Michel Cames Postgraduate Diploma in Development Studies Rural Development University of Leeds Essay - Semester 1 1995/96

Roads to Rural Development: The Viability of the Peasant Economy In what follows, I shall aim to discuss the debates around the concept of populism with specific reference to rural development. The objective of this essay is to elucidate the main characteristics of this school of thought in order to be able to make an evaluation on its viability in the developing world. I attempt to make clear that ‘populism’ which for many social scientists implies an aftertaste of a desperate craving for recognition paired with nationalism has ever had an undeniable ethical background and has evolved since into a concept which is based on economical and welfare considerations. In order to make such a point, I will first look at the historical evolution from crude and romantic populism into an elaborated and well-founded form of ‘neo-populism’ based on the theories of Chayanov. I will then proceed to shed light on the present forms of agrarian change in developing countries, before presenting contemporary proponents of this ‘neo-populist’ school of thought and the main criticisms they induce: the conflicts between employment and growth and between growth and equity. Finally I will give a general overview of characteristics commonly linked to the term of ‘populism’ due to a lack of a single definition agreed upon and will conclude by presenting my personal point of view. 1

“They all want competition without the lethal effects of competition” (Kitching, 1989, quoting Marx). This citation by Marx, while referring to Pierre Joseph Proudhon is an anticipation of the enduring debate between those who assert that the transformation of the agrarian society necessitates the development of large-scale units of production and those who think that this transformation can be based on small-scale peasant family farms. The debate which has precursors reaching back into preindustrial times originates in nineteenth century Russia and has ever had repercussions since, especially in the developing world. According to Kitching, there was a school of thought in Russia wishing that some other form than capitalistic development could be established avoiding the horrors and suffering which it had brought to the West already, avoiding the social and human costs of proletarianization and the skewed income distribution capitalism implied. They were engaged in furious intellectual battles with Marx who argued that Russia had to pass through a process of capitalistic industrialization if socialism was to be attained. As Mikhailovsky retorted to Marx: “All this ‘maiming of women and children’ we still have before us, and, from the point of view of Marx's historical theory, we should not protest against them because it would mean acting to our own detriment; on the contrary, we should welcome them as the steep but necessary steps to the temple of happiness” (Kitching, 1989, p 43f, I quoting Mikhailovsky, 1877). As Kitching continues, this critique of capitalist industrialization, termed as ‘populism’ and referred to by Marx as ‘petty-bourgeois’ was mainly based on social and ethical grounds. It recurs in writings of recent developing countries’ leaders like Nyerere and evokes elite guilt as the basis of an ethic of service to the poor, but fails to suggest coherent strategies to face the dilemma. “For leaders and policy-makers with the need or desire to change society made up overwhelmingly of peasants and other small-scale producers, there will always be a certain attraction in a tradition of thought which 2

suggests both that change and development is possible and that all that is conceived as best in existing institutions and practices may be maintained, and that this double objective can be fulfilled without creating massive extremes of wealth and poverty” (Kitching, 1989, p 63). This anxiety about industrialization has even been worrying western capitalists who owed their future to industrialization. ‘The foul drain’ as De Tocqueville christened the source of Britain's wealth, Manchester, has thus led industrial visionaries like Robert Owen to build company towns in the form of decentralized ‘garden cities’ in which people would be rural enough to keep in touch with the land and to escape the ‘unwholesomeness of the city life’. The main drive to conceive these urban utopias was however merely to provide the illusion of tradition and security in a world of flux … (The Economist, December 23rd, 1995, p 91-93). In more modern times however, philosophies have to be couched in straight economic terms in order to survive. Or, as Kitching puts it: “… ethical or moral issues may not be openly displayed - but instead semihidden in apparent economic technicalities, in discussions of production functions and of income distribution” (Kitching, 1989, p 61). It was only after the First World War that industrialization was not merely criticized on a social and ethical basis, but, according to Kitching, the economic rationale for large-scale enterprise, especially in agriculture was called into question. Its major theorist, Chayanov argued that there is an alternative pattern of economic development in agriculture to large-scale units of production in eliminating mass poverty which can be less costly in social and human terms. His main point was that peasants are not capitalists because they operate on the basis of a completely different economic rationale. Whereas on a capitalistic farm labour is a ‘variable’ cost, this is not the case for the peasants, labour is for them a fixed cost as agriculture is first and foremost a source of subsistence. The central concern of the peasant is not the extra output which he obtains from 3

