Land Reform in Developing Countries:Property rights and property wrongs

Michael Lipton, Research Professor of Economics, Sussex University

Paperback 10 Dec 2010. Sterling price: £23.50: print-on-demand online: to order, phone (44) (0)1235 400 400 or visit http://www.routledge.com/books.details/9780415615563/ or email orders@taylorandfrancis.com Kindle $10 July 2011. Chinese edition (translated by Zhang Xi): Renmin University Press, Beijing, Spring 2013. 1. The book 2. Contents 3 Comments by others 4. Review essay by Al Berry

1. THE BOOK

Land reforms are laws that are intended, and likely, to cut poverty by raising the poor’s share of land rights. That raises questions about property rights as old as moral philosophy, and issues of efficiency and fairness that dominate policy from Bolivia to Nepal. Classic reforms directly transfer land from rich to poor. However, much else has been marketed as land reform: the restriction of tenancy, but also its derestriction; collectivisation, but also decollectivisation; land consolidation, but also land division.In 1955–2000, genuine land reform affected over a billion people, and almost as many hectares. Is land reform still alive, for example in Bolivia, South Africa and Nepal? Or is it dead and, if so, is this because it has succeeded, or because it has failed? There has been massive research on land reform andthis book builds on some surprising findings.

• Small farms’ share of land is rising in most of Asia and Africa.

• This is driven not (as widely claimed) by growth in rural population or farm productivity, but by the relative efficiency of small farms, and in some cases by land reform.

• Whether land reform helps the poor depends not only on land transfers, but at least as much on its effects through employment, non-farm activity, GDP growth and distribution, as well as the village status and power of the poor.

• Avoidance, evasion and even distortion of land reform laws sometimes advance their main aims.

• Liberalisation and its accompaniments (such as supermarkets) can be powerful friends or fatal foes of small farms and land reform.

This book will be of great interest to students, researchers and consultants working on agriculture, farm organisation, rural development and poverty reduction, with special emphasis on developing countries.Michael Lipton has worked since 1960 as a development economist. He was based for 25 years at the Institute of Development Studies, for three years directed the Sussex University Poverty Research Unit, and remains ResearchProfessor of Economics at Sussex. Earlier books include Why Poor People Stay Poor: urban bias in developing countries and New Seeds and Poor People (with Richard Longhurst). He is a Fellow of the British Academy and has been awarded a 2012 Leontief Prize for advancing the frontiers of economic thought.

2. CONTENTS

List of Tables xAcknowledgements xi

Introducing Land Reform 1

(a) Why land reform matters 1(b) Structure of the book: land reform goals, efficiency, types – and death? 5

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(c) Land reform: past and future 8

1 Goals 11

(a) What goals? Whose? What policy implications? 11 (i) Goals, groups, coalitions, procedures, aims and programmes (ii) Goals, power, options, procedures: outsiders, interested parties, governments(b) The main goal – reducing poverty and gross inequality: links to liberty 16 (i) Specific forms of poverty and inequality 16 (ii) Overall land-based poverty and inequality 21 (iii) Incumbents’ legitimacy or beneficiaries’ equal opportunity: property rights & property wrongs 26 (iv) Types of equalisation goal in land reform: equality versus poverty reduction? 33 (v) Land reform and ‘rural tyrants’: the crucial links connecting equality, inclusion and liberty 35 (vi) Politics and distributive goals of land reform 37 (vii) The snake in the grass 38(c) Other relevant ‘objective’ goals 40 (i) Output, efficiency and growth 40 (ii) Environment, sustainability and land reform 40 (iii) Stability 49 (iv) Is a special goal for ‘landless labourers’ required? 52(d) Goals of governments and donors: land reform to extract surpluses 56(e) Goals of governments and donors: stopping revolution and keeping the peace 58(f) Goals of beneficiaries: participation and land reform 60

2 Output, efficiency and growth goals: beyond the inverse relationship 65

(a) What the debate is about, and why it matters 65(b) The inverse relationship in low-income countries: direct evidence 70(c) The make-up of the IR, and the transaction-cost explanation 71 (d) Other explanations of the IR, and implications for land redistribution 75

(i) Illusion? 75(ii) Unit transaction cost? 76(iii) Activity splitting? 76(iv) Area per worker? 76(v) Dualism? 77(vi) Household contribution versus search cost? 77(vii) Selective market failures? 77(viii) Risk and the IR 78

(e) Does smallness drive the IR? Family, isolation, land quality, management 79 (i) ‘Family-ness’, subsistence, part-time 80 (ii) Isolation 81 (iii) Land quality 82 (iv) Management quality 83 (v) Summary: missing variables do not explain away the IR 84(f) Dynamics of the IR: interactions with Green Revolution, liberalisation and development 84 (i) ‘Development’ versus the IR? 84 (ii) Technical progress, green revolutions and the IR 85 (iii) Liberalisation, globalisation and new market structures: impact on the IR 87(g) ‘If there’s an IR, why aren’t all farms small’? Chicago and Converse Chicago 91(h) An aggregate IR? Land, overall inequality, non-farmers,economic performance 102 (i) An macro-IR for farm output 103 (ii) An IR between farm size and non-farm output? 105 (iii) Farmland inequality and economic growth: a dynamic aggregate IR? 106 (iv) Can we trust the macro-IR? Possible link-breakers: surplus and stability 107(i) If all these IRs are genuine, so what? 110(j) Farm size, science and IRs: small farms or oilisation of agricultural development? 112 (i) The slowing Green Revolution and the distribution-growth goals of land reformers – Asia 114 (ii) Science, land reform and farm size in non-GR areas: oilisation? 117 (iii) Farm science, land reform and new growth needs 118

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3 Land reforms: the types, and the classic paradigm 124

(a) Types of institutional environment and types of land reform 124 (i) Institutional environments 124 (ii) Types of proposed land reform and their environments 126(b) Classic land reform ceilings, floors, distribution, and the Land Authority model 127(i) Classic land reform: the paradigm of land reform 127(ii) The Land Authority: top-down, here-there, participation and decentralisation 128(iii) Compensation and repayment rules 129(iv) Relation between compensation, reform cost, and level of the ceiling 129(v) Levels and types of ceilings and floors 131(vi) Ceilings and floors – levels, types, feasibility and justice: a Rajasthan example 135(vii) Procedure in classic reform: big problems, big impact, incentive-compatibility 145 (viii) Critiques: does classic land reform still meet the definition? 147

4 Tenurial options: tenancy reform, titling, patrialisation 150

(a) Tenurialism: tenancy, title, patrialise, collectivise, decollectivise – reform or deform? 150(b) Tenancy, tenancy regulation, land reform 151(i) The reversing consensus 152(ii) Types of tenancy, restrictions, effects 152(iii) Tenancy reduction laws 153(iv) Tenancy rebalancing laws 154(v) Tenancy registration laws 158(vi) Sharecropping: three underlying issues 159(c) Titling private farmland rights, and other ways to increase land rights security 169(i) Measures to formalise or individualise claims on farmland in common tenure 171(ii) Titling in transition from state and collective farms via household responsibility to freehold 176(iii) Private land systems: from informal to formal private rental 179(iv) Does private land title after ceilings reforms: enforce them or reverse them? 179(v) Formalising and enforcing land dispensations after war or civil conflict 179(d) Patrialisation of land 180

5 The terrible detour: collectivisation, decollectivisation 190

(a) Collectivisation: collective, State, and induced joint farming 190(b) Decollectivisation: the Great Reversion from farm collectivism 203 (i) Processes: decollectivisation, privatisation, liberalisation, positive enablement 203 (ii) Aspects of reversion, types of reverting country 204 (iii) Types of national experience of reversion 206 (iv) Overarching issues 212

6 Alternatives, complements, diversions, ‘new wave land reform’ 237

(a) Consolidation 237(b) Settlement schemes 244(c) Tax reform and progressive land taxes 248 (i) Context 249 (ii) Progressive land tax 249 (iii) Taxing idle land 251 (iv) Tax rules and land transactions 251 (v) Tax reform and land reform 252(d) Land reform: other paths and other substitutes? 253 (i) Removing distortions 253 (ii) Credit access 254 (iii) Growth and rural development: ‘the real land reform’? 254 (iv) Agrotechnical progress 255

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(v) Development, transition and land reform 256(e) Sheep, ceremonies and arsenic: ‘new wave’ land reform 258 (i) Defining new-wave reform: it really land reform? 259 (ii) How does new-wave reform relate to classic land reform? 261 (iii) Sheep and arsenic: rewards and last resorts 267Appendix: Supply-led versus demand-led NWLR – the role of N-land 269

7 The alleged death of land reform 273

(a) The gravediggers’ case: land reform was always dead, or is dying now 274 (i) Has not much land reform happened? Has it stopped happening? 274 (ii) Is land reform dead or dying in Latin America? 275 (iii) The life of land reform in transition economies 281 (iv) The life of land reform in other developing countries 283 (v) The life of land reform 296(b) The opponents’ case: land reform, even if not dead, ought to be 297 (i) Why might land reform be a bad thing? 297 (ii) Is access to land rights less unequal than it seems? 298 (iii) Is land reform dying as urbanisation reduces priority for addressing farmland inequality? 310 (iv) Does non-farm income reduce the poor’s need for land rights and land reform? 312 (v) Shifts from farming to farm labour, and the employment base for land reform choices 312 (vi) Is land reform dead because it has failed the poor? 316 (vii) Does farm science drive out the need for land reform? 317 (viii) Is land reform dead to debate? A: Normative discussion pointless, land reform endogenous? 318 (ix) Is land reform dead to debate? B: Normative discussion pointless, land reform non-domestic? 320 (x) Closing words 322

Appendix: Defining land reform 323 (a) Describing, prescribing, or agreeing about aims?(b) Land reform in the context of changing meanings of ‘reform’ (i) Proto-reforms, redistributive reforms and market reforms(ii) Can one definition accommodate proto-, redistributive and market reforms?(c) The need to define land reform narrowly: DDATYCDE (d) The preferred definition

Glossary 331; Notes 333; References 391; Index 428

List of tables

1.1 Some negative effects of farming on sustainability 412.1 Percentage operated area in farm-size groups, 1960–61/2002–03: rural India 952.2 Small/medium farms: agricultural censuses from 1985, Africa, Asia, Central & South America 962.3 Small/medium farms: agricultural censuses from 1985, Europe &North America 972.4 Size (ha) of median farm, farm with median hectare, and farmland Gini: developing-country trends, 1970s to 1990s 992.5 Distribution of farm size from 1990 and 2000 rounds of FAO farm censuses 1203.1 Rural Rajasthan 2003: owned land by size class, with farm and household size characteristics 1363.2 Rural Rajasthan: owned land by size class (standard ha, sha)7.1 Land Authority (classical) land reforms in Latin America, 1961–85 2777.2 Operated farmland Ginis 1950–2003, grouped by ha/holding 2857.3 Farm population, selected countries, 1961–2005 290

