurred by the Moshav. Thus, the Moshav OVDIM corresponds
to a limited partnership in U.S. business. The partners elect
the management in the form of committees.
2. Moshav Shitufi
While similar to the Moshav OVDIM above, the
Moshav Shitufi corresponds more closely to a stock company or
corporation. All land, houses, machinery is owned by the Moshav
and the members own an equal share of the Moshav. The Moshav owns
and operates businesses, farm machinery, etc. Earning, after taxes,
reserves, capital expenses are paid out in equal dividends to
members. When members leave the Moshav, they are entitled to a
return of capital, based on formula.
Both types of Moshavs are quite similar in their
cooperative activities. They run community centers, buy and sell
cooperatively, provide community health and education services.
Membership is one man one vote and the membership meeting is the
highest authority in all matters, including personal matters.
The differences arise in that in the Moshav OVDIM
the individual family works its own plot of land and owns the
buildings thereon. The family may even own its own tractor, though
the Moshav will provide a pool of attachments, i.e., harrow, reaper,
bailer, etc. which it rents out to the membership on an hourly
A booklet is attached which outlines the basic
charter and regulation of the Moshav Shitufi.
There is also a document herewith which contains
Kibbutz Society regulations. The Kibbutz is a commune in the purest
sense except the family unit is still recognized. The guiding
principle is from each according to his abilities to each according
to his needs. As far as the state, or commercial code is concerned,
there may be little distinction between the Kibbutz and the Moshav
Shitufi. Both are corporate entities which can buy, sell, borrow,
lend, operate businesses, contract for all manner of services,
4. The PreCooperative Village Society and
the Moshav Olim.
These concepts are advanced by Dr. Yair Levi
of Haifa University in Israel. The Moshav Olim does not appear
in the regulations, but in Israel, institutions tend to develop
in response to practical conditions. The Moshav Olim relates to
settlements of traditional oriental societies as opposed to the
more western and cosmopolitan Kibbuttsnif and Moshavorik. The
Moshav Olim seem to become dysfunctional rather early on and are
treated by rotating teams of experts who generally make things
worse, which brings us to Dr. Levi's "Precooperative
According to Dr. Levi, there is a great danger
in premature cooperative activity, particularly the purchase and
handling of goods. Loss of control, theft, improper handling,
etc. can cause misfortunes which poison village attitudes toward
Thus one must first:
1) Change attitudes
2) Extend aptitudes
3) Slowly organize the cooperative
Dr. Levi recommends starting with a credit union,
which is easy to control and the results can be easily observed
by villagers. This approach appears to be similar to "service
cooperatives" except the intent is eventually to integrate
the parts into a whole, or a CCC.
5. Community Development Corporation (CDC)
The CDC could fit in with the "Service Cooperative"/Precooperative
approach. The CDC would be a corporation owned by the incorporated
village organization or by individual villagers on an equal basis.
The CDC would own and operate industries, buying and selling coops,
machinery used by the community, the credit union, etc. The board
of directors would be the economic committee of the incipient
The CDC could enter joint ventures, on behalf
of the community, with individuals and companies providing financing,
management, knowhow, etc. Wealthiest individuals in the
community could participate in this way, that is, by investing
assets as an outside partner with the CDC. Through the CDC, the
community and the individual members could share equally in all
commercial results. When the CCC was formed, it could absorb the
6. Summary and Conclusion
Local law and custom will dominate any solution
we seek, but we have enough data to construct a CCC as a legal
entity out of any of the above models provided we add the relevant
local laws to the mix. After that it depends on the Acceptance
of local man, which in turn depends on the guilds, stakes, methodology
and sensitivity of the catalysts.
The above models in Israel all depend on a hierarchical
regional structure for viability. There are three national associations
of Kibbutzim. Regional centers provide groups of settlements or
villages with industrial centers, schools, hospitals, labor pools,
expertise that the Israeli village needs but cannot support alone.
This is a major issue for ICA projects whether we go the CCC route
Finally, we have to be clear about the scope
of the vehicle we are seeking. If it is purely economic, then
we go the service cooperative route with a CDC. If we want to
go beyond the economic then we adopt the Moshav, Kibbutz or similar
CCC mode, after a precooperative phase.