working another hour, but the total output which gives him and his family their minimum subsistence, even if the marginal product of their extra labour is negative. This is also true of land. Even if the rent of land is in excess of its marginal product, the peasant's only consideration is to have enough land to provide the subsistence level for his family (Kitching, 1989). Djurfeldt notes that even though Chayanov did never criticize Lenin directly, his demographic differentiation concept of the ‘labour-consumer balance’ can be looked upon as a polemic against Lenin's unilinear differentiation theory. Chayanov claims that the differentiation could be explained by and large to the expansion and contraction with the development of the peasant's family cycle (Djurfeldt in Harriss, 1981). The important point, as Kitching claims, is that Chayanov's theory provides the account why the peasant economy is able to compete with large large-scale capitalist enterprises. It is the peasant’s willingness to work long hours in order to ensure his basic subsistence (Kitching, 1989). Only this crude selfexploitation saves him from being alienated from his means of production and being integrated into the capitalist mode of production. Djurfeldt points at a turning point around 1875 when international capital began to break down capitalist agriculture by a shift in the terms of trade. By then the import of grain from non-European countries had increased dramatically and stripped this economic form of its condition of reproduction. The starting point in this evolution was the repeal of the English Corn Laws in 1846, which was the effect of the strength of the industrial capital in the class struggle with the landed interests. The capitalist penetration in agriculture, which nevertheless exists, begins however, according to Chayanov, not on the farm as such, but by splitting off from the peasant farm individual sectors, in general, those connected with mechanical processes. The reason for this is that capitalist exploitation is more effective in the vertical than in the horizontal concentration (Djurfeldt in Harriss, 1981).

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This made Chayanov advocate peasants to themselves in co-operatives to start a process of controlled vertical concentration of the peasantry. But, as Kerblay states, when Soviet agricultural policy drew to an extensive collectivisation he was increasingly attacked as a petit bourgeois idealiser of peasant economy and a pro-kulak ideologist. In 1930 Chayanov was arrested and he died in 1939. Chayanov’s main contribution was firstly to provide a theory of peasant behaviour at the level of the individual family farm, and secondly to show that at the national level peasant economy ought to be treated as an economic system in its own right, and not, as the Marxists claimed, as a form of incipient capitalism (Kerblay in Shanin, 1988). The controversy of ‘differentiation’ or a specific peasant economy has not been settled up to date. However, two different patterns of agrarian change arose: as Lehmann points out on the case of Brazil, both the dominance of capitalized family farms and the continued existence of the peasantry are possible. The former case is more dominant in the South of Brazil. Once capitalist farmers can produce more cheaply than the peasant enterprise in the production of wheat or soybean for instance, the capitalists buy consequently the peasants’ land. Rapid expansion of urban employment in industrial centres and the availability of much cheaper land in the frontier regions of Amazonia offer the peasantry viable alternatives. Only in a more unfavourable employment situation the peasant family will seek to rent or to buy land if at all possible and then at totally ‘unprofitable’ rents or prices, as Chayanov had outlined (Lehmann, 1982). In the latter case however, following Wood, capitalist and non-capitalist social relations co-exist, not in isolation of one another, but rather as interrelated aspects of the settlement frontier area. On the one hand capitalism undermines non-capitalist formations, on the other it serves to preserve or extend the non-capitalist economy. This can be clearly discerned with the land clearing practice called ‘troca pela forma’ (exchange 5

