| The Rules That Define Prosperity—and Those That Don’t
“Unfortunately, the world came without operation instructions, leaving us to discover its rules.” Interpreting Reality Through Laws Growing up on a Kibbutz, I shared a room with other children from birth. Each evening, parents took turns reading bedtime stories. At three years old, I marveled at how every parent seemed to know the exact words for each picture in the books. Without understanding how reading worked, it felt like magic. But once I learned the principles of reading, the mystery vanished, replaced by clarity that we often take for granted. This is the power of understanding laws—rules that make the world predictable and manageable. Without them, things seem chaotic, even magical—a term we use to describe what we don’t yet understand. But once these laws are clear, what seemed impossible becomes entirely logical—and eventually, we take it for granted. Consider flight. Before the Wright Brothers, the idea of a heavy machine soaring through the skies seemed like magic. Today, we know it’s not magic but the application of proven scientific principles like aerodynamics. Similarly, the principles of prosperity transcend differences in culture, history, or circumstance. When understood and applied, these universal laws make success achievable for anyone, anywhere, and at any scale. The history of the Kibbutz exemplifies this principle, defying conventional wisdom and even the doubts of Arthur Ruppin, who initially had little faith in its viability before ultimately supporting and financing the “experiment.” By all traditional measures, the Kibbutz should not have succeeded—yet it did, proving the power of universal principles when properly applied. This reminds me of the joke about a researcher who returned to Europe from Africa, describing an extraordinary animal with a neck several times longer than a horse’s and thin legs that allowed it to eat from treetops but made grazing on grass difficult. European academics dismissed the claim, insisting that such an animal couldn’t exist. Sometimes, reality challenges our assumptions and forces us to refine our theories. The Kibbutz—an extraordinary Israeli socio-economic model—proves that prosperity follows universal laws. Like the giraffe, which defies conventional assumptions about animals, the Kibbutz challenges traditional ideas about wealth creation. Often described as Israeli magic, its success is no mystery to those who understand its principles. Having been born and raised on a Kibbutz, I can confidently say there is no magic in its success. It works even without fully understanding its theoretical foundations. Now, with a clearer understanding of the laws of prosperity, it’s evident how perfectly they align with the Kibbutz model. Much like aviation progressed beyond the Wright Brothers’ first plane, the Kibbutz demonstrates the creative potential of applying prosperity principles to innovative models. Its greatest promise lies not in its past but in its future and the prosperity it can inspire worldwide. From the first Kibbutz, established in 1910, grew hundreds more. Despite differences in location, governance, livelihoods (agriculture, industry, tourism), and members' backgrounds, they all thrived by adhering to the same universal principles. Just as airplanes of various designs rely on the same laws of physics to fly, every Kibbutz prospers by applying foundational principles of prosperity. The true "magic" lies in the fact that, much like passengers enjoying flight without understanding aerodynamics, Kibbutz members benefit from its success without fully grasping its scientific underpinnings. The Laureates’ Case for Institutions The 2024 Nobel Prize in Economics recognized research on how societal institutions shape prosperity (for more details, see the previous column). The laureates argue that inclusive, trusted institutions are essential for equitable growth and that weak institutions leave nations trapped in poverty. While insightful and valid in many cases, their work implies that prosperity depends exclusively on specific institutional arrangements—a perspective that is both narrow and incomplete. I do not argue that non-functioning institutions are desirable. However, I propose that the roots of prosperity often lie elsewhere, especially when evidence shows that alternative tools and frameworks can yield similar results. The Kibbutz model, developed during times of chaos under the ineffective, non-democratic institutions of the Ottoman Empire, challenges the laureates’ narrative. Early Kibbutzim thrived despite hostile conditions under Ottoman and British colonial rule. Their success lies in a grassroots organizational system built on trust, togetherness, shared values and vision, and mission-oriented goals—all achieved without lawyers or formal agreements between individual members or businesses within the community. By transcending external institutional failures and focusing on internal cohesion, the Kibbutz model demonstrates that prosperity is achievable in any context when universal principles are applied. The laureates emphasize “trust” as a currency that drives prosperity, linking it to societal structures typical of Western democracies. These democracies are often characterized by sophisticated legal systems supported by numerous lawyers who bridge trust gaps. My experience, however, reveals a stark contrast between developed and developing nations: in developed countries, agreements drafted by lawyers often enhance trust, while in developing nations, they frequently fail to do so. This raises a critical question: Can communities without lawyers and formal agreements thrive? The Kibbutz offers a compelling answer. During the first 35 years of my life as a Kibbutz member, I never encountered a lawyer nor needed one in my interactions with other members or in dealings between businesses within the Kibbutz framework. Even when disagreements arose, or personal differences existed, trust remained inherent and complete, eliminating the need for legal intermediaries. This trust was cultivated through shared values, a unifying vision, and a collective mission. The absence of day-to-day agreements between members and businesses within the Kibbutz rests on an overarching set of agreements and regulations, periodically updated and approved in general meetings. This collective governance ensures smooth functioning while maintaining a shared understanding of principles and goals. The Kibbutz exemplifies an alternative system that builds trust, thrives, and scales through mechanisms different from conventional institutional frameworks. It resembles the internal dynamics of corporations, where trust among colleagues often negates the need for formal agreements to advance shared goals. By fostering togetherness and shared purpose, the Kibbutz broadens the discussion on prosperity and highlights the importance of diverse, context-specific pathways. Universal Laws of Prosperity Like flight, prosperity takes off and thrives when it follows universal principles. The Prosperity Formula encapsulates these principles and their interdependencies: Prosperity = f (External Integration + Social Integration) / Internal Disintegration
Or: Prosperity = f (E + Si) / I
This formula highlights that success arises when communities maximize external opportunities (e.g., market access, technology) and strengthen internal cohesion (e.g., shared values, collaboration) while minimizing inefficiencies and conflicts. Societal institutions are one tool to achieve this balance—but they are not the only tool. The Kibbutz demonstrates how alternative frameworks can work just as effectively, if not better.
The Prosperity Formula is visually captured in the Togetherness-Prosperity Principle chart. It shows how increasing togetherness and aligning with mission-driven goals create a clear path from poverty to prosperity.
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