VTSA PATNAIK* Neo-Populism and Marxism: The Chayanovian View of the Agrarian Question and its Fundamental Fallacy PART Two LET us now go back to Chayanov's comparison of the family labour farm with the capitalist farm in a situation of price fall. Chayanov might argue that even though the peasant family does have to take drastic cuts in consumption, at least it starves itself through the crisis somehow and survives, while the capitalist farm simply ceases to operate because -it is making losses. It is in this argument that the fundamental/fallacy of the entire neo-Populist theory inheres. To put the matter briefly, the crucial assumption on which the argument is based is that the technical conditions of production are identical for the "family farms" and the "capitalist farms"; they operate with identical production functions. Without this assumption the whole argument collapses. But this assumption cannot be made; there is a logical contradiction involved in postulating the coexistence of family farms and capitalist farms under conditions of identical production functions. If production functions are identical, then either the ''family farm" is not a family farm, or the "capitalist farm" is not a capitalist farm. Conversely, if the family farm and capitalist farm do exist side by side as organizationally distinct forms, then production functions cannot be identical. Let us explore the nature of the contradiction. If the "family farm" is defined as one which produces to satisfy its consumption needs, then it follows that it does not produce a surplus above consumption needs; and if the capitalist farm also produces the same output at the same cost, replacing only the category of "family consumption" by "wage-bill for hired labour", then where does the profit, which is the rationale of capitalist production, come fr om? (Why should the wage-bill for hired labour be substantially less than the consumption * Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi.