Institutions, Inequality and Well-being
Distributive
Determinants of Capabilities Realization
Daniel Little
University of Michigan-Dearborn
This
volume is focused on the moral importance of capabilities as the touchstone to
ethical theories of economic development.[1] I believe that this perspective is
correct, and that the greatest moral insight and the greatest human progress
result from sustained efforts to align economic development policies with the
goal of increasing the realization of human capabilities across the whole of
society (Little 2003).
However, I also believe that our ability to achieve this goal is highly
sensitive to the distributive structures and property systems that exist in
poor countries. Accordingly, this paper is concerned with the distributional
characteristics of developing countries and the profound impact that different
property systems can have on the full human development of the poor. Poor people in developing countries
usually measure their ability to fulfill their most basic human capabilities by
their position within the domestic property system: their access to land and
credit, their access to the components of human capital (health, clean water,
education), and their access to employment. I will maintain that the chief determinants of the outcomes
for human well-being among poor people in developing countries are the property
relations and political arrangements through which development proceeds (the
economic structure of the developing country). As a result, ethically desirable human development goals are
difficult to attain within any social system in which the antecedent property
relations are highly stratified and in which political power is largely in the
hands of the existing elites.
This
approach thus combines another of Amartya Sen’s important contributions to
development thinking—his emphasis on the centrality of the entitlement
bundle (Sen 1981, 1983)—with some of the insights of Marx’s political
sociology of wealth and poverty (Marx 1977; Marx and Engels 1976).
Strikingly, the central viewpoint of this paper is one that was well
understood two or three decades ago, when development scholars across a broad
swath of academic and policy circles were calling for entitlement reform and
land reform (Adelman and Morris 1973), (Chenery and Syrquin 1975), (Herring 1983).[2] This perspective has been eclipsed in
the past two decades by neo-liberalism, and we need once more to pay attention
to these crucial factors of agrarian life.
Creating an economy
in which all persons can fulfill their human capabilities as fully as possible
is the ultimate moral good of economic development. This is the central point of the capabilities approach. This goal requires a social system in
which people have adequate access to life’s necessities—food, clothing,
shelter, clean water, health care—and to the necessities that permit the
flourishing of their human talents—education, employment opportunity, and
freedom. So far, so good. But what must be achieved in order to
create such a social order? The
central thrust of the arguments to be marshaled here is that structural
inequalities, entrenched through property systems that systematically limit the
material resources controlled by the poor and legal-political systems through
which the voice of the poor is systematically reduced to a whisper, are the
greatest obstacle to even limited realization of this goal. So a central objective within economic
development policies in the developing world must be a renewed attention to
property reform and grassroots democracy.
Absent attention to the task of reform of the basic social-property
institutions that govern the poor, there is likely to be only limited progress
on facilitating the full development of the human capabilities of this
impoverished population.
The
central premises of my argument are these:
1. Improving the
quality of life and degree of human development (the realization of human
capabilities) of all members of society is the central goal of economic
development. (Central thesis of the capabilities approach)
2. Low household income
causes low levels of the development of the human capabilities of members of
the household. A central
determinant of human development of poor households is, precisely, their
poverty: the level of income that the household is able to generate throughout
the year. Low income causes a household inability to purchase essentials of
life (food, clothing, shelter); to pay for rudimentary healthcare; to pay
school tuitions (and spare their children from farm labor in order to permit
them to attend schools); and to gain the human-capital skills that would permit
employment in higher-income positions.
These are exactly the social goods needed to cultivate a central core of
human capabilities (e.g. health and literacy).[3]
(“poverty” premise)
3. Household income in
developing societies is determined in large measure by the structure of the
social-property system within which householders find themselves: land
ownership, access to credit, access to employment, access to markets for inputs
and products. Small farmers face
one set of social-property limitations; landless workers face another set; and
urban poor face yet another configuration. In each instance, however, the social-property system
creates systematic limitations for persons in those social positions to
increase their incomes significantly and consistently. (“institutions”
premise)
4. The specifics of the
social-property system are intimately related to powerful economic and
political interests in developing societies; these groups commonly possess
extensive political power; and reform of these institutions in favor of the
poor is consequently very difficult.
(“power and politics” premise)
5. Therefore—
o
The structure of the social-property system in most developing societies
confers substantial inequalities of capabilities-realization and human
development on different categories of people in society.
o
A concern for the realization of human capabilities to the highest level
feasible must focus on the nature of the social-property institutions within
which poor people exist.
