Oppenheimer’s Law of Transformation

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= cooperatives are a short-term means of survival, but tend towards capitalist privatization in the longer term


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Stephen I. Ternyik:

“Oppenheimer’s Law of Transformation can be read as the paradox of cooperative economics and it refers to macro-social dynamics: the beginning of a cooperative group endeavor will end up in a capitalist calculation enterprise or cease to exist as long as the macro-social conditions are based on capitalist monetization and accounting. Knowledge is about predictability and wisdom is about outcome: the later Kibbutzim were from the Oppenheimer viewpoint a survival mechanism which will be inevitably followed by economic means of privatization.

Oppenheimer’s circumspection is inspired by the caution of the careful physician and the transformative law of communal settlements does not exclude dynamic efficiency, i.e. the successful integration of short-and long-term economic sustainability. Of course, many other social scientists — Nikolai Bukharin, Karl Polanyi, Joseph Schumpeter, and Oskar Lange — have grappled with transformative questions; however, Oppenheimer clearly formulated the prospect that as long as the macro-economic accounting system is governed by private capital calculation, no communal settlement can survive without adapting this economic model. Oppenheimer’s circumspection is confirmed by the material history of capitalism. All of our economic accounting systems derive from the 5000 years old Sumer-Babylonian calculation model to expand privatized property via monetary exchange, credit and interest; industrial capitalization, since about 500 years, extended technically the ancient feudal limitations of natural land and human labor, but our economic formulae are socially still based on property relations and transactions, measured in monetary units. It is also interesting to note that Oppenheimer viewed the institution of a state as a means to protect the economic interests of the dominant property owners (rentiers), i.e. as a social reflection of the ownership structure on a given territory.

One other important decisive impact of Oppenheimer’s scientific approach is the social market economy in Germany which was modelled by Ludwig Erhard (1897-1977) who was a doctoral student of Franz Oppenheimer and who pragmatically transformed the deep insights of his teacher into political practice.

The paradox of cooperative economics can be balanced by improving the accounting methods of human exchange; land (natural resources), money (measurement unit for calculations/payments/exchange) and economic valuation (price formation) are vital factors of human living chances that depend on the basic principle of resource allocation efficiency. The cooperative idea of communal settlements as an alternative lifestyle has a definite future for a critical mass of people, especially under the participatory agenda of ecological democracy for land, labor and money, but we should indeed try to formulize the transformative laws as cautious working tools and memorize Oppenheimer’s circumspection for prospective enterprises.”

(https://economicsociology.org/2019/12/11/franz-oppenheimer-the-law-of-transformation-and-social-market-economy/?)


More information

References:

— Barkai, Haim. 1999. “Franz Oppenheimer’s transformation law and the recent trend towards privatization in the Kibbutz”. In Wirtschaft und Gesellschaft: Franz Oppenheimer und die Grundlegung der Sozialen Marktwirtschaf, edited by Elke V. Katowksi, Julius N. Schoeps and Bernhard Vogt. Berlin: Philo. — Russell, Raymond, Robert Hanneman and Shlomo Getz. 2015. The Renewal of the Kibbutz: From Reform to Transformation. New Jersy: Rutgers University Press. — Oppenheimer, Franz. 1896. Die Siedlungsgenossenschaft. Leipzig: Duncker/Humblot. — Palgi, Michal and Shulamit Reinharz (ed). 2014. One Hundred Years of Kibbutz Life. NJ: Transaction.