7.4 Farm population, developing regions, 1961–2005 291

3. COMMENTS BY OTHERS

Michael Lipton has produced a unique work drawing upon the author’s extraordinary expertise in rural development.  Lipton takes on a great, complex, and contentious topic, land reform, and does justice to this huge topic.  He delves deeply and widely, producing a text that is remarkable in its scope, insights,

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and historical knowledge.  He never fears to point out the true complexities of topics that are all too often over-simplified.  Lipton’s work is also extremely timely, as the world turns its attention once again to smallholder agriculture after decades or relative neglect.  Scholars, students, and policy makers in all parts of the world will turn to this new study with enormous benefit and with gratitude to Lipton for his remarkable efforts. Jeffrey D. Sachs Director of the Earth Institute at Columbia University; Special Advisor to UN Secretary General Ban Ki-Moon on the Millennium Development Goals.   Land reform can make a huge contribution in removing poverty, but it has not been effectively tried in many areas of the world.  The story has to be finished, and in this important book one of the foremost development economists tells us why and how. Amartya Sen Lamont Professor of Economics and Philosophy, Harvard University; Nobel prizewinner in economics

A compelling case is made about the need to refocus on agricultural growth as the engine to reduce rural poverty. Improving access to land will ensure that the benefits of agricultural technical change reach many millions of rural poor. Professor Michael Lipton is a world renowned authority on these issues. His decades of research experience, distilled in the book, offer compelling, insightful and timely solutions which are critical in addressing the global food crisis. Akin Adesina, Vice President, Alliance for a Green Revolution in Africa

Michael Lipton (pinching from Mark Twain) convincingly states that 'Reports of land reform's death are greatly exaggerated'. He takes the reader on a developing-world tour and shows tremendous dynamics in land reforms. Land reform is neither dead nor dying. As land (with access to water) becomes more scarce, land values increase as a consequence. Farms in many regions of the developing world actually become smaller -mostly for good economic reasons- and the need for efficient institutional change related to land remains strong. This book gives guidance for sound policy and offers unique opportunities for learning about land reform across time and locations. It is a must for development scholars! Joachim von Braun, Director, International Food Policy Research Institute

Land reform has had a rollercoaster ride in the toolbox of development strategies: from a panacea that would cure all ills and help replicate the successes of Japan and Korea, to venom that destroys property rights and creates unviable production units that lead to agricultural decline and urban migration as it has purportedly done in Latin America. The story is really much more complex and nuanced. Michael Lipton - the doyen of the field - uses his half-century of thinking and experience as a development economist to set the record straight and to clarify the conditions under which land reform does and does not deliver the goods. It is a must read for those who are committed to finding the road to shared prosperity in the developing world. Ricardo Hausmann, Director, Center for International Development at Harvard University; Professor of the Practice of Economic Development, Harvard Kennedy School

This is a passionate book – it is also brilliantly argued. Michael Lipton accepts that the poor of South Asia and Sub-Saharan Africa need appropriate and often advanced scientific technologies – many new green revolutions – but they also need land reform. Without both of these there is little hope of the rural poor lifting themselves out of chronic poverty. Sir Gordon Conway, Chief Scientific Adviser, Department for International Development, UK; Professor of International Development, Imperial College, London

Comprehensive, careful, thoughtful and surprising: Land reform is alive and well and delivering develop-ment around the world.  Serious students of development, poverty and inequality will find here the micro theory and the macro picture - for years to come. Nancy Birdsall, President, Center for Global Development

In the context of poverty, land is the major asset. The rights over land are social constructs and so are an emotive political battleground. But rights affect incentives: land reform needs economic analysis. Michael Lipton provides an accessible and comprehensive guide without which no reformer should go into battle. Paul Collier, Professor of Economics; Director, Centre for Study of African Economies, Oxford University

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Land and Land Reform are, in several developing countries including India, live issues - perhaps more critical today than they were decades ago. The unique analytical framework, remarkable empirical evidence and insight, and a modern perspective in this path-breaking new book of Prof. Lipton are invaluable to researchers and policymakers in their endeavour to address problems of poverty, inequality and sustainability. Pramod K Mishra, Chairman, Gujarat Electricity Regulatory Commission; former Secretary to Government of India, Ministry of Agriculture, Department of Agriculture and Cooperation

Michael Lipton has, for the last few decades, been the world's authority on land reform and economic development. In a world of continuing poverty and inequality, slow agricultural growth, changing economic structures, rapid urbanisation, and facing profound challenges of climate change and deforestation, the institutions, policies and pressures concerning  access to and use of land are as important as ever. Michael Lipton's book is a crucial contribution and an analytical landmark.Lord Nicholas Stern, I.G. Patel Professor of Economics and Government and Director of Asia Research Centre, London School of Economics; Chief Economist and Senior President of the World Bank 2000-2003; leader of the Africa Commission and the Stern Review on climate change.

4. REVIEW ESSAY

The Case for Redistributional Land Reform in Developing CountriesAlbert Berry Development and Change Volume 42, Issue 2, pages 637–648, March 2011

Albert Berry is Professor Emeritus of Economics at the Centre for International Studies, University of Toronto. His research focuses on economic development and international economics, and has been published in academic journals including World Development, The Economic Journal, Review of Income and Wealth, and Latin American Research Review, among others.