I
do not suggest that Sen and other advocates of the capabilities approach are
insensitive to these premises. But
I do maintain that there is a tendency within the broad spectrum of
contemporary development thinking, including the capabilities approach, to look
to aggregate measures of human development at the national level (for example,
the HDI)—which obscures the very extensive inequalities of attainment of
human capabilities that exists in many countries for many sub-populations. And I maintain that the capabilities
approach has been less attentive than it needs to be to the social and
political mechanisms that create these intra-national and intra-societal
inequalities. So this paper is a
plea for returning to a more structural and institutional analysis of the
mechanisms through which poverty and low human development are reproduced in
many developing countries (and many developed countries as well).
Two
types of conclusion follow from this line of thought. First is a recognition of the causal role that the
social-property system has in the processes through which people in poor
countries are enabled to more fully develop their human capabilities and
experience a rising level of quality of life. The specific institutions and social relations through which
people earn their livings matter, and these institutions are the outcome of
long and intense struggles among powerful players in society. We need to understand those
institutions in detail; and in many instances those institutions need to be
reformed so as to ameliorate their bias against the poor.
The
second insight is the recognition that it is important to disaggregate data
describing a population’s quality of life across several socially relevant
forms of difference: urban-rural, property status, region, occupational groups,
gender, and ethnic group, for example.
Efforts to measure progress in terms of rising quality of life that
depend on national data erase the direction and pace of change for different
social groups. Indices such as the
Human Development Index (United Nations
Development Programme 2000) or the Physical Quality of Life Index (Morris 1979) are valuable but limited, in that they
depend on country-wide data and therefore do not permit us to measure more
socially differentiated processes of change in important variables associated
with quality of life. Several
examples of studies of quality of life at the sub-national level illustrate the
importance of this sort of disaggregation. One is Walther Aschmoneit’s county-level study of quality of
life in China (Aschmoneit 1990); Aschmoneit documents very extensive
and growing inequalities of quality of life in different regions of China. Another is V. K. Ramachandran’s study
of infant mortality in West Bengal (Ramachandran 1991). Ramachandran demonstrates that the health status
of different social groups—landless workers versus more affluent social
groups—reflects substantial inequalities. Both studies document very substantial intra-country
variation in quality of life, across occupational groups, region, and
urban-rural status. These intra-
and inter-regional differences in the attainment of a population’s human
development plainly reflect the workings of underlying social mechanisms, and
central among these mechanisms are the workings of the social-property
system.
Let
us begin with an important empirical example of economic development without
commensurate gain for the poor of the region: the effects of the Green
Revolution in the rice-growing regions of Malaysia. James Scott provides a careful survey of the development
process in Malaysia in Weapons of the Weak (Scott 1985).
The chief innovations were these: a government-financed irrigation
project making double-cropping possible; the advent of modern-variety rice
strains; and the introduction of machine harvesting, replacing hired
labor. Scott considers as relevant
parameters the distribution of landholdings, the forms of land tenure in use,
the availability of credit, the political parties on the scene, and the state's
interests in development. His
chief finding is that double cropping and irrigation substantially increased
revenues in the Muda region, and that these increases were very unequally
distributed. Much of the increase
flowed to the small circle of managerial farmers, credit institutions, and
outside capitalists who provided equipment, fertilizers, and transport. Finally, Scott finds that the lowest
stratum—perhaps 40%—has been substantially marginalized in the
village economy. Landlessness has
increased sharply, as managerial farms absorb peasant plots; a substantial part
of the rural population is now altogether cut off from access to land. And mechanized harvesting substantially
decreases the demand for wage labor.
This group is dependent on wage labor, either on the managerial farms or
through migration to the cities.
The income flowing to this group is more unstable than the subsistence
generated by peasant farming; and with fluctuating consumption goods prices, it
may or may not suffice to purchase the levels of food and other necessities
this group produced for itself before development. And these circumstances have immediate consequences for the
ability of poor households to achieve the development of their human
capabilities. Their nutritional
status, their health, their literacy, and their mobility are all directly
impaired by the fact of low and unstable household income. Finally, the state and the urban sector
benefits substantially: the increased revenues created by high-yield rice
cultivation generate profits and tax revenues that can be directed towards
urban development.