for the formation of pasture) where labour power enters the circuit of capitalist production at a level of remuneration that covers only a small part of the total cost of maintenance and the reproduction of the worker. The labour power needs only be remunerated at a level that covers the immediate sustenance of the worker while on the job. The remainder of the maintenance and reproduction cost is shifted back to the subsistence economy. Thus staple goods and raw materials can enter the market at a cost lower than that which would obtain if they were produced in a system based on capitalist social relations. As a consequence, the presence of a peasant economy can retard the expansion of capitalism (Wood in Moran, 1983). According to Djurfeldt, one goal of land reforms in many Latin American countries is exactly this desire to decrease costs in the capitalist sector. He argues that when labourers have their own land, they reproduce their labour-power on their land and thus the capitalists need not pay them the full value of their labour power (Djurfeldt in Harriss, 1982). However, land reforms are not necessarily enhancing the productivity of agriculture. As Lehmann points out for Southern Brazil, the capitalized family farms are more beneficial for capitalist accumulation than the proliferating peasantry and has higher land and probably also higher labour productivity (Lehmann, 1982). Dore suggests that in situations such as Bolivia where a land reform left the villages without small landlords and without a structure of local leadership, there seems to have been not only no economic development but in fact a decline in production and administrative anarchy (Dore in Shanin, 1988, p 420). Whereas Chayanov’s work only deals with agriculture, his successors have extended his critique also to large-scale industrial production. According to Kitching, the critique bases itself primarily upon the ‘employment problem’ in Third World countries, and the alleged inability of large-scale capitalintensive industry to solve that problem. This is the stance of the ILO in the 1970s and its strategy could be read like this: 6

“The generation of more and more productive employment must be the primary objective in development policy, to which all others, including growth, must be subordinated. It recognizes that it would be self-defeating in the long run to concentrate purely on employment generation at the expense of growth since the resources used to raise incomes would dry up. So it does give great attention to policies which it believes will aid both growth and employment generation” (Kitching, 1989, p 72). The ILO attempted to show the connections between the structure of consumption and that of production. This argumentation is far from new. Already more than 150 years ago, Sismondi revealed this relationship while arguing for a more equitable distribution between rich and poor: “… the consumption of one rich farmer’s family, united to that of fifty families of miserable hinds, is not so valuable for the nation, as that of fifty families of peasants, no one of which was rich, but none deprived of an honest competence” (Kitching, 1989, p 24, quoting Sismondi, 1815). If in a country the income distribution is so skewed that the majority of the people cannot afford to buy most basic goods, the demand for those goods is low. Due to missing economies of scale, they can only be domestically produced under state protection. This has been the case especially in Latin America ensuing from import substitution policies. The more sophisticated consumer goods that the rich minority are able to buy are generally produced in more capital-intensive industries whereas basic goods consumer goods are generally labour-intensive in the production (Kitching, 1989). In addition, sophisticated consumer goods are often imported from advanced countries and the local rich such as the land owning elite often favour imported to local products. The adoption of more labour-enhancing technology, so the ILO argument, will not only alleviate a skewed income distribution, but will in turn lead to an increased demand for products made by this technology, thus further reinforcing this trend. The consequences will be an enhanced demand - and 7

supply - of better quality and processed food, simple clothing, better hoes, etc. Basically, the ILO recommends intermediate technology for agriculture, improving the access of farmers to credit and the implementation of land reform programmes, linked with a marked pragmatism about the means to be used (Kitching, 1989). This stance of ‘Redistribution with Growth’ can also be found in Michael Lipton. I will not go into commenting on his strongly contested statements on the urban bias and just want to raise the issue which Kitching considers Lipton's main position. Lipton claims that he would not be reluctant to industrialization, but considers that a developed mass agriculture is normally needed before widespread successful development in other sectors can be envisaged. He argues that “in early development, with labour plentiful and the ability to save scarce, small farming is especially promising, because it is the part of the economy in which a given amount of scarce investible resources will be supported by the most human effort. Thus it is emphasis upon small farming that can most rapidly boost income per head to the levels at which the major sacrifices of consumption, required for heavy industrialization, can be undertaken without untolerable hardship and repression” (Kitching, 1989, p 91, quoting Lipton, 1977). This advocacy of linking the level of capital intensity of the technology to the stage of development, thus gradually enhancing this level with increasing division of labour and ensuing industrialization is also recommended by Leonard’s ‘stages approach’ according to which the structure of developing countries’ exports will evolve with the gradual accumulation of physical and human capital, beginning with goods that require low amounts of capital and high amounts of unskilled labour. According to the degree of industrialization, they can gradually move up the ladder towards more capital-intensive types of manufacture (Leonard, 1988, p 39).

