Land Reform: A Precondition for Sustainable Economic Development

BY JAWIED NAWABI

It is in the agricultural sector that the battle for long-term economic development will be won or lost.
—Gunnar Myrdal, economist and Nobel laureate
The phrase “land reform” often conjures up memories, for those leaning right, of frightening extreme-left ideologies. On the progressive left, meanwhile, land reform is often treated as a passé topic.
With the advent of rising inequality, climate change, weak government institutions, failed states, terrorism, corruption, and a whole slew of other socio-economic problems—sown or exacerbated by three decades of neoliberal policies in the “developing world” (Global South)—it is high time we revisit the issue of land reform. We need to bring it back to the center of the discussion on sustainable economic development. Land reform is not political extremism; rather, it is a critical policy mechanism for the world to address issues of poverty, hunger, urban slums, and good governance.
What is “land reform”? It is usually defined as the redistribution of large landholdings to smaller ones. Land is transferred from large landlords to those who have been working the land as tenants (such as sharecroppers) or paid agricultural workers, as well as dispossessed underemployed or unemployed urban workers who migrated from rural areas looking for employment and wound up living in urban slums. That is one model of land reform. Another model is redistribution in the form of rural communes or cooperative or collective farms. A combination of the two models is also possible.
Reemergence of Land Reform Movements
Despite the attempts by international institutions (like the IMF and World Bank) and oligarchic political elites in the global South to suppress land reform policies, there have been growing social movements pushing for land reform in the last two decades. Neoliberal “free trade” policies have exposed small farmers to devastating global competition (especially from giant mechanized industrial farms in the global North), leaving hundreds of millions of them dispossessed, and have forced them into the reserve army of impoverished unemployed or underemployed living in urban slums. From Brazil and Mexico to the Philippines and Zimbabwe, social movements for a more just and fair distribution of wealth—particularly land—are confronting these devastating consequences of neoliberalism.
Land Reform and Colonization
If we broaden the concept of land reform, the whole process of colonial settlement in North America, Central and South America, Australia, and New Zealand was one big land reform, appropriating the lands of indigenous peoples and distributing it to the European settlers. So land reform can be understood as a much more common experience of the “developed” world than it is usually thought of in the economic literature.
Social protest has led even elite institutions such as the World Bank to acknowledge the issue. The Bank’s World Development Report 2008: Agriculture for Development, at least rhetorically put agriculture and the productivity of small farmers “at the heart of a global agenda to reduce poverty.”
Agriculture as Technical Problem?
The central tendency of mainstream economic development theory since the 1940s and 1950s has been to view agriculture as a mere stepping stone towards industrialization. Economist Arthur W. Lewis’ “dualist” model was particularly influential in casting agricultural labor in developing countries as redundant—with a “surplus” of workers adding little or nothing to agricultural production. This surplus labor force, Lewis argued, should be moved out of the agricultural sector—this would supposedly not reduce output—and into the industrial, which he viewed as the key sector of the economy. Besides moving inefficient peasants out of the rural sector, mainstream development economists proposed to boost agricultural yields by consolidating small farms into large ones—supposedly to take advantages of economies of scale. Thus, instead of reducing land concentration, this would increase it, essentially accomplishing a reverse land reform. Such an industrial model of agriculture would use expensive capital equipment (imported from the global North), petroleum-based fertilizers, herbicides, and pesticides. Today’s version of the model increasingly pushes the adoption of genetically modified seeds controlled by corporations like Monsanto.
During the 1960s and 1970s, this frame of thought led many international institutions (such as the World Bank, Asian Development Bank, etc.) and governments in the global South to embrace the “Green Revolution.” The Green Revolution was essentially a plan to use “science and technology” to increase crop production in developing countries. The use of fertilizers, pesticides, and high-yield crop varieties was supposed to boost agricultural productivity, reduce rural poverty, solve problems of hunger and malnutrition, and thus avoid peasant movements and rural political instability. This was, as economists James M. Cypher and James L. Dietz put it, a “strategy wherein it was hoped that seed technologies could be substituted for missing land reform and for more radical ‘red revolutions’ of the socialist variety threatening to sweep across the globe at the time.” Viewing agricultural productivity as a purely technical problem, advocates of the Green Revolution did not aim to transform the structure of land inequality and landlord power. To take the case of India, the Green Revolution boosted agricultural yields, making the country technically self-sufficient in food production. However, the changes primarily benefited medium and large-sized landowners who used capital-intensive technologies, high-yielding mono-crop seeds, and large inputs of fertilizers and pesticides. “Rural inequity worsened because of the growing prosperity of the large and medium farmers and the unchanged position of the landless and small farmers,” concludes Indian scholar Siddharth Dube. “And because large farms use more capital and less labour per unit of produce than small farms, rural employment grew much less than it would have if land reform had taken place and the increase in production come from smaller farms.”
The Economic and Socio-Political Cases for Land Reform
There are two broad arguments for the importance of land reform. The first is based on the widely observed inverse relationship between farm size and output per unit of land area: smaller farms produce more per acre of land than larger farms. Smaller land holdings are more productive and ecologically sustainable for a number of reasons:

1. Higher labor intensity. Small farmers use more labor per unit of land, which helps generate more output and more employment per unit.
2. Higher multiple cropping. They grow more crops per year on a given piece of land.
3. Higher intensity of cultivation. Small farmers leave a lower proportion of land fallow or uncultivated. In addition, they cultivate crops that are higher value-added per unit of land.
4. Lower negative environmental impacts. Small farms use fertilizers, pesticides, and other agrochemicals more sparingly than large farms. This reduces negative impacts of harmful chemicals on workers and neighbors. Small farmers, overall, have a greater incentive to employ environmentally sustainable techniques than large industrial ones.

