The Agrarian Question in Socialist Transitions
The Agrarian Question in Socialist Transitions
Edition 1st Edition
First Published 1985
eBook Published 28 October 2013
Pub. location London
Pages 260 pages
eBook ISBN 9780203043493
Saith, A. (1985). The Agrarian Question in Socialist Transitions. London: Routledge, https://doi.org/10.4324/9780203043493
First published in 1986. Routledge is an imprint of Taylor & Francis, an informa company.
TABLE OF CONTENTS
period. Of these 14, only three, namely, the Philippines, Thailand and Sri Lanka, appeared at a rough glance, to have met the two balances. In most of the others, the rate of growth of food production, even when keeping abreast of population growth, was not sufficient to accommodate increases in food demand that should be allowed for at normal rates out of additional incomes. Mozambique, Ethiopia and Nicaragua put in a dismal showing with staggering declines in the index of per capita food production, although the reference period straddles the systemic breaks in these countries. India conforms to the general pattern of doing rather better in terms of the overall growth and, therefore, of the labour absorption experience than in terms of the food balance relation. Three conditional conclusions seem to be justified: that it is only in exceptional cases that both balances have been maintained; that in the majority of cases, the experience with regard to overall growth has been better than that for the food sector, implying imbalanced growth; and that in the overwhelming number of cases, the food balance has been grossly violated. A few additional points need to be made. First, the twin balances as discussed only provide a floor level: the balances could also be maintained at much higher growth rates. Second, even when the balances are met, it is possible that other mechanisms operate which lead to the violations of the conditions which the balances were meant to protect. Thus, food production and employment might be sufficient, but if the foodgrains are politically prices (as in India), the result might be similar, from the point of view of the poor, to the situation where the food balance is violated. So also, the rate of employ-ment increase might be high enough, but the labour participation rate might rise for certain groups of the population while it drops for others, again implying, from the point of those left out, a violation of the employment balance. Third, even where one or both balances are violated, it is possible that there is a positive per capita growth rate of income in aggregate terms. Indeed, high per capita growth rates are more likely to be characterised by food imbalances than not. Fourth, these imbalances are partly ascribable to the nature of the growth process, but usually also in part to the nature of planning and policy priorities of the state. What happens when there are imbalances? While the pressures set up by imbalances are similar, the manner in which they are absorbed, and hence the social burden of the adjustment is quite different in socialist as against capitalist economies. When the EB is violated, the average number of dependents per employed person rises. If alongside this, per capita incomes are rising, then the question becomes one of an equitable sharing of the restricted employment opportunities . W ithin a capitalist framework, there is no way for this to happen; in a socialist economy, where the entitlement to work is universally guaranteed, there is an inbuilt redistributive mechanism which shares out the available benefits of employment - albeit with greater gains for the employed - between the employed and the unemployed population. When the FB is broken, then in a capitalist economy, the inequality of the distribution of income leads to an inflationary process which raises the price of food suf-ficiently to establish a new equilibrium, but at a point where the post facto income elasticity of demand for food is low enough to equilibriate effective
on land must exceed the average rate of profit sufficiently so as to cover the payment of rent. However, if rents are stable relative to rising commodity prices the barrier of rent becomes progressively less significant. Such was the situation in English agriculture of this period. The tenant capitalists were confident that they 'could take a reasonable share of the increased revenue resulting from their capital investments and not have them taken away by the landlords' rent increases' [Brenner, 1976: 64]. The capitalist tenant farmer who directly organised production had to share the surplus he appropriated with the landlord. But the gains in productivity were increasingly accruing to him. Thus the basic desiderata of what we have called a Type B agrarian system had been firmly established by the early years of the seventeenth century. The surplus appropriator both organised pro-duction and also appropriated the gains in productivity. Spurts of investment embodying strategic innovations in English agriculture followed quickly. By the middle of the seventeenth century the concept of mixed farming had taken hold at least on those soils most suited to it. The growing of forage crops (legumes and roots) in place of fallow made possible the raising of herds and flocks without any diminution in grain acreage. On the contrary the increased availability of organic manure substantially raised grain productivity. The effort was enhanced by the more careful selection of seeds and breeds. The first wave of biological-cum-organisational innovations was followed after a lag by a second wave of 'proto-industrial' innovations, that is, the use of better hand tools such as the scythe in place of the sickle and the introduction of chemical fertilisers. Specialist estimates by Jones, Kerridge and others suggest that productivity in English agriculture doubled in the first wave and doubled again in the second wave. Thus by the seventeenth century England had already parted with the rest of Europe on the basis of an agrarian revolution. It happened long before the industrial revolution and is marked most dramatically by the English response to the 'general subsistence crisis' which gripped the rest of Europe about the middle of the seventeenth century. Like the earlier crisis of the fourteenth century this too had Malthusian features on the continent: stagnant production, shortage of food, rising prices, peasant revolts and a demographic collapse. In England, however, productivity rose continuously, food prices were relatively stable and the population continued to grow. What is more, with rising food productivity the whole population could now be sustained by roughly 60 per cent of the workforce. On the one hand this made a large workforce available for absorption into industry. On the other it reduced the real cost of food and hence raised the balance of purchasing power available for manufactures after meeting food costs in both rural and urban households. The very fact of a different English response suggests that at its roots this escape from a 'Malthusian' crisis of the seventeenth century had something to do with the emergence of a different agrarian system in England. A new organisation of production conducive to productivity growth, our Type B system, had pre-empted the crisis in England while the persistence of retrograde agrarian systems of Type A had failed to overcome it on the continent. That this was indeed so is indicated by the contrasting experience of France. While serfdom had declined in France, as in England, in the wake of the earlier
limited to the desirable speed for attaining it and methods for doing so. Doubtless this was how it appeared at the outset to those involved. In retrospect, however, we can see that this distinction between ends and means is too simple. The reality is that ends and means rarely form a simple hierarchy or are easily separable. Means must be designed with the end in view; if the objective is not clearly perceived, then the design of policy will incorporate unforeseen distortions which may limit or even prevent attainment of the given goal. Means which turn out not to lead to the designated objective will have some other outcome instead. When ends and means prove incompatible it may suddenly transpire that the means are more precious than the original end, attainment of which is deferred or abandoned. Of course in many cases there will be several different routes to the same destination and, under these conditions, the choice of route will rest primarily on considerations of speed and economy of effort. But in other circumstances what is apparently a choice of means to an end will turn out to involve the choice of ends as well. Here different means incorporate different objectives and may be taken to stand for them; they become just as charged with value (or its opposite) as the goals to which they correspond. In theory Bolshevism was directed towards a classless society in which the state was to have 'withered away', coercion being replaced by voluntary association and co-operative creativity. Yet the circumstances of international and social conflict prompted the Soviet regime, from its first moments, to resolute measures of governmental and social coercion. These