Economic Theory Development Economics-Methodology, Agrarian Structure and Rent Control Laws

Methodology, Agrarian Structure and Rent Control Laws Kaushik Basu This paper argues that pure theory and abstract reasoning play a crucial role in the advance of development economics. Abstract theoretical arguments can throw light on many critical matters of political economy and policy-making. Two examples are taken up to illustrate this. First, it is shown that the connection between efficiency and exploitation in backward agriculture has been widely misunderstood, but this can be sorted out by resorting to some simple theory. Secondly, the subject of rental laws is a source of much confusion but, again, abstract reasoning can help us understand many of the issues involved. The popular view that the existing rental laws are 'pro-tenant' is examined and some suggestions are made for policy reform.