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Is land a commodity?
Written by: Michel Merlet, (English version: Mary Rodeghier)
Writing date: November 2007
Organizations: Association pour contribuer à l’Amélioration de la Gouvernance de la Terre, de l’Eau et des Ressources naturelles (AGTER), Institut de Recherche et d’Applications des Méthodes de Développement (IRAM), Réseau Agriculture Paysanne et Modernisation (APM), Fondation Charles Léopold Mayer pour le Progrès de l’Homme (FPH)
Type of document: Research Paper
Merlet, Michel. Proposal Paper. Land Policies and Agrarian Reforms. AGTER. November 2007. (English version: Rodeghier, Mary). 120 p.
A. Land remains a major cause of conflicts and problems
Links can often be made between the land tenure situation, economic well-being and governance: countries that have undergone sustainable economic development and which are the most democratic are also the countries that have a relatively egalitarian distribution of land. As in the past, many of the world’s conflicts are still more or less directly related to land issues.
In a general way, these conflicts can be grouped into three related types:
very unequal distribution of land, leading to the implementation of agrarian reforms;
insecure access to land or resources: non-recognition of customary rights, lack of guarantees for tenant farmers1, share-croppers, insecure rights of natural resource users, etc.;
social and ethnic groups’ claims for the right to exercise power over a territory. This is the typical case of territorial claims made by indigenous peoples, and also of claims with historical roots and sometimes religious and cultural connotations.
These issues have given rise to a large number of works, though the reflections and proposals resulting from them generally remain quite segmented. Our purpose is to align diverse situations on different continents and to assemble subjects that are usually treated separately. Thereby, together we can formulate innovative proposals that not only move the debate forward, but more importantly increase the capacity for proposal held by the organisations representing the farmers and communities concerned, in order to contribute to speedy and sustainable solutions for a number of land-related conflicts today.
The sole aim of this paper is to contribute toward furthering this cause.
B. Is land a commodity?
“What we call land is an element of nature inextricably interwoven with man’s institutions. To isolate it and form a market for it was perhaps the weirdest of all the undertakings of our ancestors.”
(Karl Polanyi, The Great Transformation, 1944.)
1. Land, a good unlike others
Land has at least two specificities:
1. Rights to land refer to a space, to a “territory”. A piece of the Earth’s crust cannot be destroyed or moved. Therefore “ownership” of land cannot be assimilated with ownership of just any object. Rights over a territory refer to the relations with other human beings liable to travel over this space or to use the resources it contains.
2. Land has the particularity of containing natural resources that are not the fruit of human labour. Thus, for example, natural fertility is not the same everywhere; “spontaneous” plant cover can also be used; the earth itself can contain water, minerals and so forth. This remains true nonetheless when another part of these resources may also result from the accumulated work of generations of farmers (fertility is not only a “natural” state).
Land rights therefore refer to relations with other humans who might travel over this space or use its resources. Thus the relationship between human beings and land is essentially a social relationship, a relationship between human beings based on land. For this reason, land was a primary focus of early political economists as they elaborated different theories of unearned income coming from land tenure2.
However, land rights are now bought and sold in many parts of the world. In this sense, land has become a saleable good, though one that cannot be assimilated with goods that have been manufactured for sale. This is why, as early as 1944, Karl Polanyi spoke of fictional merchandise. (cf. box #1)
2. Absolute ownership of the ground, a myth without innocence
In « La Gestation de Propriété » 3, Joseph Comby explains that land ownership can never be absolute: a simple idea whose implications are extremely important. Even in countries that have invented the right of “absolute” ownership, the latter cannot apply to the ground. (See, for example, the right in France to hunt on private property, and the myriad restrictions imposed on construction by local regulations, etc.).
As far as land is concerned, property is actually a bundle of rights. In other words, land ownership is nothing but the ownership of one or more rights and thus a landowner is merely he or she that has the most rights among all others. This leads to many possibilities; rights can overlap without causing problems, or be in contradiction with one another. This is the case in Africa, in most “indigenous” societies and even in less obvious but nonetheless concrete ways in places where private property predominates such as Europe and Latin America. Although property title deeds are often used to set the boundaries of a plot, it is the tenure rights signified rather than the surface area of the land that endows a possible exchange value.
If absolute ownership does not exist, we must therefore speak of the transformation of some tenure rights into commodities, and not of the land itself as a commodity.