Scott
draws this conclusion:
The
gulf separating the large, capitalist farmers who market most of the region's
rice and the mass of small peasants is now nearly an abyss, with the added (and
related) humiliation that the former need seldom even hire the latter to help
grow their crops. Taking 1966 as a
point of comparison, it is still the case that a majority of Muda's households
are more prosperous than before.
It is also the case that the distribution of income has worsened
appreciably and that a substantial minority—perhaps 35‑40
percent—have been left behind with very low incomes which, if they are
not worse than a decade ago, are not appreciably better. Given the limited absorptive capacity
of the wider economy, given the loss of wages to machines, and given the small
plots cultivated by the poor strata, there is little likelihood that anything
short of land reform could reverse their fortunes. (Scott 1985:81)
This
example well illustrates the problems of distribution and equity that are
unavoidable in the process of rural development. The process described here is one route to
"modernization of agriculture," in that it involves substitution of
new seed varieties for old, new technologies for traditional technologies,
integration into the global economy, and leads to a sharp increase in the
productivity of agriculture.
Malaysia is in effect one of the great successes of the Green
Revolution. At the same time it
creates a sharp division between winners and losers: peasants and the rural
poor largely lose income, security, and autonomy; while rural elites, urban
elites, and the state gain through the increased revenues generated by the
modern farming sector.
How
do people earn their livings? The
economic institutions of the given society (property relations and market
institutions, for example) determine the answer to this question. An economy represents a set of social
positions for the men and women who make it up. These persons have a set of human needs—nutrition,
education, health care, housing, clothing, etc. And they need access to the opportunities that exist in
society—opportunities for employment and education, for example. The various positions that exist within
the economy in turn define the entitlements that persons have—wages,
profits, access to food subsidies, rights of participation, etc. The material well-being of a
person—the “standard of living”—is chiefly determined by the degree
to which his or her “entitlements” through these various sources of income
provide the basis for acquiring more than enough goods in all the crucial
categories to permit the individual to flourish (Sen 1981). If
wages are low, then the consumption bundle that this income will afford is very
limited. If crop prices are low,
then peasants will have low incomes.
If business taxes are low, then business owners may retain more business
income in the form of profits, which will support larger consumption bundles
and larger savings. There is thus
a degree of conflict of interest among the agents within the economic system;
the institutions of distribution may favor workers, lenders, farmers, business
owners, or the state, depending on their design.
Central
in this schematic account are the institutions and social relations through
which economic processes take place.
This complex includes, first, the property system. The property system defines how
individuals and corporations acquire and retain physical and non-physical
assets. What rights does the
property owner possess? How is
land owned? Is there a mix of
private and public property (e.g. public ownership of utilities and
roads)? Are there restrictions on
the use and disposal of private property?
What are the legal conditions of wage labor? Second, the institutions of the state—regulation,
fiscal policy, property and contract, law—set the context of economic
activity. Third are the specific
forms that labor takes in a given economy—farm labor, industrial labor,
service labor; high skilled versus unskilled labor; and so forth. Finally, there are the many ways in
which self-seeking individuals can take advantage of existing institutional
arrangements, leading to the possibility of corruption—private and
public.
A
substantial shortcoming of current approaches to development theory is
insufficient attention to the institutional determinants of income distribution
(Taylor 1990, 1983).
Analysis of these institutional arrangements is mandatory if we are to
have an informed basis for designing poverty-alleviating strategies of
development. Local institutional
arrangements—the property system, the institutions of credit, the
characteristics of labor markets, and the circumstances of political
power—decisively influence the distribution of the benefits of economic
growth in existing rural economies.
A chief determinant of the distribution and character of poverty in a
given economy is the system of entitlements that the economy creates for its
population: the means through which persons gain income through wages, interest
and rent, sales of products, state-funded subsidies, and the like, as well as
the distribution of ownership rights in productive assets. It is therefore
essential to consider the institutional framework that determines the
generation of income.[4]
The
distributive characteristics of economic development schemes are largely
determined by the specifics of the institutional arrangements through which these
work, including chiefly the form of ownership of land and the distribution of
political power. This perspective
works within a framework of analysis that identifies the social relations of
production, and system of surplus extraction that they represent, as the
fundamental determinant of the distribution of income, wealth, and political
power.[5]
We
may distinguish broadly between two families of development strategies: those
that funnel development through existing property relations and political power
alignments and those that involve a redistribution of property and political
power in favor of the dispossessed.
