Land Reform, Part II

The Economic and Socio-Political Cases for Land Reform

By Jawied Nawabi, Guest Blogger

Jawied Nawabi is a professor of economics and sociology at CUNY Bronx Community College and a member of the Dollars & Sense collective.

This is the second part of a two-part series. The first installment discussed conventional approaches to the agrarian sector in economic-development theory and policy, and their failings. This concluding installment focuses on the socio-economic case for land reform, and it role in successful economic development experiences. Originally published in the May/June 2015 issue of Dollars & Sense magazine.

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.

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 (except Kerala, India), 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.

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