Michael Lipton , Land Reform in Developing Countries: Property Rights and Property Wrongs . New York : Routledge , 2009 . 384 pp. £ 95.00 [Paperback £23.50]

It is a widely held view among experts in economic development that the best launching pad a country can have if it is to achieve fast and equitable growth is an egalitarian agrarian system composed of small family farms. Taiwan, with its early post-war land reform, is often held up as the paragon. However, between the knowledge (of the experts) and the action (of the politicians and other influential people) there has usually been an enormous gap. A key element of the argument that such a land distribution can be both equitable (in both the short and the long run)1 and growth-promoting has long been the inverse relationship (IR) between size of farm and land productivity. Several decades ago this arguably became one of the ‘stylized facts of development’, accepted by nearly everyone who had looked at the issue, questioned only by a few and usually on weak grounds. But of the various such ‘stylized facts’, this one has probably entered with least force into the policy process. Behind the gap between knowledge and implementation lies a long and frustrating story. On the knowledge front, Michael Lipton's Land Reform in Developing Countries: Property Rights and Property Wrongs is the latest and by far the most complete review of where we are and where we should be going.This is, to put it conservatively, an important book. It is the first comprehensive and up to date review of land reform issues in the developing countries in many years. In my opinion, it is one of the most important books ever written about agriculture in the developing countries. This conclusion is based in part on the book's impressive breadth of coverage and depth of

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analysis, in part on its timeliness, in part on the centrality of land reform issues to poverty and inequality reduction (and more generally to societal health in many countries), and in part on the urgent current need for very strong ammunition in the battle with the opponents of such reform. It is widely believed in many policy circles that land reform, if it ever was an important aspect of policy in developing countries, is so no longer. It is not happening and there is no need for it to happen. In this view, the advantages of size and the related economies of scale have now superseded such merits as smaller farmers might once have had in the industrial and developing worlds. One need only take a glance at recent articles like the laudatory review in the Economist (26 August 2010) of what has been achieved by large-scale agriculture in Brazil's Cerrado region and its statement that ‘like almost every large farming country, Brazil is divided between productive giant operations and inefficient hobby farms’ to get reinforcement in such beliefs.2 We have for many years now needed a powerful corrective to such often seriously biased and sometimes erroneous views. This book provides it. It is essential reading for anyone involved at any stage of a land reform, and for anyone weighing the pros and cons of such reform with an open mind (and a mind that can understand some microeconomics).The volume begins (Chapters 1 and 2) with extensive looks at the goals of land reform and the more general economic considerations surrounding it, including the IR and the interface between size structure and the Green Revolution and other aspects of the dynamics of agriculture. These background discussions set the stage for the review of land reforms, tenure systems, and how these are interrelated (Chapters 3 and 4). Chapter 5 (‘The terrible detour: collectivisation, decollectivisation’) details the unhappy/tragic perversion of land tenure change undertaken in the Soviet Union and elsewhere in the Communist world. Next comes a look at ‘new wave land reform’ (Chapter 6) and a powerful parting shot at those who doubt the continuing importance of such reform (Chapter 7, ‘The alleged death of land reform’).Both the agricultural economy and the traditional small farm in low-income countries can be complicated organisms, and any adequate analysis of land reform must be built around a solid understanding of them. Professor Lipton has already made major contributions to the study of agriculture in the developing countries with his analysis of peasant rationality and the nature and causes of peasant risk aversion (Lipton, 1968), of the pervasive biases of public policy in favour of urban areas and against rural ones (Lipton, 1977), and of the great role of new and better seeds in raising farming populations and others out of poverty (Lipton, 1989). These contributions involved three of the most important development issues of the last half-century. Land reform (LR) is a fourth such area, and in recent years the one most in need of such attention. The scholarly tour de force we have here could not be done by committee, but only by one person dedicating years of effort to the task, as Professor Lipton has done.Any term with as long a history as land reform can be expected to have a variety of categories and meanings. Classic Land Reform (CLR) in Lipton's terms (p. 127) involves the transfer of land from those with initial holdings above a maximum ceiling to those initially having something below a specific floor, and with varying possible degrees and forms of compensation to the former holders.3 Most of the historic debates have revolved around the economic, social and political effects of this type of reform. It has most often been espoused as corrective for social injustices and (usually related) economic inequities. In many situations, there is no doubting the merits of these goals; they alone are often adequate grounds for major land reforms.4 More contentious, always, have been the economic effects; will such reforms lower agricultural output, will they slow its growth over time, will they be environmentally damaging?The IR has been a key economic argument of reform proponents, since at least as far back as John Stuart Mill and his analysis of the effects of Irish land tenure. The debate revived in the twentieth century with evidence from the Indian Farm Management Surveys of the 1950s and from the Inter-American Committee for Agricultural Development on several Latin American countries, which ‘inspired two generations of productivity conscious reformers’ (p. 66) including liberal economists and some Marxists. By the 1966 FAO World Conference on Land Reform, a consensus had formed that this was important. A World Bank 1975 policy paper (World Bank, 1975) advocated for ceilings-based, productivity-conscious and non-