In the circumstances of many parts of the less-developed world, the
existing property relations define an agrarian class structure based on highly
stratified land ownership, and existing political institutions that are highly
responsive to the political organizations of the elite defined by this property
system. We may say that
“neo-liberal” strategies of development are those that aim at diffusing
technology, new investment funds, expertise, etc., through these existing
private property arrangements, and then let the distributive chips fall where
they may. “Redistributive”
strategies undertake to alter these fundamental institutional arrangements in
such a way as to confer more power, autonomy, and welfare on the least-well-off
strata of rural society.[6]
In
addition to analysis of the property relations defining economic activity and
interests it is also important to provide an analysis of political power at the
local and national level. Given
that different strategies affect local interests differently, and given that
the strategy chosen will result from a complex political process involving various
affected parties, it is crucially important to know what players will be most
able to influence the goals and implementation of the development plan. In what is otherwise a sustained denial
of the claim that the Green Revolution has exacerbated inequalities, Hayami and
Ruttan write, "It is a common observation that, in a society
characterized by extreme bias in economic and political resources, it is
difficult to bring about institutional reforms that are biased against those
who possess substantial economic and political resources. A disproportional share of
institutional credit and subsidized inputs will, in such situations, be
directed into the hands of the larger farmers. . . .
It is extremely difficult to implement institutional changes that are
neutral or biased toward the poor in a society characterized by extreme
inequality in economic resources and political power" (Hayami and Ruttan
1985:360).[7]
Rural
development that flows through existing private property relations has a
built-in structural tendency towards favoring the interests of the rich over
the poor—large landowners over small, owners over tenants, and managerial
farmers over hired hands. Such
schemes do not do very well at improving the welfare of the lowest stratum of
rural society, and they work to extend rather than narrow rural
inequalities. (See an effort to
model these effects in (Little 2003) : 82-86.)
These
conclusions rest on several converging lines of argument. First is a political point: development
strategies are the object of intense political activity within the developing
country, and the extreme inequalities in political powers between large
landowners and peasants guarantee that the former will have the preponderant
voice in this political struggle.
As a result, we should expect that development strategies will emerge
that are biased towards the interests of the landowner.
Second,
there is a structural tendency stemming from the character of stratified
property holdings themselves that leads to deepening inequalities between
landowners and landless workers.
Excluding tax revenues, incomes are generated through two basic
sources—income on property (rent, profit, interest) and income from
wages. The effect of rural
development is to increase the productivity of rural farming
systems—ultimately, to increase the yields on land. These increased yields are then
converted into increased earnings for the owners of land and other capital
resources. Wages would increase
only if the demand for labor rose; but to the extent that mechanization is part
of the package of technological changes that are introduced, the opposite is
more likely. Thus there is a tendency
for the larger share of the gains through innovation to flow to the owners of
land and capital. (See
Ramachandran’s analysis of landless workers in rural India; (Ramachandran 1991).)
This
tendency leads to greater inequalities between land owners and the landless;
but another important feature of rural inequality is that between large and
small owners (managerial farmers and landlords, on the one hand, and
subsistence peasant farmers, on the other). How does rural development affect the micro-farmer? There is much debate on this question
in the literature, but several factors appear fairly clear. The very small farmer faces serious
barriers to successful implementation of technical innovations of the Green
Revolution. First, his plot is
very small—often too small to fully satisfy subsistence needs. He has little access to credit, since
he has little collateral and little political influence. His current cultivation is frequently a
food crop, whereas the available spectrum of innovations are oriented towards
riskier market crops. And
many—though not all—of the available innovations are indivisible,
requiring a minimum acreage to be efficiently used. This is particularly true of mechanized
innovations—tractors, harvesters, etc. Finally, the small farmer is in the most precarious economic
position: frequently heavily indebted, with few cash reserves, a bad harvest or
slump in the commodity market can lead to the loss of the land that he owns or
rents. Moreover, as the potential
return on land increases through development, there will be more pressure on
the smallholder to relinquish his land.
Thus foreclosure, abrogation of tenancy, and intimidation should result,
pushing some small farmers into the wage labor sector. The net result is that it would appear
as a practical matter that larger farmers and landowners are in a substantially
better position to implement Green Revolution technologies; to the extent that
this is so, however, we would expect a widening gap between earnings on the two
types of farms. And we should
expect a significant slippage in the number and size of small farms, as
peasants are proletarianized or marginalized by changing economic
circumstances.
The
issues of equity and stratification that I am raising here have been much
discussed in the development literature.
But there the question is usually a somewhat different one: do
modernization of agriculture and technological innovation all by themselves
lead to a worsening of inequalities and the welfare of the rural poor? I suggest, however, that this is not
the right question to ask, inasmuch as it emphasizes the technical changes of
the Green Revolution rather than the institutional arrangements through which innovation
occurs. Defenders of Green
Revolution technologies hold that these new techniques confer benefits that are
largely neutral across classes, while critics hold that the technologies favor
richer farmers. I will make
several points on this subject, however: first, that it is the institutional
arrangements through which development occurs rather than the technologies
themselves that determine the distributive impact of modernization; and second,
that within the spectrum of available Green Revolution technologies, some favor
large farms and some small. (See (Otsuka, Cordova,
and David 1992) for a review of
some of the interactions of these effects in the Philippines.)
A
number of agricultural economists address the question of whether Green
Revolution technologies favor large farms over small. There appears to be a rough consensus that the technologies
themselves are largely neutral across farm size, and that they do not
inherently have the effect of increasing stratification. Thus Robert Herdt (1987) summarizes the
experience of the Green Revolution in the Philippines,[8]
and argues that there was no clear bias in these technological changes in favor
of large farms. Small farms
incorporated green technologies as readily as large; there was no tendency for
farm size to increase; real wages for farm labor rose slightly. In a similar vein Hayami and Ruttan
(1985) argue that MVs and agricultural modernization do not have the effect of
increasing rural inequalities.
However,
these authors also conclude that the local institutional
arrangements—property and political power—decisively influence the
distribution of the benefits of innovation. Thus Hayami and Ruttan write:
The
potential gains from technical change set in motion both private and
bureaucratic efforts to capture the gains from technical change in the form of
institutional rents rather than allowing the market to partition the gains
among factor owners and consumers.
The possibilities for bias in institutional innovations are greatest in
societies with highly unequal distribution of economic and political resources.
((Hayami and Ruttan
1971) : 361)
And in his survey of
the rural development experience of Mexico W. Randall Ireson emphasizes a
similar conclusion.
While
the findings reported here do support his ((Nicholson 1984) general contention that Green
Revolution technologies by themselves do not increase inequality, the
landholding context in which technologies are introduced is found to affect
their relative impacts across farm groups. ((Ireson 1987) : 361)
Most
research on Mexico has emphasized an increasing income inequality in the
agricultural sector as well as a strong institutional bias in favor of large
commercial farms. ((Ireson 1987) : 352)
The
importance of land distribution patterns as a crucial element of agricultural
structure must be acknowledged.
The data analyzed here clearly indicate the effect of land concentration
on increasing income concentration and also the influence of landholding
inequality on the different effects of technical change. Perhaps, rather than continuing to
debate the distributional consequences of technical change, the development
community should pay more attention to the effects of resource concentration on
technical change and income concentration. ((Ireson 1987) :363)
Finally,
in his major study of the rice economy of Asia, Randolph Barker argues that the
Green Revolution technologies themselves do not create greater inequalities,
but that unequal ownership of land and capital leads to greater inequalities of
income through technical change ((Barker, Herdt, and
Rose 1985) : 157). Barker comments that the decisive
factor determining distribution is the set of property relations and
institutional arrangements present.
If
ownership of these resources is concentrated in a few hands, then their
earnings will likewise be concentrated. . . . The effect of resource ownership on the distribution of
earnings is so great that any effect caused by technological change is marginal.
. . . That does not say that when
incomes are increased because of a technological change, all participants
benefit equally. On the contrary,
they benefit in proportion to their ownership of resources and the earnings of
the resources. . . . The important
factor determining who receives the direct income benefits is the ownership of
resources. ((Barker, Herdt, and
Rose 1985) : 157)
These
observations corroborate the basic point to be argued here. Herdt, Barker, Hayami and Ruttan, and
others have shown that modernization and green technologies themselves do not
induce inequalities; rather, the inequalities are generated by the
institutional arrangements through which these innovations are introduced. Thus new technologies confer benefits
and burdens only through the lens of the property relations and relations of
political power that exist in a given country. In this sense the technologies themselves are neutral; it is the
property relations and political institutions that are the decisive mechanism
of distribution.