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However, according to Kitching, Byres simply disbelieves the sincerity of Lipton’s protestations in favour of some long-run industrialization. He refers to Lipton as a populist, this ideology implying a ‘repeated implication that inequality is the greatest of all social evils’ and ‘an almost mystical faith in the mass of the people’ (Kitching, 1989, p 92, quoting Byres). According to Harriss, Byres rejects populism as sham and as ‘pipe-dreams’ with the argument that while it may be true that resources invested in agriculture now will yield a better rate of return than investments outside agriculture, such investments will frequently have less effect on the longrun prospects for growth than an economy as a whole than those in capital goods industries (Harriss, 1982). Byres puts forward the ‘Dobb-Sen’ thesis which claims that static efficiency is often less important than dynamic efficiency, i.e. that the choice between more or less capital-intensive forms of investment depends not on the existing ratio of available labour to capital, but on the importance to be attached to raising consumption in the immediate future compared with the potential increase of consumption in the more distant future (cited in Thirlwall, 1994, p 239). Whereas Kitching does not expressly call in question the applicability of this thesis, Harriss doubts whether ‘Byres and Dobb take sufficiently into account the opportunity cost of tying resources up now’ (Harriss, 1982). As can be read in Thirlwall (1994), the Dobb-Sen thesis is to be based on several assumptions, which are the following: (i) that the wage rate is given and invariant with respect to the technique of production. Even if an overall statement cannot be made there is empirical evidence that this assumption is violated. (ii) That all profits are saved and wages all consumed. No one dispute that the propensity to save out of profits is higher than the propensity to save out of wages, but this extreme assumption is somewhat unrealistic. (iii) That unemployed do not consume. Even if unemployed are not on the dole and remain in the subsistence sector, they depress average productivity in most cases. (iv) That consumption is not productive. This assumption does not take into account the long-term productivity enhancing effects of contenting ‘basic needs’ like food intake, health or 9

education. (v) That governments lack the ability to tax (Thirlwall, 1994). Admittedly, governments in developing countries have great difficulties to impose direct taxes, but again, this extreme position cannot be maintained. It seems that the thesis, if watered down by considering all the diminishing effects the assumptions imply, does not give a strong argument in either direction. Thirlwall further argues that there is little evidence to support the view that labour-intensive techniques require more capital per output than capital-intensive techniques. On the contrary, there is growing evidence that labour can be substituted for capital. However, the co-operating factors associated with the increased labour-intensity are not always available with a large fraction of investment goods originating from developed countries and a rudimentary or non-existent capital goods industry in developing countries (Thirlwall, 1994). The neo-populist stance, not rejecting the need for industrialization but at a pace more appropriate to the level of development has however generally been neglected and in fact, successful evidence has been hard to locate. Leaving aside the more crude populist and nationalist policies in quite a number of countries in Latin America and Africa, the Soviet Union's New Economic Policy was suppressed by the end of the twenties, the neo-populist activities in Eastern and Southern Europe were abandoned by the outbreak of World War II, and so was the more extended theory of ‘Redistribution with growth’ by the looming rise of nee-liberalism, say Reaganism, of the 1980s and the subsequent debt crisis. In Latin America, the ‘structuralist’ movement of ‘desarrolismo’ had already earlier lost much ground with the decline of the US hegemony and their ‘New Deal’ with Latin America known as the ‘Alliance for Progress’, let alone the establishment of militaryauthoritarian regimes and their pursuit of radical monetarist policies. Kitching may have been short of models in taking the examples of Tanzania, a basic populist model neglecting the need for a germing industrial sector and ‘China, which traded off the greater equality among peasants and between peasants and others with a total loss of individual

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peasant autonomy’ (cited in Kitching, 1989). Therefore the Chinese model can hardly be termed ‘populist’ or ‘neo-populist’. As Kitching concludes: “However, a desire to separate these two phenomena is precisely the hallmark of populist and neo-populist visions of development. Populist visions imply that peasant living standards can be raised and equality increased while at the same time maintaining individual peasant households as landholding and labour-disposing units” (Kitching, 1989, p 136). This statement, reminiscent of Marx’ comment on Proudhon, however does not supply any concluding cogency except that the Chinese model is failing. We are still left with the query if a precedent case can be located in space or time. One could be tempted to state like Keynes, who wrote in 1934 on classical economics, not having yet gained any experience from his at the time radical contribution: “The strength of the self-adjusting school depends on its having behind it almost the whole body of economic thinking and doctrine of the past 100 years. This is a formidable power. It is the product of acute minds and has persuaded and convinced the great majority of the intelligent and disinterested persons who have studied it. It has vast prestige and a more far reaching influence than is obvious. For it lies behind the education and habitual modes of thought not only of economists, but of banks and businessmen and civil servants and politicians of all parties” (Keynes, John Maynard in Beardshaw, 1994). In addition, while referring to Kitching’s statement above, one might question what the hallmarks of a populist vision imply. Kitching uses the term in a wide sense as he points out in his introduction, including socialist, anarchist and contemporary thinking about development (Kitching, 1989, p 19).

