Indebtedness and the Theory of Agrarian Reform
THE IMPORTANCE of analysing the rural credit system in any study of the agrarian structure in the third world is now quite well established. Whether we view the agrarian system as merely an interlocking of the land, credit and labour markets (e.g., Bardhan, 1980) or as one in which indebtedness ensures a form of semifeudal bondage (e.g., Bhaduri, 1973), credit relations, if they can be called that, are now seen as an intrinsic part of agrarian relations. It follows that our view of agrarian reforms must be altered by the nature of existing credit relations. This has been recognised rather more in practice—Vietnam being a notable example, (Luu, 1982)— than in theory. In this paper we seek to identify some of the implications of credit being a source of control over the agrarian system for agrarian reform theory.
The first step in this exercise is to identify an acceptable framework within which the agrarian system and its reform can be analysed. Broadly speaking there are three views of the agrarian system. In the neo-classical view the agrarian system is seen primarily as a set of interlocked markets (Bardhan, 1984). Even if we do not go into a detailed critique of neo-classical theory this view does not suit our purpose for two reasons. First, the neo-classical system is based on the assumption that all aspects of the functioning of the economy are determined entirely by economic factors. Agrarian reform, however, is often more relevant in systems where extra economic coercion exists. Indeed, sometimes agrarian reform is the process through which a system is changed from being one in which extra economic factors play a major role to one in which economic factors are dominant. Since the neo-classical model assumes the second type of system to exist it cannot be used to analyse change from one type of system to another. Secondly, the neo-classical system neglects the political aspects of social change. This in our context is a major weakness as the existing literature on agrarian reform shows us how important politics can
*The Economic Times, Bangalore.