It
is also worth noting that, given typical institutional arrangements in many
parts of the less developed world—i.e., private ownership of land,
stratification of landholdings, and credit through private or semi-private
banks—there are sharp differences between different new technological
options. Some technological
innovations are biased towards large farmers, while others favor small holders'
interests, and still others appear to be equally available and beneficial for
all strata. New seed varieties are
equally available to large and small holders; while expensive capital equipment
and irrigation technology is only available to larger farmers and those with
substantial credit available.[9] Thus new agricultural technologies do
not form a seamless package of innovations, but rather a differentiated set of
options with differential consequences for different classes.[10]
The
argument to this point may be summarized in these terms. Quality of life and human development
are strongly influenced by household income—and most so at the bottom end
of the income distribution. The
fundamental determinant of the distribution of income within an economy is the
set of property relations through which production occurs. Property relations in the less
developed world are typically highly stratified, with a small class owning the
majority of wealth (chiefly land).
Ownership of wealth confers both high income and substantial political
power; so large wealth holders are able to absorb innovations and to influence
the political process of planning in a way advantageous to their
interests. In most developing
economies there is significant stratification of landholding, with consequent
stratification of income. In an
agrarian economy, land ownership is the primary source of income. So without property reform, it is
difficult to see how the lower strata of rural society will be able to improve
upon their distributive share of income generated by the rural economy.[11]
From
this we may draw a conclusion: development that proceeds through existing
economic and political institutions will tend to reproduce and perhaps
intensify inequalities between classes.
This analysis suggests that if we are interested in a process of
development that reduces the structure of inequalities, it must be grounded in
a set of institutional reforms that redistribute property rights and political
powers. In a word, development
strategies that aim at reducing inequalities must embody a program of agrarian
reform.
What
is agrarian reform? It is a
process through which property relations and political powers are redistributed
in such a way as to favor the interests of the rural poor. Ronald Herring puts the point this way:
Agrarian
reforms worthy of the name transform rural society through alterations in the
property structure and production relations, redistributing power and
privilege. ((Herring 1983) : 11)
The
political obstacles to agrarian reform are obvious, both in theory and in
history. For as we have already
argued, agrarian reform is directly contrary to the economic interests of the
politically powerful. (See
Herring’s revisiting of land reform in Kerala in his more recent study (Herring 1991).) Thus agrarian reform appears to presuppose a dramatic
increase in the political power and influence of the rural poor. And secondly, the problem of
institutional design—the creation of property arrangements through which
efficient, modern agriculture may proceed while serving the ends of equity and
welfare—is a knotty one.
The
obstacles to a rational and equitable process of agrarian reform are
several. First, there is the
problem of pre‑reform distribution of political powers. Existing elites have both the interest
and the opportunity to defeat and sabotage fundamental reform. Second, the problem of designing
effective and fair institutions is non‑trivial, and may be expected to
require an extended time of experimentation and error. Finally, even with well‑designed
institutions there will unavoidably be a period of transition that will pose
potentially disruptive problems.
There are substantial problems of transition; if property arrangements
are to be significantly altered, various players will have counterproductive
incentives during the transition.
For example, if oxen are to be confiscated in the next period, then the
owner of the ox has no incentive to keep the ox alive; he may consume it, drive
it to death, or in other ways attempt to make use of its value before
confiscation. More innocently, as
new institutions come into existence it is necessary to rally support from
various segments of rural society for them, and this requires raising public
confidence in their efficiency, fairness, and stability.
The
earliest demand voiced by the rural poor is for fundamental land reform—a
"land to the tillers" program.
The goal of such a program is to level out land ownership by
confiscating the holdings of large landowners and distributing them to the
land-poor and landless. The result
of such a program in most environments is a system of peasant proprietorship of
small plots worked with family labor.
Fundamental land reform addresses several of the chief aims of agrarian
reform: in particular, it addresses the problem of rural inequality and it
substantially reduces or destroys the political power and influence of the
rural elite.
A
program of fundamental land reform by itself is insufficient, however, if it
fails to address problems of efficiency.
Small holdings with inadequate access to credit are not a feasible basis
for modern high‑yield agriculture; but without sustained development in
agriculture, it will be impossible to raise either average welfare or the
welfare of the least‑well‑off stratum. Moreover, a peasantry that has achieved the patchwork of
smallholdings implied by this system will politically oppose further
transformations of the agrarian system.