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Following Wiles, populism is moralistic, ill-disciplined, anti-intellectual, strongly opposed to the Establishment, basically conciliatory and tries to avoid class war in the Marxist sense; its ‘Idealtypus’ is a small cooperative, further it abhors science and technocracy and therefore fundamentally nostalgic (Wiles in Ionescu, 1969). According to Stewart, populist movements appear in societies and social groups which are and have become aware of being peripheral to centres of power. Populism seeks to organize social reconstruction around traditional institutions of the ‘people’ (Stewart in Ionescu, 1969). Minogue argues that populism is a type of movement found among those aware of belonging to the poor periphery of an industrial system; in this sense, it may be taken as a reaction to industrialism. But it is a reaction by those whose profoundest impulse may often be to industrialize: it is only if you cannot join them (and until you can) that you attack them. And it is this ambivalence which accounts for the intellectual emptiness of populist movements (Minogue in Ionescu, 1969, p 209). Or, as Axelle Kabou from Senegal argues on an African variation of populism: Africa would remain culturally cut off from the rest of the world, it would have ossified and fixated on the past, ‘Negritude’ and t he White Man. Africans would be, convinced that their machineless culture would be morally superior to that of the West. They would reject the culture of the Whites but yet could not turn down the achievements of this culture - car, tap, telephone, etc. She proceeds to argue that ‘Third Worldism’ which belonged to the avantgarde of a new thinking in Europe of the 1970s would have contributed with ideals of an intact world and ‘good’ people to the fact that Africans persisted in unrealistic perceptions of Africa and its relations to the rest of the world (Kabou, 1991). This ‘ideological tradition or constantly reproduced ideological syndrome’ (Kitching, 1989) comes close to Kitching's postscript reflection on the issue: 12

“… the present day ‘syndrome’ as I analyse it - a combination of commitments to anti-industrialism, rural development, appropriate technology and a rather crude ‘dependency’ version of anti-imperialism - is mainly an ideology of western intellectuals (...) it is mainly found in western higher education (...) This syndrome, which I term ‘populism’ (sometimes/often with the addition of a feminist strand) is particularly omni-present in such institutions as UNESCO, ILO, WHO and the less technicist parts of the FAO” (Kitching, 1989, p 193). He apparently also refers to an ideology of the present day western society which could be termed as the ‘68-generation’ and whose remnants can be found in a contemporary ‘green’ perspective which abhors a mainly technological culture and whose social base, often marginalized people, seek to defend an autonomous way of life while creating a more ‘communal’ society. I would not deny that indications of ideologization are in existence the way Kitchinq describes them, but to some extent he seems to overvalue them particularly in regard to a ‘basic needs’ approach and he also apparently understates the ‘professional competence’ of this school of thought. This might stem from a sometimes ‘backward smell’ of a more subjective argumentation ensuing from statements like ‘We jolly well have to have the courage to dream’ (Schumacher in Kitching, 1989, p 97), but this should not be misinterpreted as a general surrender to pragmatism, facts and technocracy. Populism in its crude and craving forms certainly is of little help to solve any present problems of the developing world even though it should be recognized that it is in many cases based on ethical grounds. However, to take together this classical populist ideoloqy with an elaborated theoretical concept maybe unhappily termed ‘neo-populism’ (Kitching, 1989) is of even less help to a contemporary fruitful debate on the issue. Neo-populism, or let me term it ‘Redistribution with but before Growth’ could be a tool in tackling the developing countries' problems. But it seems that another ‘Keynesian Revolution’ is needed to overthrow 13