measures prompted deep divisions within Bolshevism. What was at issue was the appropriateness of such methods on grounds both of expediency (the regime's survival) and of principle (the regime's permanent objective of a socialist society). The question of expediency was settled in the sense that the regime survived. The question of principle remained unresolved. Was coercion a temporary expedient and the state no more than a necessary evil in the course of struggle for the realisation of human freedom? Or should Bolsheviks attach a positive value to their refinement and extension? And if coercive disciplines and authoritarian centralisation were to become the central themes of Bolshevik practice, what kind of society would result - a society capable of evolving towards the goals originally defined, or some more primitive and limited variant, or even a reversion to something completely antithetical to communist ideals? It was Bukharin who revealed most clearly the closeness of these issues to the debate over 'primary socialist accumulation'. He had broken with the left during the period of reassessment immediately following termination of the civil war, and became a leading exponent of the theory and practice of NEP as a possible road to socialism. He criticised both Preobrazhensky's concept of primary socialist accumulation and Stalin's subsequent attempt to secure a temporary 'tribute' from the peasantry - the former on the grounds that it would require widespread coercion to prevent peasant withdrawal from the market, losing the goodwill of the peasant masses without whom socialism could not be built in Russia; the latter because Stalin's policies for grain requisitioning initiated in the spring of 1928 amounted to 'military-feudal exploitation' of the village [e.g. Cohen, 1975:160- 73, 306- 7]. In neither case
Production Micro-Processes Under high collectivism, determination of the division of labour within the productive unit and specification and management of the actual work pro-cesses were handled by the collectives, apparently in a rather democratic fashion. To some extent the collectives still discharge these functions, although now less through a collective democratic process and more by arrangement and supervision of contracts. How the collectives now arrive at a division of labour (on the basis of which to let contracts) is also an area for further research, although the general thrust of policies on planning and management would suggest a drift towards technocratic rather than participatory criteria and methods. Once the division of labour is determined and workers allocated within it, there are still the problems of managing and supervising the work process. Under high collectivism, this was handled by a combination of monitoring by elected local officials, direct mass participatory political processes (at work point meetings, for example), and continuous monitoring by other peasants working on the same job nearby (whose interest in maintaining certain stan-dards of work derived at least partly from the fact that their incomes depended - via the work point - on the economic performance of the collective as a whole). Now, management and supervision of the labour process is the responsibility of the contracting group or household. The peasants have lost control of the capacity to set work standards and monitor work performance for the collective as a whole; hence they have less control over its economic performance. Yet, if they still receive remuneration in work points, their incomes continue to depend on that performance. In this sense, they have been separated from the capacity to control some of the important forces which determine their livelihood. This is a key contradiction of the specialised and production contracting responsibility systems, which may have had something to do with their relatively rapid demise and the corresponding rise of 'con-tracting in a big way' to a predominant position. One major and still unresolved analytical problem revolves around the question of why Chinese peasants, who made high collectivism work satisfactorily for two decades, could abandon it so rapidly and utterly rather than embracing moderate reforms more fully. This analysis suggests that perhaps they preferred depending mainly on them-selves to a situation in which they depended on their neighbours but could not control or monitor them. Production Macro-Processes The state still plays a major role in agricultural planning. It is unclear whether the relationship between the lowest level of collective organisation - the team - and its superior units, and among its superior units, in the planning process has changed. Within the team, the method of implementing plans passed down from above now takes the form of regulation by contract with peasant producers. The scope of production planning and regulation has also been reduced, and restrictions on engaging in many sorts of sidelines have been lifted, so that the collectives and peasants have greater latitude to determine the nature of their production activities.
Investment decisions and finance, which under high collectivism were undertaken by the state and the collectives, have now been extended to the peasants as well. Individuals, households and groups of peasants may now purchase equipment and use credit to finance productive activities. In agri-culture, under the specialised and production contracting types of responsi-bility system, the collectives provide investment funds and stipulate their use, while under 'contracting in a big way' it is the peasants' own responsibility to invest in the land and the annual crop. Division of the Social Product The state still has the first claim on the social product through taxation. And the collectives still have the next claim for their own accumulation which they exercise either by retaining a share of output before setting aside a distribution fund (under the specialised and production contracting responsibility systems which use work points) or by stipulating rent-like payments in 'contracting in a big way'. Then comes the share for distribution to the peasant producers. Under specialised and production contracting, this share is still subject to collective mediation, since it is allocated in the form of work points which are a claim on a share of the collective distributable income. The use of bonuses and penalties in these systems complicates matters. The most extreme depar-ture from this principle of collective determination occurs under 'contracting in a big way', where peasants' incomes are simply the residual of what they have produced after remitting their taxes and quotas. But in the more moderate forms of responsibility system, it is mistaken to think that collective distri-bution of income has been abolished. It has not. But there probably has been a marked attenuation of the extent to which this collective mediation of income is subject to collective determination and control. Under high collectivism, decisions about income distribution - how much collective income to distri-bute, what distributive criteria to use and how to apply them - were often subject to lively mass participation. They were based upon and in turn provided the basis for direct mass supervision of the work process. Under contractual collectivism, the contracting process is probably less subject to collective democratic participation, although for now this can only be an hypothesis for future research. Whatever the case may be, where peasants' incomes are, under the specialised and production contract responsibility systems, still subject to collective mediation (through the work point), peasants have lost much of their capacity to control or influence the collective actions through which their incomes are mediated. This may well be another aspect of their major contradiction discussed above: that peasants must depend on each other but have no means of controlling each other. Exchange State determination of almost all prices has now given way to a more variegated pricing structure. For certain basic staples (like grain and cotton), prices remain under close state regulation although they have been adjusted to improve incentives and take greater account of scarcities. For other products, prices have been allowed to seek levels more closely in accord with shadow
in mid-1982. Data are scarce in Ethiopia and, even when available, are not always reliable. Caution is necessary, therefore, in interpreting the data. In view of this, this study does not aim to be empirical in the strict sense of the term and uses carefully selected data mainly for illustrative purposes. The article is organised as follows. In the second section, the structural changes that have already occurred since 1974, the transitional forms which have emerged as a result of the changes and the growth experience of this period, are discussed. In the third section, the economic logic of transition to a collective agriculture is examined. In the fourth section, the government's programme of co-operativisation is outlined and its major weaknesses are highlighted. In the fifth section, the problem of integrating a growth strategy with a strategy of institutional transformation is addressed.