3. « The satanic mill »4
These preliminary observations allow us to better understand why the market and capitalist development cannot « solve » land problems alone in the interest of the greatest number of people. This leads to several consequences that although obvious are nonetheless fundamental.
Like land and the rights associated with it, many other goods, especially those related to living organisms, are not genuine goods according to Polanyi’s definition of the term since the market is unable to regulate the good’s price. Likewise, goods other than land can be the sources of unearned income. Moreover, the prices of goods are not only set by markets, but also are affected by social conflicts. Therefore, prices may reflect the balance of power.
The temptation to consider economic phenomena independently from society, thereby constituting distinct systems to which the latter is subjected, is just an illusion. The dramatic consequences and dangers that this illusion entails were already blatant fifty years ago, but now they appear in new and more worrisome forms in the present era of neo-liberal dogma and globalisation.
According to Polanyi’s analysis, this madness, which he thought had ended, was the cause of the profound economic and social disorder of the first half of the 20th century, including the Great Depression and the rise of fascism. It has now returned to centre stage to cover the entire world, casting a growing shadow over the future of humankind5.
C. The administration of property rights and the arbitration of conflicts
Since the relations binding people to the land are essentially social in nature, it is logical that contradictions and conflicts occur through time between people and social groups. Since no social system is static forever, conflicts are inevitable in a social system, but rather in constant flux. They can even be salutary and necessary, as emphasised by Etienne Le Roy, who insists on the fact that « what is serious in a conflict … is the failure to resolve it, making it worsen into dispute and then drama, with tragic consequences »6.
Therefore, in order to go beyond the basics, our reflections must constantly attempt to link together our understanding of “forms of social organisation at the local level” and land matters. Thus, it is impossible to conceive of a land tenure system in abstract form; the decision-making bodies responsible for modifying and updating land rights and those called to settle conflicts must also be taken into consideration.
Box # 1 The world as a commodity, a dangerous fiction. Excerpts from The Great Transformation by Karl Polanyi, 1944.7
Here, goods are empirically defined as objects produced for sale on the market; and markets are also empirically defined as actual contacts between buyers and sellers. Accordingly, every element of industry is regarded as having been produced for sale, as then and then only will it be subject to the supply-and-demand mechanism interacting with price. (…)
The crucial point is this: labour, land and money are essential elements of industry; they must also be organised in markets; in fact, these markets form an absolutely vital part of the economic system. But labour, land and money are obviously not commodities. The postulate that anything that is bought and sold must have been produced for sale is emphatically untrue in regard to them. (…) None of them is produced for sale. The commodity description of labour, land and money is entirely fictitious.
Nevertheless, it is with the help of this fiction that the actual markets for labour, land and money are organized; they are being actually bought and sold on the market; their demand and supply are real magnitudes; and any measures or policies that would inhibit the formation of such markets would ipso facto endanger the self-regulation of the system. The commodity fiction, therefore, supplies a vital organizing principle in regard to the whole of society affecting almost all its institutions in the most varied ways, namely, the principle according to which no arrangement or behaviour should be allowed to exist that might prevent the actual functioning of the market mechanism on the lines of the commodity fiction.
Now, in regard with labour, land and money, such a postulate cannot be upheld. To allow the market mechanism to be sole director of the fate of human beings and their natural environment, indeed, even of the amount and use of purchasing power, would result in the demolition of society. For the alleged commodity « labour power » cannot be shoved about, used indiscriminately, or even left unused, without affecting also the human individual who happens to be the bearer of this peculiar commodity. In disposing of a man’s labour power the system would, incidentally, dispose of the physical, psychological and moral entity « man » attached to that tag. Robbed of the protective covering of cultural institutions, human beings would perish from the effects of social exposure; they would die as the victims of acute social dislocation through vice, perversion, crime and starvation. Nature would be reduced to its elements, neighbourhoods and landscapes defiled, rivers polluted, military safety jeopardized, the power to produce food and raw materials destroyed. Finally, the market administration of purchasing power would periodically liquidate business enterprise, for shortages and surfeits of money would prove as disastrous to business as floods and droughts in primitive society. Undoubtedly, labour, land, and money markets are essential to a market economy. But no society could stand the effects of such a system if crude fictions even for the shortest stretch of time unless its human and natural substance, as well as its business organization, was protected against the ravages of this satanic mill.