It
would appear likely, therefore, that the outcome of a process of rural reform
through existing political arrangements will be sharply tilted towards the economic
interests of the rural elite (Riedinger 1995).
So long as this elite retains decisive political power, the goals of
land reform are difficult to achieve. Land reform runs contrary to the most
fundamental interests of the rural elite, and this elite generally has
substantial or even decisive political power. Land reform can only be the outcome of a political
process—either through the exercise of state power or through
revolutionary action on the part of land-poor peasants. If it is the former, however, the interests
of the individuals, coalitions, and organizations involved will play a
determining role in the way in which institutional changes are adopted, and the
various players have greatly unequal powers. Ronald Herring puts the point this way: "Although land
reforms are universally argued for in terms of social justice and economic
efficiency, the political reality in South Asian societies is that such reforms
are promulgated by ruling elites largely composed of, or structurally or
electorally dependent on, agrarian elites" (Herring 1983:3). Herring writes,
"Land to the tiller is a direct attack on private property and seems to
presuppose an organized and militant peasantry, a revolutionary situation, or
some extraordinary concentration of power, perhaps from outside the indigenous
political system (as in Japan and Taiwan)" (Herring 1983:50). This line of reasoning suggests that a
successful policy of land reform requires very exceptional circumstances; in
any nation in which the dominant political and economic elite is the landowning
class, meaningful land reform looks improbable.[12]
My
argument is that in typical circumstances of the less-developed world, progress
on the goals of improving the level of human development of the
least-well-off—the level of realization of their human
capabilities—is unlikely to occur without substantial institutional
reform: in particular, redistribution of property rights and political powers
in the favor of previously dispossessed classes (landless, land-poor,
share-tenants, urban workers, etc.).
Absent these forms of fundamental redistribution, we should expect that
the pattern of stratification of measures of quality of life will not
substantially change. Thus it is
necessary to locate the process of economic development within the broader
context of class politics and political power in the developing country.
If
we are genuinely committed to realizing human development goals and full
realization of human capabilities for the poorest one billion of the earth’s
population, then substantially greater attention will be needed on the
distributive institutions that exist within developing societies. And this means that the capabilities
approach needs to reaffirm its pragmatic and intellectual relationship to those
voices within development theory who emphasize the centrality of inequalities
and the institutions that reproduce them.
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Delman, C. S. Ostergaard and F. Christiansen. Aarhus, Denmark: Aarus University
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Barker, Randolph,
Robert W. Herdt, and Beth Rose. 1985. The Rice Economy of Asia. Washington, D.C.:
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Brenner, Robert.
1976. Agrarian Class Structure and Economic Development in Pre-Industrial
Europe. Past and Present 70:30-75.
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M. Syrquin. 1975. Patterns of Development, 1950-1970. Oxford: Oxford
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Crocker, David A.
1992. Functioning and Capability: The Foundations of Sen's and Nussbaum's
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and Hans Binswanger. 1999. The Evolution of the World Bank’s Land Policy:
Principles, Experience, and Future Challenges. The World Bank Research
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Drèze, Jean, and
Amartya Kumar Sen. 1989. Hunger and public action. Oxford: Clarendon
Press.
El-Ghonemy, M. Riad.
1990. The Political Economy of Rural Poverty: The Case for Land Reform. London: Routledge.
Hart, Gillian
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1983. Land to the Tiller: The Political Economy of Agrarian Reform in South
Asia.
New Haven: Yale University Press.
Herring, Ronald J.
1991. From Structural Conflict to Agrarian Stalemate: Agrarian Reforms in South
India. Journal of Asian and African Studies 26 (3-4):169-188.
Ireson, W. Randall.
1987. Landholding, Agricultural Modernization, and Income Concentration: A
Mexican Example. Economic Development and Cultural Change 35 (2):351-66.
Kerkvliet, Benedict
J. 1990. Everyday politics in the Philippines : class and status relations
in a Central Luzon village. Berkeley: University of California Press.
Kohli, Atul. 1987. The
state and poverty in India: The politics of reform. Cambridge:
Cambridge University Press.
Little, Daniel.
2003. The paradox of wealth and poverty : mapping the ethical dilemmas of
global development. Boulder, Colo.: Westview Press.