concepts like the ‘trickling down effect of growth’ with its seemingly cogent principle that ‘in order to get a bigger slice of cake you must bake a bigger one’. I will just touch upon the quite obvious finding that it is generally much harder for humans ‘to share a cake more fairly than creating a bigger one’ and point out that with growing populations and increased strain on resources we might just well have to at some stage in the future. I can only hope that this change which might imply a reduced life-style for more welloff contemporaries can be guided appropriately. Sceptics like Sauvy however claim that experience would show that in order for men to accept much tougher living conditions, the change had better take place brutally and ‘life appears completely different overnight’ ... (Sauvy, 1975, p 247). Yet not only the contemporary calling in question of a steady extrapolation of ‘unlimited growth’ is clearly undermining the current school of thought, other factors like a growing rootlessness and a worsening distribution of all assets in developing countries definitely point into a more moderate and sustainable direction with a stress on intermediate technology. In conclusion, I should add that any extreme positions regarding such complex and vast matters as the improvement of rural living conditions in large parts of the world can only harm. Also had the advanced countries better to plan ahead more on the long term any development strategy and not alter course radically after any major political reshuffle. The breakdown of the Soviet Block could in this regard only do good in relaxing the positions between those who favour a radical ‘crash-industrializing’ strategy and those of a moderate approach. In any way, it might just be the general controversy on strategies that may at times guide southern political convictions towards nationalism and - populism.

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Bibliographv Beardshaw, John (1992), Economics - A Student’s Guide, Reprinted 1994, London, Pitman Publishing Byres, T.J. (1979), ‘Of Neo-populist Pipe-dreams: Daedalus in the Third World and the myth of urban bias’, The Journal of Peasant Studies, 6 (2), p 210-244 Djurfeldt, Goran (1981), ‘Classical Discussions of capital and peasantry: a critique’ in Harriss, John (1982), Rural Development, London, Hutchinson & Co. Ltd. Dore, R. P. (1965), ‘Land Reform and Japan's economical development - a reactionary thesis’ in Shanin, Teodor (1971), Peasants and Peasant Societies, 1988, London, Penguin Group Harriss, John (1982), Rural Development, London, Hutchinson & Co. Ltd. Kabou, Axelle (1991), Et si l'Afrique refusait le développement ?, Paris, L‘Harmattan Kerblay, Basile, ‘Chayanov and the Theory of Peasant Economies’ in Shanin, Teodor (1971), Peasants and Peasant Societies, 1988, London, Penguin Group Kitching, Gavin (1982), Development and Underdevelopment in Historical Perspective 1989, London, Routledge Lehmann, David (1982), ‘After Chayanov and Lenin: New Paths of Agrarian Capitalism’, Journal of Development Economics 11 (2) Leonard,, H. Jeffrey (1988), Pollution and the Struggle for the World Product, Cambridge, University of Cambridge Lipton, M. (1977), Why Poor People Stay Poor - A Study of Urban Bias in World Development, London, Temple Smith Minogue, Kenneth, ‘Populism as a Political Movement’ in Ionescu, Ghita and Gellner, Ernest (1969), Populism Its Meanings and National Characteristics, London, Weidenfeld and Nicolson Sauvy, Alfred (1975), Zero Growth?, Oxford, Basil Blackwell Sismonde de Sismondi, J.C.L. (1815), Political Economy, Reprints of Economic Classics, New York, Kelley (1966)

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Stewart, Angus, ‘The Social Roots’ in Ionescu, Ghita and Gellner, Ernest (1969), Populism - Its Meanings and National Characteristics, London, Weidenfeld and Nicolson The Economist Newspaper Limited (1995), ‘The Strange Death of Corporationville', The Economist, December 23, 1995 - January 5, 1996, pp 91-93 Thirlwall, A.P. (1972), Growth and Development, Fifth Edition 1994, Houndmills, Basingstoke, Hampshire and London, The Macmillan Press Ltd. Wiles, Peter, ‘A Syndrome, Not a Doctrine: Some Elementary Theses on Populism’ in Ionescu, Ghita and Gellner, Ernest (1969), Populism Its Meanings and National Characteristics, London, Weidenfeld and Nicolson Wood, Charles H., ‘Peasant and Capitalist Production in the Brazilian Amazon: Conceptual Framework for the Study of Frontier Expansion’ in Moran, Emilio F. (1985), The Dilemma of Amazonian Development, Boulder, Colorado, Westview Press, Inc.

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