of the state farm sector and that of the co-operative sector unless it is supposed that they compete for state investment and imported goods, that is, unless it is supposed that they both involve the development of capital- and technology-intensive large-scale farming. Unfortunately, such a supposition seems to have been made in formulating state policy over the past years. This is even indicated by certain characteristics displayed by the existing producers' co-operatives. There is no evidence to suggest that the co-
inputs in the same regions. Further, some of these areas, especially Shoa, form the industrial backbone of Ethiopia. This is due, of course, to Addis Ababa and its strong gravitational pull on new industries. The danger with such extreme concentrations is that they tend to soak up a wide range of scarce resources. Indeed, from a short run point of view, allocational choices could further exacerbate the position. The availability of a reliable and relatively efficient infrastructure would no doubt invite planners to place important new industrial enterprises in this heartland, just as the need to extract a high marketed proportion from incremental agricultural output would further divert scarce chemical fertilisers to the already developed and high income agricultural regions. And inexorably small-scale industries also prosper in these developed areas. Thus, of the total number 1,485 private manufacturing establishments, 1,164 are located in Addis Ababa, Shoa and Eritrea; these account for 82 per cent of the 15200 persons employed. It is also clear that some agriculturally prosperous regions score well on certain nutritional indicators, while highly industrialised ones do better than most on other indicators which are dependent on urban services. Those which are neither fare poorly. These data also point out the abysmally low general levels of these indicators across the board (see Saith [1983: Tables 2, 3]). One major source of regional disparities lies in the variations in geo-natural conditions. Areas with variable weather are not conducive to agricultural or local industrial growth. The scattered and semi-nomadic populations of Wollo, Hararghe and Sidamo are thus subjected to frequent disasters through droughts which decimate both people and livestock. It has been argued in the case of Wollo and Hararghe that the famines of 1974/5 were due to exchange entitlement failures (see Sen [1981: Chapter 7]). While the stricken population certainly lost most of its purchasing power, this should not hide the fundamentally fragmented nature of the Ethiopian regional economy. This implies a lack of market integration of an extreme kind. Very considerable grain movements would be required in normal times to compensate for the wide regional variations in the degree of self-sufficiency in foodgrains [Ghose, this volume: Table 7]. In theory, the flow of such movements would be governed by regional price variations which would invite food inflows up to a point where the disposition of supplies would equilibrate prices after adjusting for transport costs. Reality appears to follow a rather different course. Tables 1 and 2 reveal remarkably high price differentials across the board. The average quotations are taken from important markets at awraja or woreda levels in October 1981, and hence can be used as an index of market integration. Gojjam displays the lowest variability in intra-regional prices for most crops, while Tigrai, Wollo, Gamo Goffa and Bale seem highly volatile. The food deficit areas expectedly show higher prices, but the differentials are remarkably high, as a comparison of Hararghe and Tigrai with Gojjam and Gondar reveals. The variability is generally greater in the case of the four inferior crops on which the poorer population depends. Thus, teff and wheat have the lowest coefficients of variation, and sorghum the highest. Relative prices of the different crops also alter ranks frequently. Detailed data indicate a remarkably dissimilar price structure and growth rates even between contiguous, well-connected awrajas of the same province, with
scattered peasant holdings. This programme has made some headway, especial-ly in Bale, where it is anticipated that the entire rural population will soon inhabit specially set-up settlements. This will permit not only the state service and delivery systems to incorporate this population into their network but, as importantly, will provide some necessary preconditions for the emergence of collective units which can internalise the wide range of production and social externalities not reaped by individual peasants. With regard to the wider strategic issues concerning regional disparities, it has to be admitted that any headlong or dramatic attempt to 'solve' this historical problem is likely to prove an expensive failure. However, the policy framework developed in this article has inherent in it processes which would diminish the disparities through development at the periphery. Thus, in view of a high degree of economic fragmentation, a special if not overriding priority would have to be assigned to rural infrastructure based on four complimentary activities. First, through labour accumulation facilitated by the co-operative structure, rural roads should be developed linking co-operatives to feeder roads, and these to the main gravel highways. Second, local storage capacity for foodgrains should be constructed at critical supply points, widely dispersed. Over a period, these silos should begin to serve as the grain banks of the co-operatives of the region. Third, local rural industries located at the service-co-operative level should be initiated, at first on the basis of the demand of the members for simple consumer goods and farm implements, and subsequently for a wider range of products, including industrial ancillaries, and consumer goods for a wider market. Such industries, as also the infrastructural creation activities could have a strong seasonal dimension in the present phase of development. Lastly, and perhaps most significantly, concerted efforts should be made to harness the considerable small-scale irrigation potential of the country, but again through the institutional device of the producers' or service co-operatives. The great advantage of the former would be that such activities would be self-financed, and would be non-inflationary in the short run, and strongly anti-inflationary in the long run when their benefits come on stream. The objective should be through such schemes to integrate the economy, to develop rural diversification, and to provide food security. The key to achieving these is the extension of the area of stable grain yields through irrigation. Once again, the objectives of growth and equity appear to be harmonious within a 'boot-strap' strategy of local, self-financed, labour accumulation generated and organised within the emergent rural collective institutions. But critical to the success of these measures is the rapid expansion of the co-operative mode of organisation. In this respect, the experience thus far is extremely disappointing [Ghose, this volume].