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Friedrich Engels. 1976. The German ideology. 3d rev. ed.
Moscow: Progress Publishers.
Morris, Morris
David. 1979. Measuring the condition of the world's poor : the physical
quality of life index, Pergamon policy studies. New York:
Published for the Overseas Development Council [by] Pergamon Press.
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1984. Landholding, Agricultural Modernization and Local Institutions in India. Economic
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———,
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[1] Representative statements of the capabilities approach include (Crocker 1992; Nussbaum 2000; Sen 1999; Sen and Hawthorn 1987).
[2] This perspective was welcome to analysts at the World Bank in the 1970s. World Development Report 1978 offers this assessment: "Historical experience suggests that the poorer members of the population are unlikely to share equitably in economic growth, mainly because they have less access to the productive assets needed to generate incomes—land, credit, education, and jobs in the modern sector" ((World Bank 1978) : 8). But the openness to significant pro-poor institutional reform at the World Bank abated in subsequent decades; see a recent review of 25 years of World Bank thinking on land reform; (Deininger and Binswanger 1999).
[3] Another key
determinant is the quantity and quality of public goods such as healthcare,
education, and clean water the state is able to provide to poor
households. This premise is
important but will not be further developed here. It is Sen’s primary focus in his discussions of public
policy; (Drèze and Sen 1989).
[4] See ((Little 2003) : chapter two) for more extensive
exposition of these ideas.
[5]
This framework is very elegantly described by Robert Brenner: "Class
structure . . . has two analytically distinct, but historically unified
aspects. First, the relations of
the direct producers to one another, to their tools and to the land in the
immediate process of production—what has been called the 'labour process'
or the 'social forces of production'.
Secondly, the inherently conflictive relations of property—always
guaranteed directly or indirectly, in the last analysis, by force—and by
which an unpaid‑for part of the product is extracted from the direct
producers by a class of non‑producers—which might be called the
'property relationship' or the 'surplus extraction relationship'. It is around the property or surplus
extraction relationship that one defines the fundamental classes in a
society—the class(es) of direct producers on the one hand and the surplus‑extracting,
or ruling, class(es) on the other" ((Brenner 1976) : 31).
[6] Redistributivist
perspectives emphasizing the importance of agrarian reform can be found in the
research of V. K. Ramachandran and his colleagues (Ramachandran 1991;
Ramachandran and Swaminathan 2002, 2005). See also
Gillian Hart’s writings on agrarian reform in Southeast Asia (Hart, Turton, and White
1989).
[7]
Land reform is one type of agrarian reform that can significantly improve the
distribution of income and well-being in rural societies. The importance of credit reform in
poverty alleviation strategies in rural India is emphasized in (Ramachandran and
Swaminathan 2005).
[8]
Herdt's study (Herdt 1987) is based on an IRRI research
project consisting of a 15 year study of two wet rice areas in the
Philippines. The project surveys
patterns of land tenure, technology, yields, and income distribution and
changes in each of these over the period of the study (during which time the
green revolution technologies became available).
[9]
"It is critical to recognize that modern technologies are not homogeneous
in their effects on agrarian structure.
Advances in mechanical technology are usually accompanied by scale
economies, resulting in economy in management effort as well as in the use of
labor in production. . .
. Biological technology, in
contrast, is generally embodied in divisible inputs such as improved seed and
fertilizer and requires intensive on‑the‑spot supervisory
management decisions. Its effect
is to raise the relative efficiency of small family farms and promote a
unimodal farm‑size distribution" (Hayami and Ruttan 1985:332).
[10]
"Although the Green Revolution is usually considered to be a package of
changes, its different components interact with landholding patterns to produce
different effects, some of them contradictory, on income inequality. The political context of farm‑level
decision making and resource allocation is a third area crucial to
understanding the dynamics of technical change" (Ireson 1987:363).
[11]
Riad El-Ghonemy provides developed arguments concerning the relationship
between land reform and poverty alleviation; (El-Ghonemy 1990). Benedict Kerkvliet provides an ethnographic-scale study of
these issues in rural Philippines; (Kerkvliet 1990).
[12]
Somewhat different analysis is needed for a large and complex nation such as
India. In this case there is a
much broader range of political powers and interests at work, with a
substantial urban sector whose interests may sometimes join with those of the
rural poor against the rural elite.
See Atul Kohli’s careful analysis (Kohli 1987).