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The power of land

August 13, 2012

SOME economists have shown empirically, that land reforms in rural areas, may not lead to economic growth, and hence have argued that such reforms are not worth pursuing.

Their empirical evidence may indeed show why this would happen, for a number of reasons, although there is also a large body of evidence which contradicts such findings and shows the exact opposite. Such is the state of economics.

However, if economists simply see land reforms as a growth-enhancing intervention, they miss much of the social and political consequences of holding on to large tracts of land in societies where there are far more small and landless farmers.

Inequality, especially on account of landholdings — as opposed to say, opportunity — does give rise to social inequities which have far greater repercussions than just growth.

Arguments against land reforms in Pakistan and elsewhere have become legitimised, mainly by economists, but also by other categories of social scientists (and of course the land owners themselves), on the basis of different types of empirical evidence.

While land reforms, which mainly imply the redistribution of land from large landlords to small or landless farmers or distributing state-owned land to landless farmers, may not increase overall growth, in some cases, large, corporatised, highly capitalised, landholdings have been shown to do so.

According to this argument, rather than break farms down in size, it is better to consolidate and mechanise.

Other reasons why land reforms are not supposed to be on the political agenda is that due to inheritance laws in Pakistan, land has already, over the generations, been fractured and made smaller in all categories of landholding. The average farm size in Pakistan has also fallen markedly over the decades as one would expect, and will continue to do so over the next few decades.

Moreover, arguments are also made that relations of production are no longer feudal and hence there is no need to undertake land reforms. It is also argued that the process of urbanisation is doing away with large landholdings, and that it is just a ‘matter of time’ before most of Pakistan will become urban, relegating the issue of rural land.

Sadly, for all these reasons, some political parties in Pakistan have bought into this empiricist logic, and do not consider even raising slogans about land reforms which, while unlikely to be ever fulfilled, demonstrate an understanding of issues and explanations of social inequity and injustice. As a consequence, land reform has become a little passé on Pakistan’s political map.

Just as an agricultural income tax is a must on income earned from agriculture, similarly, reforms in the agricultural sector, which favour the poor, the landless and the small farmer, are also essential. While it has become unfashionable in the Pakistani context to talk about land reforms, the arguments are still valid.

Whether it is the distribution of state land to landless peasants or the more radical demand for the imposition of lower ceilings on landholdings and redistributing land above that limit to landless farmers, such demands need to be part of the public discourse to warn against the sort of violence and injustice which take place on account of extremely inequitable landholdings in the presence of a state machinery which is in the control of the landlord.

Unequal land ownership in the context of Pakistan also leads to the forceful and disproportionate acquisition of other public goods, such as water and credit. The highly exploitative treatment of peasants, particularly women, in rural areas, is legion and is one of the consequences of the absence of justice and the presence of power derived from owning land.

Many of the problems which exist in rural Pakistan emanate from the pattern of landholding. Land ownership is not simply a matter of economic power; control and ownership of land allows a disproportionate control of other assets and capital, whether economic, social or political.

One could, of course, wait another half century when the process of inheritance would have fractured the size of holdings even further and urbanisation would have made much rural land redundant, giving rise to a Malik Riaz-type phenomenon demonstrating the power of urban land. By then, possibly, there might even be a tax on agricultural incomes, and perhaps a little bit of education and some understanding about justice and equality about women. But left to a natural process, some of this might never happen.

Intervening in what is the source of so many of Pakistan’s problems in rural areas will not only speed up the eventual outcomes, but also provide some sense of justice to those who will benefit three generations sooner. Moreover, there are also empirical studies which show that land reforms actually increase a country’s economic growth, especially if agrarian reforms accompany land reforms. Studies have shown that land reforms had a significant and positive impact on income growth and accumulation of human and physical capital. Land reforms have also been seen to have a positive impact on equity.

The power of land extends far beyond the horizons of the landed estate, and the externalities of large-size holdings are many.

Despite the evolving changes which have taken place in Pakistan’s agrarian economy and in land ownership, the demand for land and agrarian reforms is just as pertinent today as it was three or four decades ago. They ought to be always high on the agenda of every political party as an option worth implementing, particularly by those who promise a break from the past.

The writer is a political economist.