the first place through inflationary financing. In subsequent rounds of the operation of the multiplier, however, the effects would be similar on the whole to those obtaining from domestically financed investment. Perhaps a brief mention should be made of the probable operation of a negative multiplier as well. The decline in the Handicrafts & Small Scale Industrial sector can partly be attributed to the uncertainties and restrictions imposed upon the private sector by the Revolution, but it could certainly also be attributed in part to the decline in demand that the inflationary process would have caused, as higher proportions of family budgets were being diverted to those producing and/or trading in foodstuffs. Finally, our analysis based on n and y runs in terms of national aggregates, although clearly the model underlying it is one involving inter-sectoral transfers of marketed surplus from agriculture to non-agriculture. This aggregation conceals some important aspects of the process. First, it ignores the possibility of non-inflationary productive investments based on rural labour accumu-lation, and thereby exaggerates the strategic necessity of extracting and transferring rural surplus product. Second, it ignores the fact that the rural sector is largely insulated from the urban food market, since it has the first claim to foodgrain consumption. The implication follows that the urban areas are thus rendered even more vulnerable to variations in agricultural output and marketed product. This fact was starkly highlighted by the recent Ethiopian experience, and the extreme consequences for the urban population form the subject matter of the following section which documents the im-poverishment of an increasing proportion of urban households.
present state of the country's statistical and economic system, such exercises are impracticable, and we will therefore focus on the wider distributional features of teh DTYP. Also excluded is any discussion or test of the feasibility fo the DTYP targets in narrow technical terms. In keeping with our mild scepticism over the officially adopted population growth rates, we will assume a growth rate of population of 3.0 per cent per year over the period. This does not alter any of our arguments in a significant fashion. One other statistic has been altered: the growth rate for agriculture. In the DTYP, this is pegged at 4.5 per cent per annum. However, this includes the rapidly expanding export sector which carries a base-year weight of about 12 per cent, and which has a target growth rate of ten per cent per annum. This implies a growth rate of 3.5 per cent for the non-export domestic agricultural sector, and we will utilise this rate in our calculations. Let us return then to the simple analytical device used in our discussion of the inflationary process and compute the * warranted' levels, y*, n* and e*, and compare these with the targets for y, n and e. This is done in Table 12 which offers some strategic insights into the possible distributional dilemmas and implications of the DTYP. With n = 3.5 per cent, y* = 3.8 per cent, implying a warranted per capita GDP growth of under one per cent per annum, in contrast to the targeted 4.5 per cent or more. If we set y = 7.5 per cent, then n* = 5.7 per cent.
enterprises are bound to gravitate towards the big cities and the need for marketed surplus beyond that obtainable from the state farms would re-inforce the already existent pattern of extreme concentration of modern inputs in the few agriculturally developed regions of the country. Fourth, it is unlikely to generate the order of urban employment that is required over the plan period. This failure has various ramifications. For one, un-employment would probably become increasingly worse in the smaller towns or else, the migration into the prime cities from other smaller urban centres would increase without, of course, affecting the overall employment outcome. For another, this would mean an exacerbatian of the social costs of such urbanisation, manifest in the forms of an expanding urban lumpenproletariat, prostitution, and begging. Clearly, none of these phenomena should have an extended life in a socialist system. Furthermore, such unemployment would undermine the utility of the rationing system which would fail to reach this needy class on account of their exchange entitlement failure. To meet the distributional objectives, therefore, it would become necessary to rely increasingly on institutional devices of income sharing as a strategic rather than purely tactical option. Case C: An Alternative This offers an alternative strategic framework for a revised DTYP. The central principle underlying this concerns what is adopted as a trinity of objectives, namely, growth, distributional equity, and grassroots participating institutions. The earlier cases are crucially dependent upon an extended circular flow of investible resources extracted from agriculture and invested in industry and related sectors in the form of large projects. This involves little direct participation on the part of the savers and investments occur largely outside the units or sectors from which resources are extracted. Inevitably, aggregate domestic investments would depend upon the open and hidden contributions of peasant agriculture which would also remain a net contributor or loser in resource terms. It is arguable that this type of investment process is unsuited to an economy like Ethiopia where the level of available investible surplus is low and scattered in small denominations, where the degree of economic fragmentation is extreme, and where even the relatively well-developed centre is unlikely to be able to bear the burden imposed upon it. In addition, this strategy is unmindful of harnessing for productive purposes those investible rural resources which are not extractable and therefore not useable through the centralised and dichotomous investment process mentioned above. The collective framework, that is, Case C, takes the relative emphasis away from major industrial investments and places it on investments within the rural sector. The industrial shift involves the locational, size, product and technology dimensions, making the sector less import-intensive and more labour-intensive. Thus, even if the scale of investment was to be lowered, there might be few net losses (in GDP terms) to output, and perhaps even a net gain in terms of intermediate-level skill creation, as well as in direct and indirect employment generated. This would ease the urban poverty
considerable advantages, too, for the spread of producer co-operatives. In addition, while bypassing the obstacle posed by economic fragmentation, such investments would nevertheless be attacking it, thus raising the degree of economic integration. No doubt, these investments would require industrial inputs at a higher level than before and the financing of this might imply that the planners have to give up some of the surplus extracted from the agricultural sector for use by it within its boundaries. In our opinion, this approach provides the basis for achieving high growth targets in the medium term without compromising on the distributional front at the class, sector, or regional levels. Two qualifications need to be registered. First, this does not imply that the DTYP target of y = 7.5 per cent per annum becomes feasible in this strategy. Even in Case A, the argument was only partly that it was probably not achievable; rather, that achieving it with n = 3.5 per cent would almost certainly lead to a vicious inflationary spiral, thereby worsening income distribution. In Case B, the burden of financing would be shared in an egalitarian manner through the rationing system but its average level would not be any different. What is being argued is that, first, for any given n, y* (C) > y* (A, B), and second, the rate of growth of n would be substantially greater over time in Case C than in Case A or B. Thus, Case C could be viewed as laying the basis for an eventual second phase of an industrialisation drive of the type now being proposed, in our view, prematurely. Second, it is probable that under Case C, rural foodgrain consumption would rise in the short run. In this strategy, too, state farms would play a crucial part in the transitional phase and beyond. It is necessary therefore to assist them in achieving efficiency quickly, and to overcome the problems of haphazard location and early growth. A period of consolidation might be necessary prior to any further expansion on any large scale. Finally, we need to turn our focus to the problems of urban poverty and unemployment which are not directly handled in any of the three cases. A separate policy component is therefore called for. A two-pronged approach is necessary. The first of these is to ensure that all low-income earners are covered by the urban rationing system. In the present context, this would require extending the coverage to the smaller urban centres and even in the larger ones to that lowest strata which might not be registered in any urban kebele. Thus, the AMC needs to grow greatly and quickly. It is in this context that the current and future role of the state farm sector has to be seen. Even within the framework of Case C, it will be some time before the area of stable grain yields is extended to a point where the urban populations are not held to ransom by the weather all too frequently; in the meantime, the state farms provide an insurance cover which is indispensible. (A corresponding function would be performed in the food-insecure rural areas by the grain banks suggested earlier.) Further, the kebele shops need to move more into the inferior cereals, in particular, sorghum, maize and black teff. Improving the storage facilities of the AMC and state farms could achieve the welcome result of lowering cost by anything up to 15-20 per cent on some crops. All such gains registered should reflect themselves in lower prices for the inferior, rather than for the superior, cereals as appears to have been the case in the recent past.
