i
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 and
this 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 Research
Professor 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 x
Acknowledgements xi
Introducing Land Reform 1
(a) Why land reform matters 1
(b) Structure of the book: land reform goals, efficiency, types – and death? 5
(c) Land reform: past and future 8
ii
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
iii
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
(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
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(ii) How does new-wave reform relate to classic land reform? 261
(iii) Sheep and arsenic: rewards and last resorts 267
Appendix: 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 41
2.1 Percentage operated area in farm-size groups, 1960–61/2002–03: rural India 95
2.2 Small/medium farms: agricultural censuses from 1985, Africa, Asia, Central & South America 96
2.3 Small/medium farms: agricultural censuses from 1985, Europe &North America 97
2.4 Size (ha) of median farm, farm with median hectare, and farmland Gini: developing-country
trends, 1970s to 1990s 99
2.5 Distribution of farm size from 1990 and 2000 rounds of FAO farm censuses 120
3.1 Rural Rajasthan 2003: owned land by size class, with farm and household size characteristics 136
3.2 Rural Rajasthan: owned land by size class (standard ha, sha)
7.1 Land Authority (classical) land reforms in Latin America, 1961–85 277
7.2 Operated farmland Ginis 1950–2003, grouped by ha/holding 285
7.3 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,
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
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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 development 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
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
vi
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 20002003; leader of the Africa Commission and the Stern Review on climate change.
4. REVIEW ESSAY
The Case for Redistributional Land Reform in Developing Countries
Albert 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
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
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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 largescale 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 halfcentury. 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 nonconfiscatory 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
viii
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 breakup 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 proprivate 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
efficiency advantage.5
The 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
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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.6
Underlying 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 (prereform) very small farmer or the landless worker.7
Why 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
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
x
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
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
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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 reconcentration 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
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
xii
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
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
xiii
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’.
REFERENCES
Carter, Michael and Fred Zimmerman (2000) ‘The Dynamic Costs and Persistence of Asset
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.
xiv
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.