While the economic case for land reform can be construed as a narrow technical argument on how best to boost agricultural productivity—which land-reform opponents could argue is unnecessary due to the advent of the Green Revolution—the socio-political argument is aimed against this kind of narrow technical thinking. The importance of a land reform is in changing the hierarchical structure of agrarian class relations while increasing productivity. The idea is to break the power of landlords, who keep peasants as a captive labor force in rural areas and act as a conservative political force at the local and national levels of the state.
Good Governance
The “good-governance functions” of the state are policies beneficial to the large majority of the population. Good-governance states exercise control over a certain territory, depend on a broad part of their population for revenue, and in turn provide the population with a wide range of public goods: the rule of law, transportation infrastructure (paved roads, extensive and affordable public transportation, etc.), public utilities (electricity, clean water, sewage systems), human services (health, education systems), and job security or at least temporary unemployment insurance.
The central mechanism by which landlords wield their power is through patron-client networks that give them control over local and regional government institutions. Landlords keep the poor majority dependent on them for jobs and access to land, while also using them as a captive power base for local elections (in countries where there are elections, such as India and Brazil). This way, they can block the development of state programs providing public goods—like public roads, clinics, schools, water systems, etc.—for everyone. Instead, they perpetuate a more narrowly targeted development relying on private goods—fertilizer, pesticides, expensive high-yield seeds, privately controlled water wells, loans that put peasants in ever-deeper debt, etc. They provide, also, a form of private insurance system for those clients who exhibit proper loyalty, in contrast to social support systems available to all—which would reduce the peasants’ vulnerability and the landlord’s power. The consequence is that the state’s good-governance capacities are distorted and corrupted, favoring the narrow interests of the landlords and the political elite that is connected to them (often by kinship).
Transformative socio-political land reform for developing countries is aimed at diminishing wealth inequalities in the initial stages of development and breaking the grip on power of the upper-class elite (including not only landlords but also big industrial, financial, and commercial capitalists generally allied with them). This democratization of society would make it possible to orient the state towards long-term national development policies which can create more conducive socioeconomic and sociopolitical conditions serving the population as a whole, and not just the elite.
The socioeconomic conditions would include a more egalitarian class structure in the rural sector, greater incentives for farmers to increase their productivity due to owning the land they work, greater farmer incomes allowing the farmers to send their children to school, better nutrition due to higher caloric intake, and greater small-farmer purchasing power leading to greater demand for the products of labor-intensive manufacturing. The sociopolitical democratization would mean the breaking of landlord power, political stabilization resulting from the inclusion of the peasant masses in the political system, and democratization of decision making now liberated from landlord capture of local and national state bureaucracies.
Land Reform Is Not Enough
There have been many more failed land reforms than successful ones. Reforms have failed mainly because they have not been thorough enough in breaking the power of the landed elite, and in extending the role of the government in an inclusive development process. Across Latin America—in Mexico, Bolivia, Brazil, Chile, and Peru—land reforms have had partial success, but for the most part have not dislodged rural elites and their industrial counterparts from political dominance. This has contributed to an image of land reform, even among the progressive left, as a tried and failed policy. There are also examples of half-successful land reforms in South and East Asia—in India, the Philippines, Indonesia, and Thailand—where peasants did reap some benefits like reliable ownership titles, which allowed them to borrow on better terms, boosted crop yields, and reduced malnutrition, though without fundamentally altering the class structure. On the other hand, successful land reforms were thorough, extensive, and swift. Key examples in the twentieth century include Japan, Taiwan, South Korea, and China. Land in the first three countries was distributed as family-sized farms. (China initially had a collectivized land reform.) Looking at the Japanese and South Korean cases: In Japan in 1945, 45% of the peasants were landless tenants. By 1955, only 9% were tenants and even they benefited from much-strengthened protective laws. In pre-reform South Korea in 1944, the top 3% of landholders owned about 64% of the land, with an average holding of 26 hectares. By 1956, the top 6% owned just 18% of the land, with an average of about 2.6 hectares. Meanwhile, 51% of family farmers owned about 65% of the land, with an average holding of 1.1 hectares.
Nowhere in Latin America or Africa, nor elsewhere in Asia, did land reforms come so close to such equalization and radical reshaping of traditional social structures. The East Asian land reforms succeeded in bringing about the long-term national development policies by creating more conducive socioeconomic and sociopolitical conditions—breaking the existing power structure, allowing for the emergence of developmentally oriented states (as opposed to neoliberal models that saw state promotion of economic development as anachronistic and “inefficient”). Successful land reforms require follow up—supportive policies investing in rural infrastructure development (irrigation, electricity, roads, health clinics, schools), plus providing services such as clear and legitimate land records, micro-credit at reasonable rates of interest, and training for farmers in the newest skills for sustainable farming. Japan, Taiwan, South Korea, and arguably even China’s development paths serve as examples of transformative land reforms in the last fifty years. What these countries achieved was remarkable growth with equity.
JA

This paper is published here with the permission from  http://www.dollarsandsense.org.

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