socialism from the grassroots, we have indulged in the presumption that our supply of alternatives will not encounter a lack of demand arising from the political entitlement failures of potential buyers. It is the only assumption one is able to or can wish to make; whether it is a realistic one is another matter altogether.
decolonisation in Africa since the latter generally implied that a compromise between the colonial power and the nationalist movement(s) is worked out in a constitutional conference which not only shaped the political system of the new post-colonial state, but also worked out the economic and financial obligations and arrangements of the new state vis-a-vis its previous colonial power. Frelimo's position that the Lusaka conference could only discuss the conditions of the transfer of power and not the content of the new power was accepted in the end by the Portuguese delegation. Furthermore, no agreements were made with respect to financial and economic ties as a carry-over from the colonial period. The concrete mechanism of the transfer of power was to take place through the immediate instalment of a transitional government in which Frelimo was the majority partner with Portuguese officials as the only remaining other partner. The immediate response to the agreements was the aborted attempt on the part of section of the settler population to seize power by means of Rhodesia-type unilateral declaration of independence. The period of the transitional government (up to independence in June 1975) and roughly the first two years after independence were characterised by the massive emigration of the settler population accompanied by an intense struggle waged by the colonial bourgeoisie and petty bourgeoisie in an attempt to destabilise the economy as well as to export most of its capital (in whatever form). Hence economic sabotage in its various forms - destruction of equipment, and economic infrastructure; killing of cattle stock; large-scale dismissal of workers from productive enterprises and complete production standstills - were practised on a large scale all over the country. The export of capital also assumed enormous proportions and took various forms: the collapse of the (colonial) state apparatus and the fact that banks were privately owned meant that it was easy to arrange for acquiring foreign exchange to import goods without any imports subsequently materialising, or to export cashew, cotton, etc., without the foreign exchange ever returning to the national bank; furthermore, initially no control was organised over the export of personal belongings of returning settlers which led to massive buying in shops and depletion of stock of commodities; finally, the direct illegal exportation across the borders to South Africa and Rhodesia of trucks, tractors, equipment, cattle, etc., further depleted the available means of production in the country. With this context economic policy was dictated by the necessity to fight against the destabilisation of the economy propelled by the actions of the colonial bourgeoisie and petty bourgeoisie (as well as of skilled and admin-istrative workers). The legal weapon was a decree of February 1975 which specified that in proven cases of acts of sabotage (which included the massive dismissal of workers and deliberate production stoppages) the government could intervene by transferring the management of the enterprise to an appointed administrative council composed of workers and often members of the old management as well. The social force which concretised this policy were the dynamising groups - popular organisations of militants which were constituted at community level as well as in enterprises, public institutions and government administrations. The outcome of this intense struggle was a sharp production crisis which
levels which normally oscillated between 80,000 and 100,000 per year, and which in 1975 had soared up to 118,000 workers, were sharply reduced to 40,000 thereafter [First, 1982]. This mainly affected the southern part of Mozambique by creating massive rural unemployment. The towns had no capacity to absorb this surplus labour since employment was drastically re-duced in the towns as well. The latter process was due to the fall in employ-ment in domestic work (servants) and in the tourist sector (restaurants, hotels, bars, etc.). The exodus of Portuguese settlers and the virtual standstill of tourism (which catered for South Africans and Rhodesians) had amplified the problem of structural employment in the towns. The rural unemployed could not merely fall back on family agriculture since this was heavily dependent on cash income from wage work. Oxen and ploughs, farm implements, water reserves, etc. were normally paid for with wages from mine labour or other wage work. Furthermore, due to this cash inflow from wage income, a more interactive type of division of labour developed within the rural areas of southern Mozambique. Hence, peasants without oxen and plough would rent the services of peasants who did, and pay for it out of wage income. Brick-makers, carpenters, house-builders, tailors, mechanics were to be found among the middle peasantry who relied on these activities (usually acquired through mine labour) to supplement their income from farming. In a similar fashion, local transport and petty com-merce were sidelines of middle peasants stabilised by the influx of wage income. The reduction in mine labour employment deeply affected the viability of this internal division of labour within the rural economy. Finally, the impact of the reduction in mine labour was not evenly spread among the peasantry, since only those who held valid work certificates from the recruitment agency could continue to go to the mines. Other peasants were cut off altogether. This introduced a sharp element of differentiation within the rural econonmy. Those who could continued to go to the mines not only had cash income but also a guaranteed access to commodities (including means of production), while within Mozambique shortages were rapidly turning into a goods famine. However, rural unemployment was not merely a phenomena of the south. In central Mozambique, wage work to Rhodesia dropped sharply with the closure of the border between Mozambique and Rhodesia since 1976, and as a result of the war situation which developed thereafter. As stated in above, the concentration of resources on the state sector further weakened the basis of family agriculture at a time when a considerable part of its cash income through wage labour was cut off. While the colonial situ-ation was characterised by persistent labour shortages within the rural economy and continued state intervention to keep labour cheap (through the imposition of forced labour and forced cultivation of crops as well as by fragmentation of labour markets to avoid competition for labour to drive up the wage levels), the post-independence situation became characterised by rural unemployment and an intensified flow of people from the rural areas to the towns in search of wage work. The priority accorded to investments led to the slow expansion in the supply of consumer goods and in 1981 it actually fell by eight per cent: six per cent