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confiscatory LR, citing evidence for IR.If such an inverse relationship exists, and if it is substantially a causal one (not due to other factors that determine both farm size and land productivity, such as land quality or water availability), then classic land reform would seem to be, in modern parlance, a ‘no-brainer’ since there would be no trade-off between social justice and economic performance. The putative benefits from land reform lie partly in its direct effects (raising incomes of poor people who get access to more land) and partly in such indirect (general equilibrium) impacts as the rise in overall rural and urban wage rates which may be expected to follow from a widespread increase in the marginal productivity of many low-income people and in the increased total demand for labour (including own labour) when a reform occurs and shifts technologies in a labour intensive direction.Lipton carefully reviews the evidence bearing not only on the existence and causality (from farm size to land productivity) of the IR, but also on whether this relationship typically weakens with time, with development, with the advent of new varieties (such as those that defined the Green Revolution), with globalization, or with anything else that has transpired over the last century or so. He concludes not only that the strength of the arguments for LR are very much today as they ever were, even though the details have changed, but also that much more reform has been taking place than is commonly believed, and that much more again should still take place. At the same time, and as might be expected, the forces working against desirable reform have remained very strong, though again the details involved have changed somewhat. The volume under review is a major exercise in the pricking of intellectual bubbles, the debunking of myths, and the correcting of often innocent misperceptions of the events of the last half century. The reader is left with an understanding that the LR saga is far from over, that the battle remains very much worth the effort, and that in this volume one has the evidence marshalled in a very useable and powerful form.In setting the record straight on recent trends, Lipton notes (frontispiece) that ‘small farms share of land is rising in most of Africa and Asia’ and that ‘this is driven not (as widely claimed) by growth in rural population or farm productivity, but by the relative efficiency of small farms, and in some cases by land reform’. ‘Classic land reform… has spread much further, and with more success, than is widely believed’ (p. 7) and continues to be central to the lives of billions of poor people. Land reform by detour (first collectivization, then break-up into small farms) now affects over a billion people dependent on agriculture. Perhaps another half billion got land through major redistribution of private rights. Lipton argues that the large decline in world poverty over 1950–2005 from half to a quarter (p. 1) was due less to the Green Revolution (though this was very important) than to LR. As for the future, wherever agriculture continues to be central to the lives of the poor, as it does in many countries, the role of reform will not diminish for the next half century at least (p. 10). In the process of making its case, the book attacks several of the shibboleths around the nature of small-scale agriculture, among them the ‘tragedy of the commons’, the proposition that land held in common is inevitably overused to the point of degradation; the simple logic and pro-private property implications of this idea seem to have maintained its popularity even as a combination of less simple but much more compelling logic, plus the weight of empirical evidence, should have consigned it to the intellectual dustbin.The arguments championed by Lipton face a sceptical audience not only among many supporters of social justice (see below) but also among many economists not close enough to the issues and data involved and/or not sufficiently schooled in microeconomic theory. Many equate economic efficiency with labour productivity. Others equate private profitability with economic or social efficiency. Both of these equations are incorrect. (Among economists who participate in the debates on LR, it should perhaps be required that they pass a refresher course on these theoretical issues before opining on LR issues. That test would greatly reduce the differences of opinion.) Lipton frequently draws the distinction between private efficiency (private return to capital and other resources used) by which criterion larger farms are often or usually efficient, and social efficiency, which takes account of the fact that smaller farms often utilize excess resources, especially labour, implying that when input costs are (correctly) measured at their social opportunity costs, the smaller farms often have the

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efficiency advantage.5The technical (economic) part of the book lays out these criteria, then proceeds to review at great depth the available evidence on the IR, its economic meaning and explanation, and how it may have changed over time, in the historical context of rising population pressures, rising environmental threats, globalization and the end of the Cold War. The very complete coverage of the empirical literature involves no ‘cherry picking’ of evidence to favour Lipton's conclusions, nor any attempt to sweep contradictory evidence under the rug. Conclusions are conservatively and prudently drawn, with nearly all of the potential arguments against the payoff to land reform taken into account, given their due and (usually) concluded to not alter greatly the arguments for reform, even though Lipton accepts that as development proceeds the merits of size do tend to grow. He is careful to distinguish between statistical association and causation, and dissects as much as possible both the proximate factors explaining the higher land productivity of smaller farms and the underlying factors that explain how small size causes higher land productivity. The four proximate factors (p. 72) are: (i) smaller farms leave less of their land unused; (ii) they have higher crop per year ratios on a given piece of soil; (iii) they have a higher-value cropping pattern; and (iv) they sometimes have higher yields for a given crop. Much of the early debate revolved around the last factor but it is now recognized to be of minor importance.6Underlying causal factors are discussed in terms of differences by farm size in the production cost per unit of output (UPC) and the transaction cost per unit of output (UTC). If all markets were perfect and all transactions costless then all farm sizes would be expected to operate in the same way. But imperfections and transaction costs abound. In Lipton's judgement (p. 73) the main explanation for the IR, and it is a causal one, is the differences in UTC that favour the small farms in developing countries but eventually (by the time a country is substantially industrialized) favour the larger ones. A main example is that the small farm, especially the food deficit unit (many small farms do other things than own farming and produce less food than the family consumes) has less (at the limit zero) costs of selling their products and less (at the limit zero) labour costs (when labour is in surplus supply). Lipton is at pains to explain that IR arises even when, as is usually the case, most big (and small) farmers achieve decent levels of private efficiency, with reasonably similar total factor productivities; but because their transaction costs differ their social efficiency also differs. He presents much detail on how the transaction costs of smaller farmers can be lowered by innovation, customary practices etc., and why the often denigrated ‘subsistence farming’ can be very resource efficient.Although reformers never cite income stability as a prominent goal of LR legislation, it is very important, since small farmers in low-income countries usually suffer both from low income and from unstable income. Analysis of any major policy initiative like land reform must take account of both, as Lipton systematically does. LR normally lowers income insecurity, both because it raises average income of beneficiary families and because the (post-reform) small family farm has more ways to smooth family income than either the (pre-reform) very small farmer or the landless worker.7Why would anyone oppose a policy step that is good both for income distribution (social justice) and for economic productivity and growth? Among the economic aspects of development, the history of discussion and debate around land reform has suffered more than its share of misleading arguments. Historians of thought should study it for the lessons it provides on the biasing impacts of the combination of (i) facts that are counterintuitive to most people not close to the issue (the idea that small, ill-clothed and uneducated farmers can be more efficient than large, modern, well-dressed and well-educated ones, or the idea that economies of scale are relatively unimportant in developing country agriculture); (ii) the lack of a feel for general equilibrium mechanisms; and (iii) the enormous combined political and intellectual clout of the large holders and their political allies. The idea of LR undoubtedly took a large hit from the neoliberal revolution in economics, since classic LR involves intervention and everything tarred with that brush became a mistake and a threat (deservedly, of course, for some types of intervention).Intriguingly, this battle for LR involves not only confrontations with vested interests — the

