This chapter discusses rural development as embedded in the wider society. It argues farmers' culture in Iceland and their political organisation and struggle led to economic development that resulted in an economy based on small scale production rather than large scale manufacturing. The chapter presents a framework for analysing the inter-relationship between changing societal paradigms and rural development. It illustrates the theoretical discussion by analysing the unusual history of rural development in Iceland during the 1920s and 1930s. The structuration of the countryside is a consequence of the balance of power between socio-economic forces. The history of western capitalism is characterised by shifting techno-economic paradigms. A fundamental element of the capitalist techno-economic paradigm is the principle of private property. In earlier European agricultural society, social and biological reproduction was located in the extended family, with co-ordinating regulation by the church.