subsistence production (where in the colonial period mainly extra-economic factors such as forced cultivation or forced labour caused the integration of the peasantry in the market exchange). Socialist development was there-fore strongly identified with modernising through the rapid expansion of the state sector, that is, nationalisation and mechanisation on an ever-increasing scale. The peasantry would be gradually absorbed within this expanding sector, and hence, at first, the role of the peasantry was seen as essentially passive with its transformation mainly centring on social aspects. As such, the policy of communal villages became virtually a habitational concept (and was in actual fact the responsibility of the national directorate of housing): a question of social infrastructures (water supplies, schools, etc.) within a concept of communal life without concerning production and its transformation. This view conflicted heavily with the objective conditions in the rural areas characterised by a deep involvement of the peasantry in market relationships and their dependence on it either as suppliers of labour power or as cash crop producers. This contradiction became more obvious, when the balance of payments became a real constraint (in 1979) and, hence, the question of financing accumulation cropped up more strongly in practice. The peasantry as suppliers of cash crops, of food and of labour power to the state sectors occupied a crucial position in production and accumulation. However, the crucial question then becomes whether the peasantry only performs the role of supplying part of the accumulation fund or whether the peasantry itself is part and parcel of the process of transformation and hence that accumulation embraces as an integral part the transformation of peasant agriculture into more socialised forms of production. In other words, it poses the question whether the strategy is based on a primitive socialist accumulation on the basis of the peasantry (transferring the agrarian surplus to the develop-ment of the state sector), or whether accumulation includes the transformation of peasant agriculture. Clearly, the way this question is posed in practice will influence heavily the nature of the organisation of the exchange between the state sector and the peasantry. The proposition that the state sector can develop under its own steam (with or without the aid of external borrowing) cannot bypass this crucial question since, on the one hand, a considerable part of foreign exchange earnings and of the food supply to the towns depended on peasant production and, on the other, the very conditions of productivity and profitability in the agrarian state sector depended heavily on the organic link that existed.between labour supply and family agriculture. The monetary disequilibrium originating from the state sector has a severe impact on the organisation of the exchange between the state sector and the peasantry. First, the imbalance between the demand for and the supply of consumer commodities affected rural areas differently from urban areas. The reason was that in urban areas the rationing system guaranteed to each family a minimum quantity of basic consumer necessities at official prices. In the rural areas the principal form of rationing remained the queue! Hence, forced savings were distributed differently over urban and rural areas. Furthermore, the concentration of resources on the state sector also implied that the peasants'
demand for producer goods (that is, implements, fertilisers, etc.) was largely left unsatisfied, a fact which eroded the peasants' productive basis. The exchange with the peasantry became conditioned by the following three interlocking phenomena: (1) the reduction in relative and in absolute terms of official marketing of crops as result of the rapid expansion of parallel markets; (2) the galloping inflation of prices in the parallel markets; and (3) the consequent rapid depreciation of the currency and the increased reluctance to accept the metical in exchange for sale of goods. Although the surface appearances of these phenomena were generally recog-nised, the explanation of the underlying mechanisms was by no means clear. The dominant explanation of the problem came from the ministry of internal commerce which was in its day-to-day operation more directly con-fronted with the problem. According to this view the nature of the problem was the withdrawal from the market by the peasantry since money no longer bought goods. Hence, the payment of rural wages and the buying of cash crops channelled a volume of money into the economy far in excess of available pro-ducer and consumer goods directed to the peasantry. Cash balances therefore accumulated over time and the stimulus to further production was blunted. The fact that the supply of commodities destined to be traded with the peasantry was, in terms of value, far in excess of the official marketing of crops was the often quoted proof that peasants simply ran down cash balances to buy goods and did not produce more for exchange. This view often overlooked the impact of the demand springing from the wage bill and, hence, directly equated the difference between the supply of goods to the peasantry and the goods obtained in return with the running down of cash balances accumulated by the peasantry. The problem therefore was seen as one of an excessive volume of money being held in the rural areas: peasants had too much money relative to the available supply of goods. Therefore, they withdrew from the market and preferred to buy up any supplies forthcoming with the money in hand rather than through production. Implicit in this view was a conception of a single circuit of exchange between the state sector and the peasantry in which the state buys with money either cash crops or labour power, and subsequently the peasantry buys consumer and producer commodities from the state sector (with or without the intermediation of private trade). If both parts do not balance in value, idle balances of money will build up in the hands of the peasantry and over time blunt the incentive of production. The preoccupation was thus with the stock of money in the hands of the peasantry (as a measure of frustrated demand) and little attention was paid to its velocity since it was implicitly assumed that these balances remained idle (stuck in the peasants' pockets). Therefore, concerning economic policy, a solution was sought in the direction of neutralising the interference of accumulated balances by linking sale and purchase together. Hence, commodities would be sold to the peasantry only in exchange for the purchase of cash crops. Similarly, state farms would guarantee a certain part of the wage in kind to assure the flow of labour.