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largeholders and their various allies — but also with many people genuinely concerned about poverty, who do not understand how a land reform that provides small amounts of land to many or all farm families may be the fastest, sometimes the only, way to alleviate poverty. One of the hurdles to a better understanding of the merits of CLR lies in the fact that the incomes of the LR beneficiaries with their perhaps tiny plots are, initially, so low. Should not proponents of LR, or of any policy to get people out of poverty, be aiming higher? Of course they would prefer a quicker way out of poverty, but usually no policy instrument, nor any combination of available instruments, will get everyone out of poverty quickly, and the most effective options do involve many people sustaining low incomes for a period of time. The intellectual challenge here is to understand that assuring the lucky winners plenty of land by definition condemns the rest to having too little land. The IR generally implies that total agricultural income will be highest when land is (about) equally distributed. This is turn implies that the total poverty gap (the amount by which, in the aggregate, families fall below any given poverty line) is minimized under such a land distribution. Careless thinking on this point has muddied the waters and fuelled much bad policy around LR.One of the more credible of the steady stream of arguments — some serious and some risible — that have been mounted against land reform over the last half century or so is that an LR that does not include the majority of landless labourers as beneficiaries will impact negatively on that group by shrinking the paid employment complement of the large farm sector. Lipton (p. 53) contends that, for various reasons, this is in fact a smaller issue than it is often made out to be, because the completely landless are often a quite small share of the agricultural labour force, because often some do become LR beneficiaries, because the aggregate upward impact on labour use from an LR can create new jobs for them, and for other reasons. In cases where this negative effect on the landless is alleged, it is often due to leakages from the supposed beneficiaries to better-off capital intensive farmers, as in Namibia (p. 54). It is true, though, that part-time and sometimes migratory workers are more likely to be victims because they are simply missed in the reform process though lack of records, lack of organization, etc. (p. 55).More exotic is the ‘Chicago critique’ to the effect that, if there were anything to be gained output-wise from an alteration of the size structure of farms the market, left to its devices, would have brought about that shift on its own. Anyone familiar with the extent of market imperfections in and around agriculture in developing countries is unlikely to take this contention very seriously. Intellectual recourse to ‘perfect markets’ analysis is equivalent to keeping one's head deliberately and fervently in the sand.Quixotically, another group that sometimes diverts attention away from reforms that might work are the ‘deep greens’ with their desire that everything (inputs, sales, etc.) be as local as possible, including even seed improvement (p. 42). But the low-input farming that is likely to result typically means faster resource depletion, as rising population forces the use of more marginal lands, less fallow time, etc. Unconstrained small farms tend to use more fertilizers per acre than do other farms, part of a pattern also involving more water. Africa's slow agricultural growth, with minimal irrigation and fertilizer use has in fact led to massive soil and water depletion. Asian agriculture, with a few striking exceptions due to policy errors, has been largely sustainable.A very different critique of CLR (e.g. Powelson and Stock, 1987) is that it is designed to and does squeeze the peasantry. While Lipton does not question that this supplies much motivation for some LRs (he notes that a major reason that China and the USSR opted for collective farming was in order to access the surplus) he concludes that attempts to mulct the peasants have usually failed or even proven counter-productive. Whatever the intent, in cases like Korea and Taiwan, there is no question that the small farmers achieved quick and large income benefits from LR.Among the great lessons of collectivization and its less dramatic counterpart experiences in countries like Peru is the pervasive misreading of agrarian reality by those on the left as well as those on the right. Many of the same mistakes enter into the thinking of both — the prevalence of economies of scale and the lack of confidence in the managerial capacity of low-income peasants. It is a great historical irony that so many families have benefited from