Diverse land tenure administration systems exist around the world. They are related to specific historic processes. Procedures of inheritance, mechanisms for the periodic redistribution of land and wealth, the existence of bundles of rights, etc. have given rise to centralised land and wealth management systems whose foundations differ across cultures and time periods. Such differences can also be found within developed countries, and therefore do not correspond in any way to a demarcation between developed and underdeveloped societies, or between modernity and archaism. For example, in Europe, different land registers and several different ways to provide public notice of tenure rights coexist without raising irresolvable problems8.
Different societies also have very different dispute settlement systems. Four major types of situations can be distinguished9. In the first two cases, only the parties in conflict are involved:
the parties can reach agreement without the dispute becoming an open conflict, each of the parties making the necessary concessions;
they can confront each other, with the stronger overcoming the weaker.
Two other situations exist between these two extreme cases:
the required intervention of a third party, who abides by socially accepted legal standards, and arbitrates for a settlement between the two parties.
The intervention of a judge, who applies the existing law coercively.
As stated by E. Le Roy, « Whereas modern Western legal and judicial culture exclusively considers the imposed order to settle disputes as soon as they reach a certain stage, Africans prefer to settle conflicts within the group from which it sprang, cii biir u deuk, or in the belly of the village as the Wolofs of Senegal told me. »10
Contrary to what is all too often accepted, there is no single, standard worldwide solution for information systems on tenure rights11, nor is there one for conflict resolution.
1 And sometimes also owners transferring rented land, cf. below.
2 The importance of unearned income coming from land tenure for the classical economists (especially Ricardo), reviewed and modified by Marx, is well known. The following is a brief reminder of the essential definitions of two key concepts, differential rent and absolute rent. Differential rent springs from the sale on the same market at the same price of productions from plots of land that, for the same area and with the same quantities of labour, do not all produce the same wealth. Part of these differences stem from the natural fertility of the soil, climate, and another part from the investments used in the environment, drainage, irrigation, soil improvement, etc. An owner can therefore collect this surplus by making the farmer pay a rent. The farmer will accept such rent as long as the profit he makes matches what he could obtain elsewhere. The reasoning behind absolute rent is totally different: a landowner can, due to the balance of power in his favour, demand the farmer to pay a rent, theoretically even on the poorest land, containing no differential component. Neoclassical and institutional economics have distinct approaches to land. Record # 13 of the second part of this paper provides additional elements on this subject [O. Delahaye, USA. Farm land and the law in the United States of America at the basis of the positions of the Washington Consensus.
3 This article explains how the idea of land ownership has been constructed historically. In (dir. Philippe Lavigne Delville) Quelles politiques foncières pour l’Afrique rurale? Réconcilier pratiques, légitimité et légalité, Paris : Karthala, Coopération française, 1998.
4 The expression is from Polanyi in The Great Transformation. Cf. box 1.
5 Read Susan George on this subject in A Short History of Neoliberalism - Twenty Years of Elite Economics and Emerging Opportunities for Structural Change. Bangkok: Conference On Economic Sovereignty In A Globalising World, 24-26 March 1999
1 Etienne Le Roy, La sécurisation foncière en Afrique. Paris: Karthala, 1996, pp. 280.
7 New York and Toronto: Farrar & Rinhart, inc., 1944.
8 Mention should be made of the example of the German Land Book in which rights are verified by a judge before being registered and the French system, which, on the contrary, is based on the strong presumption that rights result from a successive social validation of contracts between individuals. These two systems coexist in France, the first in the eastern départments while the second predominates elsewhere. Source: a lecture given by Joseph Comby and Jacques Gastaldi, “Les systèmes d’information foncière” in (dir. Philippe Lavigne Delville) Quelles politiques foncières pour l’Afrique rurale? Réconcilier pratiques, légitimité et légalité, Paris : Karthala, Coopération française. 1998.
9 We use the classification of N. Rouland in his Anthropologie juridique (quoted by E. Le Roy, La sécurisation foncière en Afrique, Paris: Karthala, 1996, pp. 209), which distinguishes respectively the accepted order, the contested order, the negotiated order, and the imposed order.
10 E. Le Roy, op cit. pp. 210.
11 We return to this subject later on in this paper.