Initially, mine workers would be rather reluctant to invest their wages in means of production (in agriculture and in transport) within the Mozambican rural economy. Up to 1980/81, government policies were not favourable to such investments. However, thereafter, miners were specifically encouraged to plough back their wages into production and commerce. Rural unemployment was widespread and, hence, the conditions for private accumulation were favourable on this count. Generally, miners would invest in transport and commerce, but some did invest in agriculture. Indeed, in the latter years, peasants with resources were allowed to operate on unutilised ex-settler farms. In other cases, the more permanent and better paid state farm workers could use their specific position to strengthen their own farm, often supplemented by hired labour. As mechanics or tractor drivers, etc. they had access to cer-tain resources such as seeds, fertiliser, fuel and consumer goods which they could buy either from the state farm or, not unfrequently, merely take from stocks on the state farms. Border areas were another such case of differentiated access to resources by means of barter trade cross the border. Due to the political criticality of such areas within a general condition of war, the government distribution policy would grant a certain priority to supplying these areas with commodities which would then provide a basis for further barter trade with the neighbouring country. Further, areas located more closely to the main food markets (either towns or plantations) would be subject to a much more dispersed and intensive barter and money trade, thereby raising the producer prices which would benefit those peasants who had sufficient resources to produce surpluses. More distant food producing areas were much more within the grip of the commercial traders who provided the link with the market. Hence, while some strata within the peasantry managed to create some room for themselves by producing for the parallel markets, the majority of rural producers (either as wage labourers or small-scale producers) confronted declining real incomes as a result of the inflation on the parallel markets to which they had to turn not only for industrial commodities but also to supplement their food needs. Hence, their problem was not one of having too much money at hand with too few commodities to buy; rather, they experi-enced an acute shortage of both money and goods. The poorer peasantry were the main suppliers of seasonal labour to the state sector. However, although rural unemployment was high, the supply of labour was by no means elastic. The reasons for this were the following. First, the pattern of labour demand of the state farms and plantations was in most cases highly seasonal and, hence, did not provide an all-round income for the worker. Second, money wages earned on the state farm did not guarantee any access to commodities, and often did so only at speculative prices. For both reasons, the real basis of security of the rural worker still remained his family farm, however fragile that may have been. The state sector may have become dominant in terms of area and in terms of production (regarding monetary output), but it certainly was not the dominant aspect in securing the livelihood of rural producers. In most cases, the pattern of peak demand for labour on the state farms coincided with the peak demand for labour in family agriculture. For example,
in the Limpopo valley harvest labour was needed for rice production at the agro-industrial complexes at the same time that the peasants needed to harvest their own plots. The colonial settlers had relied on force and on the use of task work to cope with this. Hence, the peasants would start very early in the morning to harvest a designated area at the settler farms and subsequently move on to their family plots. The wage would supplement the income and subsistence acquired from the family plot. However, when the state farms tried to introduce an eight-hour working day (instead of task work), they experi-enced an immense withdrawal of labour when it was most needed. The wage did not cover the consumption needs of a family throughout the year and, increasingly, money did not guarantee access to goods or did so only at the cost of accepting catastrophic reduction in the real wage. Similar shortage problems of labour were experienced in the plantation sectors, in food pro-duction in state complexes of Angonia or Zambezia, on cotton farms in the north, etc. The co-operative movement, which was never very strong since it had never received the effective material backing of the state, was further weakened by the fact that the development of parallel markets within the rural economy enfeebled the poorer peasantry even further. The latter would have to be the social force to be mobilised behind the co-operative movement; rather, it became economically weakened as a result of its rapidly deteriorating real incomes and the fact that the existing co-operative movement provided no real alternative. The government policy to link up purchase with sale so as to stimulate rural production did nothing to counteract this process of differen-tiation but, rather, tended to intensify it. Indeed, rural trade between the state and the peasantry was intermediated by private trade. The policy gave them an increased leverage over the peasantry and allowed them to channel more crops into the parallel markets since they effectively traded at terms of exchange which were less favourable than those laid down officially. Furthermore, the impact was that the supply of com-modities became concentrated in the hands of the richer peasantry (who had surpluses to sell) and this gave them leverage over the poorer peasantry. Finally, this process did not take place within conditions of peace but, rather, within an ever-spreading war situation. The South African-backed MNR was gradually spreading throughout the whole country and its acts of brutal oppression of the population and of sabotage and destruction of the whole network of social and economic infrastructure led to the increased destabilisation of the economy and society. To combat this force, a strong alliance between the army and the peasantry was necessary. But this alliance itself became weakened by the worsening of the economic situation of the peasantry. Economic investment was concentrated in bis projects within the state sector and these became the target of MNR attacks. On the other hand, the destabilis-ing effect of the concentration of resources on the state sector and of off-loading the burden of the costs on to the peasantry through the inflationary issue of money, unbacked by material resources, weakened the peasantry economically and intensified processes of differentiation. At the time of the preparation for the Fourth Congress it was not surprising
therefore that a critique of the pursued policies was building up at different levels. Economic policy was challenged from within the army, at village meetings and in the towns. The congress itself formulated various elements of a strong critique against the practice of planning for resource allocation within the prior period. The critique itself still remained an addition of part-critiques: the need to support family agriculture; the need to consolidate the state sector before its further expansion; the question of the place of private enterprise within the economy; etc. No clear-cut strategic line and tactical measures were laid down within the congress: rather, many issues remained somewhat vague and therefore set the stage for a further struggle as to the content of economic policy thereafter.
Despite the fact that the historical experience of the construction of socialism has taken place in predominantly agrarian societies, it is notorious that the 'agrarian question' remains unresolved and constrains their progress to a greater or lesser degree [White and White, 1982]. This is all the more crucial for those revolutions of the second half of the twentieth century which, generated in the Third World by the 'liberation struggle', not only seek an increased food supply as the basis for raising popular living standards, but also greater exports from the primary sector (albeit in processed form) to secure imports of producer goods. Thus the agrarian question becomes central to
allies and the military) had not only large landholdings, but also direct control over strategic elements of the 'circuit of agrarian capital' such as agroindustry, processing facilities, foreign trade, manufacturing and all the banks. The monopolistic control not only excluded direct participation by foreign firms but also reduced the rest of the bourgeoisie to a subordinate position. Above all, the monopoly in banking (which provided virtually all the working capital for export agriculture in the form of annual loans backed by pre-export credits from foreign banks, preserving classical monetary stability) [FitzGerald, 1985c] gave the Somoza group indirect control over commercial farmers, directing their production decisions and siphoning off much of the investible surplus. In a country with a high cultivable land to population ratio (two hectares per head) and a social structure which guaranteed labour availability, the scarce resource was credit, especially in export agriculture which requires considerable working capital for inputs and the harvest wagefund. Agroex-ports in 1976 used 47 per cent of the cultivated area but received 75 per cent of the credit; most of the rest went to the two modernised foodgrains, rice and sorghum [IFAD, 1981], As we shall see, this inherited model has had a profound effect upon the particular form of 'mixed economy' in agriculture that has been adopted in this transitional stage. The resulting land tenure pattern is indicated in Table 1. In 1978, the large (over 500 mz) units included 36 per cent of the farmed area, of which about one-half was the property of the Somoza group. This was con-centrated predominantly in agroexport production of sugar, cotton, coffee and cattle. The medium and small farmers (50-500 mz) included some 46 per cent of the land, using a lower technology and with a balance of food and export crops. The peasantry proper had only 18 per cent of the land, predominantly in foodcrops, much of this of a subsistence nature. The data
extremely so, if compared with the experience of other countries in similar situations. As Table 4 indicates, by 1984-85 almost all the main crops had recovered pre-revolutionary levels and in many cases (such as coffee, sugar, rice and agriculture) considerably surpassed them. The three products that failed to recover were cotton, beef and milk, the first because of poor world prices and high costs, the latter two because of the indiscriminate slaughter during the 1978-79 insurrection which would take ten years to replace. However, supply was very badly affected by the war from 1983 onwards, particularly coffee, maize and beans (produced in the war zones) while the foreign exchange shortages also affected the output of import-dependent crops such as sugar and cotton. The general lack of 'business confidence', logical under the circumstances, also had a negative effect. The main achievement, therefore, was to maintain a reasonable level of production at all.