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equalizing reforms that were the last chapter of a drama that began with collectivization. There is an interesting contrast of historical forces between decollectivization and CLR, and the former may well be systematically the easier of the two.The latest fashion in LR is the market-based or market-friendly version under which the state assists (through financing and in other ways) a process such that the land transferred into smaller farms is obtained through voluntary sale by the former largeholder. Lipton provides a balanced castigation of those unwilling to think of this new form as land reform at all, and those who see it as innately superior. Since this type of reform is so recent, it is harder to judge its potential than that of CLR. But Lipton's emphasis on possible complementarities between the two forms and the potential advantages of having one more instrument in the tool-kit is helpful. To the extent that this ‘wave’ poses a danger to the overall success of LR, it will probably be because, within the political process, it crowds out CLR, just as colonization has so frequently done in the past.In this volume and elsewhere Lipton has emphasized the interrelationships among various aspects of LR, understood broadly as getting more land into the hands of small-scale owners. Clearly, tax policy has much potential, since in most countries differential collection favours land over other assets, and makes it that much more attractive to largeholders. A tax reform is helpful when it imposes heavier taxes on land than on many other assets, both to encourage transfer to smallholders and to discourage holding of this asset for speculative purposes (an efficient tax system discourages holdings of all naturally speculative assets in favour of assets that are both productive and in variable supply). Such a reform and CLR can thus be seen in part as substitutes. But their complementarities may be even more important. When land is less useful as a tax shelter, largeholders are less determined to hold onto it at all costs. And land taxes can help to finance the rural infrastructure that makes all farms more profitable. Lipton (1993) argued persuasively some years ago that the threat of expropriation might be needed to give market-based land reform enough traction to make it actually work.Colonization to appease land hungry peasants is often a conscious alternative to contentious reforms, as in Brazil, Ecuador and Peru where mechanization responds to fear of militant workers (p. 47). Frequently the newcomer colonists wreak environmental damage to traditionally grazed lands. Sometimes the blame is put on commons grazing and weak fallow systems when it belongs elsewhere. Many commons-run lands would deplete under population pressure regardless of how they were managed.It is true of many countries that with time and development, the potential economic and social contribution of a good land reform diminishes. But this is not grounds for concluding that we should be forgetting about it just yet. To do so is in part to make the same sort of mistake made by the ‘industry first’ proponents of half a century ago who, on the grounds that agriculture's share of output and employment falls as development proceeds, concluded that the sector could safely be ignored and left to fend for itself. This was a costly mistake in a number of countries. The famous article by Johnston and Mellor (1961), among others, demolished that view but, like the idea that LR is passé, it has continued to pop up since then.Lipton's main point is that, under most conditions, the arguments that made small family farming the best way to go fifty years ago are still valid. Accordingly, LR and complementary policies that promote that form of agriculture are still highly relevant in much if not most of the developing world. LR is dramatically relevant in many countries and regions of the world. Further, although it is not a main focus of Lipton's attention, the usually gradual process of land concentration that eventually leads to the need for drastic land reform (and imposes heavy social costs on the majority of countries that cannot undertake such reform) also continues to deserve much attention. A good reform is one that includes barriers to such re-concentration of land, normally in the form of a land ceiling. But what of the countries that have not had reforms and are undergoing that gradual (or not-so-gradual) land concentration? They need preventive steps to maintain such equity and small-farm based efficiencies as they have, and to avoid the social and economic costs of concentration. Many authors (e.g. Carter and Zimmerman, 2000) have written cogently on the vulnerability of small farmers who lose their land to larger ones. Sometimes this happens under conditions of extreme injustice and conflict, as over the last several decades in Colombia, or injustice associated with weak or

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absent or conniving states, as in such countries as Paraguay, where aerial fumigation of large farms makes neighbouring small farms uninhabitable or dangerous to health, or under conditions of generalized violence (Sudan, Congo). In short, the key ideas that underpin the desirability of LRs also underpin preventive action against the ever-present threat of land concentration through the corrosive effects of unequal political power. These processes have always been pervasive, as apparent from the long histories of agrarian systems in the empires of China and India, for example (Tuma, 1965).Understanding the arguments for land reform and what, broadly speaking, needs to happen to achieve it is usually the easier part of the reformer's challenge. Many countries at many times have ‘needed’ such reform but it has either not been undertaken or has not proceeded as it should. Apart from its invaluable analysis of the economic evidence that pertains to land reform, this volume also discusses the surrounding politics in a way that will be helpful to the reformer looking to see how to work through the morass of opposition and confusion. Some of this discussion appears at the end of Chapter 1. Other points are made throughout the volume.Some aspects of the politics of land reform are straightforward but others are tricky and nuanced. Who some of the main opponents will be is clear. But what palliatives will be put forward with what political persuasiveness, how overblown fears will generate opposition, and how good timing and sequencing of reforms can be crucial to their success, are all complicated matters. The danger that holders of extreme and simplistic (or simply erroneous) views will hijack a promising reform process is exemplified by the Russian and Chinese revolutionaries who won mass support for individual land redistribution, only later revealing that they were determined to collectivize (p. 25). Latent goals of the rich always deserve watching, as they are often able to distort the reform process in their own favour.Chapter 7, ‘The death of land reform’, revisits most of the issues dealt with earlier in an analytic way (attempting to understand reality) but now with a view to how they are relevant to those undertaking LR. It provides a practical guide to the issues that need to be taken up, together with much information on the current agrarian reality in the various parts of the world that provide the context for those reform efforts.* * * **Depth, conceptual breadth and vast coverage of the literature are all here. In this volume, Lipton goes into virtually every nook and cranny, including those that could in principle overturn the basic conclusion he reaches about LR. Because it is so detailed and complete in laying out the empirical evidence, many people will not read it from cover to cover, though everyone who has followed the issue closely over the years certainly will. For those for whom some of the economics is a struggle or who are mainly interested in the bottom line on the various LR issues, the brief ten-page introduction is helpful, as is the last summing-up chapter. Some of the background discussion inevitably takes us into the realm of philosophy, e.g. that directed to the competing concepts of legitimate inheritance and non-owners’ access to equal opportunity (pp. 26–29).Lipton is cautious on those points where the evidence is ambiguous. This gives much greater weight to those points on which he takes a strong position; the reader is in little doubt that he is right.8 The overall import of the volume is that, in many aspects of LR, the proponent does have some real thinking to do — not too many generalizations can be made that involve no possible exceptions, as exemplified by the complicated relationship between farm size and the environmental effects of farming.It is intriguing that social policy, defined as the set of instruments useful in bringing people out of temporary or chronic poverty and reducing the risks of their falling into those states, has received much discussion over the last couple of decades without much attention to the policy that in many countries would have the greatest potential on both these counts — land reform, and particularly what Lipton refers to as ‘classic land reform’. The story of land reform is very much a story of the reduction of poverty and of the income instability of the poor and hence it fits nicely into today's discussions around social safety nets, economic security and social policies, a justifiable and laudable concern of all governments who take the welfare of their citizens to heart, of all the major international agencies, and of many