deteriorating situation of the mountain peasantry became a defense problem, did this question of 'rural exchange' receive high priority in the Economic Programme of the government [SPP, 1985]. Agrarian investment in the 1980-84 period was maintained at a high level, equivalent to about half the national total. This was almost exclusively concentrated on the APP: that is, in about half the modern sector or about a quarter of the whole of agriculture. This investment included extensive irrigation works, imports of tractors and combine harvesters, coffee reno-vation, a sugar mill, palm oil plantations, intensive dairy and beef breeding units, as well as the recapitalisation of the new state farms ruined by their previous owners. It formed part of a long-term strategy discussed below and thus did not itself add much to production during the first five years, although it did help compensate declines in the large private production sector. Given the external terms of trade (which had deteriorated by 40 per cent between 1977 and 1983 [CEPAL, 1984]) and the gradual recovery of production, the agricultural sector was not in a position to generate a sufficiently large surplus to finance its own investment. Even though the sector generated three times more exports than it absorbed imports [MIDINRA, 1985], the foreign exchange thus released was needed to maintain basic consumption elsewhere in the economy. Similarly, food supplies over and above the requirements of the agrarian workforce were needed to maintain the rest of the population; there was no significant capital goods sector to absorb these wagegoods [FitzGerald, 1982]. Thus, this investment was basically financed from abroad, initially with long-term development loans from multilateral institutions, but as US agression increased these funds were cut off and replaced by commercial credits from both capitalist and socialist suppliers. This was economically justifiable in that the increment in exports (or substituted imports) would have a compensatory balance of payments effect within a few years. Eventually, however, a net exchange surplus would have to be generated so that agroexports should expand more rapidly than domestic foodstuffs rather than the reverse, as had been the case between 1980 and 1984, when popular living standards had a higher priority than the trade balance. None the less, the major shortcoming of this accumulation model was undoubtedly its almost exclusive concentration on the APP as the focus of modernisation. Large private farmers might not wish to invest, but the middle farmers and the co-operatives were also neglected in machinery assignment, cattle restocking, and irrigation equipment. The political objective of preventing the re-emergence of capitalist accumulation or the reconstruc-tion of a rural bourgeoisie (albeit on a petty scale) appears to have been the main justification. However, the cost in terms of production was high, and in any case such a sector could have been simply controlled through the existing fiscal, banking and commercial mechanisms, let alone the eventual application of the Agrarian Reform laws.
was a root cause of its collapse) the MEDA does not define a new role for this class in the model. The strategy concentrates on modern farming as the most rapid way of resolving the agrarian accumulation problem - food and investible surplus. At most, assuming that there is sufficient administrative capacity and skilled labour to implement the strategy, it will benefit the APP and the CAS, about half of agrarian production but only a quarter of the rural population. It would take place, moreover, basically on the irrigated and fertile Pacific plain where two-thirds of the population resides. Meanwhile, the land reform itself has effectively established a middle farmer and service co-operative group which occupies over half the rural population and provides the other half of production; this group has no specific part to play in the MEDA. Depending on the circumstances, this group might either develop into a 'kulak' class dependent on the market and opposed to further agrarian reform or else collapse and migrate to the towns in the long run. But in any case, it will be responsible for the bulk of the food production in the short term (which may well last for a decade) and thus requires specific attention. To overcome this contradiction, which is already apparent, the APP would have to restore part of the role of estate agriculture in the rural economic formation, acting as a point of articulation for small and medium farmers instead of acting as a competitor to them. This articulation essentially implies subordinating them to the state rather than marginalising them, but also means shifting input and investment resources towards them in exchange for guaranteed production sold to the state. It is too early to make a definitive characterisation of the Nicaraguan agrarian reform, not only because the Sandinist Revolution is still in an initial tran-sitional stage, but also because of the current war conditions which, depending upon external political factors, could change the direction of social change. None the less, the nature of the agrarian reform project, the experience of its implementation to date, and the long-term agricultural development proposal do provide elements for some tentative conclusions. First, that the three lessons learned from other agrarian reform experiences were applied to some effect. Namely: (a) that production must be maintained throug the reform period, in order to avoid collapse of exports or falling urban living standards; (b) that the process of nationalisation should not proceed faster than the capacity of the state to assimilate the private sector; (c) that while individual land distribution should be avoided, co-operativisation should be voluntary and gradual. In this way, the collapse of productive forces as production relations are transformed was avoided. Second, that it is possible to effectively remove the control of agrarian capital over the economy without land expropriation as such, if the 'sur-rounding' mechanisms such as commercialisation, credit and inputs are used effectively. Indeed it might even be suggested that social control of the relations of exchange in agriculture are as important as ownership of the means of production, especially land. It is true that the Nicaraguan experience, where the strategic Somoza group holdings passed directly to the state without
threatening the rest of the private sector, was especially conducive to this solution. None the less, the experience of post-reform agriculture in a number of socialist countries indicates that this is in practice the best way of articulating such disparate forms of production. Third, that the process of capitalist agricultural development does generate a large proletariat, even though it is disguised in the form of impoverished peasantry. This means that the agrarian reform can proceed in socialised production forms in the 'capitalist' sector without direct peasant owner-ship of land. It is true that in the Nicaraguan case, the relatively high land endowment per head reduced this pressure, but it is also important not to overestimate the 'peasant' nature of agriculture in Latin America [Goodman andRedclift, 1981], because this tends to lead to agrarian reform proposals which ignore the inevitable role of agriculture as the base of the national accumulation model in almost all underdeveloped economies in transition. Fourth, that in the case of Nicaragua, this logic has probably been carried too far. In implementing a project to eliminate the exploitative relation-ship between capitalist export agriculture and the peasantry (cheap labour and cheap food) by establishing a stable rural proletariat and secure food supplies, the revolutionary state has effectively undermined the remaining peasant economy without providing a coherent alternative. This has produced a new contradiction in the agrarian development model proposed for the rest of the century, when the revolution not only depends upon the mountain peasantry for defence against external aggression but also for food supplies during the transitional accumulation period. A successful agrarian accumulation model, above all during the tran-sition, must provide for an adequate articulation of distinct forms of pro-duction as part of the process of rural transformation.