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NGOs. Just as LR has so typically been neglected in debates on agriculture and rural development, from which neglect it is to be hoped that Professor Lipton's volume will help to rescue it, so it has been relatively absent from many debates on social policy. Hopefully, this study will have an impact in that domain as well, since it offers a thorough look at LR in all its important aspects, including the effects on poverty and economic insecurity. A complementary study to Lipton's would involve a careful comparison among all of the major instruments of poverty reduction and economic security, including LR. Thus far there is no such comprehensive and careful study in that domain. It should be one of the next items on our collective agenda.

Footnotes 1 Agriculture-based equality endures through the various mechanisms that create a powerful inertia in the degree of inequality in any society, an inertia well recorded over recent decades in the developing world, in fact one that leads many to despair as to whether and when inequality in countries where it starts high (like Brazil and South Africa) can ever come close to those where it started low (Taiwan, Vietnam, in lesser degree Costa Rica). At this point in time, the only market-based developing countries whose Gini coefficients (for personal or family income distribution) are or have likely been below 0.35 are those that had early equalizing land reforms.2 Discussions like this one seldom define ‘efficiency’ and when they do it is usually the wrong definition. They highlight the high share of output coming from large farms or the high labour productivity, but do not worry about the general equilibrium impacts of such agriculture, e.g. where the workers who might otherwise have worked this highly mechanized land will get alternative jobs. It is perhaps not surprising that non-academic writing often argues that bigger is better, but there is no doubt that such writing is influential in forming the views of non-economists and even some economists.3 Tenancy regulations and titling of formerly public lands are other elements of the LR package.4 Social justice arguments are sometimes based simply on the fact that land concentration in a few hands pushes many people into poverty. Sometimes they also involve past theft of the land out of which the large farms have been built; Colombia is currently an extreme example of that form of injustice.5 One might add a third and broader concept of efficiency, which allows also for who gets the incomes from a given economic unit's productive activities. This criterion of efficiency was put forward by Chenery et al. (1973) to reflect the fact that a given amount of income is in fact worth more to lower-income people and that this fact should be taken into account as overall social efficiency comparisons are made between types of production units, patterns of growth, etc. In those terms, smaller farmers have an even larger advantage over large ones, often leaving them unquestionably more efficient from a broad social perspective than their larger counterparts when measured against this appropriate criterion.6 In my experience in Latin America there are many cases in which yield of a given crop rises with size, but this tendency is more than offset by the other factors, especially the higher value cropping pattern.7 A factor contributing to Cuba's revolution was the income instability suffered by landless workers in a sugar system where paid work was seasonal.8 Lipton's discussion of the pros and cons of land reform in a context of feudal or semi-feudal conditions where the landlord is relatively benevolent raises the inevitable ambiguity of social dynamics; things can go either way depending on many aspects of a situation that are hard to predict and generalize about. He concludes (p. 37) with customary prudence, that ‘Land reform is often the best chance for social inclusion and freedom’.

REFERENCESCarter, Michael and Fred Zimmerman (2000) ‘The Dynamic Costs and Persistence of Asset

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Inequality in an Agrarian Economy’, Journal of Development Economics 63(2): 265–302. Chenery, Hollis B., Montek S. Ahluwalia, Clive Bell, John Duloy and Richard Jolly (1973) Redistribution with Growth. London : Oxford University Press. Johnston, Bruce F. and John Mellor (1961) ‘The Role of Agriculture in Economic Development’, American Economic Review 51(4): 566–93. Lipton, Michael (1968) ‘The Theory of the Optimizing Peasant’, Journal of Development Studies 4(3): 327–51. Lipton, Michael (1977) Why Poor People Stay Poor: Urban Bias in World Development. Cambridge , MA : Harvard University Press. Lipton, Michael (1989) New Seeds and Poor People. Baltimore , MD : Johns Hopkins Press. Lipton, Michael (1993) ‘Land Reform as Commenced Business: The Evidence against Stopping’, World Development 21(4): 641–57. Powelson, John P. and R. Stock (1987) The Peasant Betrayed: Land Reform in the Third World. Boston , MA : Oelgeschlagetr, Gunn and Hain. The Economist (2010) ‘The Miracle of the Cerrado’, 26 August. Tuma, Elias H. (1965) Twenty-six Centuries of Agrarian Reform: A Comparative Analysis. Berkeley , CA : University of California Press. World Bank (1975) Land Reform-Sector Policy Paper. Washington , DC : The World Bank.

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