ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Political Economy of Land Grab

A new phase of capitalist expansion led by "global capital" is driving governments, including those of the left, to dispossess and displace peasants from agricultural land, even using force to break up peasant resistance. The article offers an understanding of this new phase, with a focus on the role and compulsions of governments. The analysis is in the tradition of radical political economy, and is based on a revaluation and expansion of Marx's conceptualisation of rent and the primitive accumulation of capital.

Perspectives

Political Economyof Land Grab

T

Economic and Political WeeklyApril 7, 20071282capital,that the necessary changes can beimplemented.Capitalist RentThe principle endeavour of imperialismin the current age is to extract rent, takingadvantage of natural or imposedimmobilityand non-replicability. The reason can befound in the history of evolution of capi-talism. Grossly put, since the 1970s, techno-logy and the organisational structure ofcapitalist enterprise have evolved in sucha way that income distribution is becomingacutely skewed. Technological innovationis directed towards reducing manpowerrequirement. At the same time the need fortechnicians with some degree of mechanicalcompetence in the operation of computer-aided production processes is increasingdisproportionately. This technical labourforce has to be compensated for the invest-ment in acquisition of such training. Thoughthey can hardly be differentiated from theirolder traditional counterpart in the labourforce, in terms of their mechanical defer-ence to the orders of the management, theyearn higher wages. For thissmall segmentof the workforce, as well as for the expand-ing segment of managerial staff, salariesand wages are rising. For the large massesof the population, who cannot afford toacquire such skills,unemployment is onthe rise. To maintain the demand-supplybalance, the sectoral division of invest-ment is adapted to the increasingly unequaldistribution of purchasing power. An in-creasing proportion of the workforce isemployed in the production of luxury goodsand services. Demand has to be generatedfor such commodities. Esoteric needs haveto be created in the minds of the smallfraction of the workforce that can buy. Sothere is an expansion in the workforceemployed in sales and advertisement. Butthis is insufficient for compensating for thesluggishness of demand caused by thephenomenal decrease in the rate of growthof the demand for mass consumption goods.The culture of the market-oriented societyhas mutated to the aid of sustaining/seduc-ing the exponentially expanding desires ofthe rich. An elementary aspect of this newculture is that it breeds a perception of afast rate of obsolescence of consumerdurables. This also causes a fast rate ofobsolescence of technology – both of thatemployed in producing such commodities,as well as that embodied in the durablesthemselves. The cost of increasing R&Dtosupport this fundamental systemicrequirementis balanced by the accompa-nying reduction in labour required for pro-duction. This further adds to the trendtowards decrease in the demand for massconsumer goods. Credit financing of con-sumer purchases is a commonly usedinstrument for boosting sluggish demandunder the circumstances. This leads to theexpansion of the financial sector dedicatedto financing consumer purchases. The smallworkforce employed in this segment alsobelongs to the developed enclave. Globali-sation expands the scope of earning profitin another area – speculation. New instru-ments of global speculation emerge. Facedwith this current phase of systemic crisis,global capital is also expanding the scopeof other routes of surplus extortion, whichhave always been available within thesystem. It is increasingly falling back onthe tried and tested method of investmentfor colonisation of resources to extractrent.This may be a trifle baffling and so callsfor some elaboration. Capital, havingacquired proprietary rights over theresourcesthat were previously under thecontrol of the feudal classes used them forrent earning which supplements its profitearning.5Put very succinctly, rent is earnedon the basis of immobility of resources andof produced goods. It may be extractedthrough the establishment of proprietaryrights over immobile resources. Or it maybe extracted by curbing the mobility ofproduced goods across the boundary of adesignated market. This latter is what isusually called monopoly profit. WithinMarxist political economy this is besttreated as a species of rent.6This is theo-retically reasonable because rent is ex-tracted on the basis of immobility andmonopoly over the rarity that cannot bedevalued or diluted because of immobility.The additional price that is extracted bythe monopolist firm originates in just this.The immobility of a resource may be anatural characteristic of the resource (asin the case of land, minerals, etc) or theimmobility may be created by devisingsuitable laws and regulations (like in thecase of knowledge, genetically engineeredvarieties of plants, etc). Patent laws renderknowledge and technology immobile andnon-replicable. The right to such resourcesvests with the capitalist enterprises thatfund research or are able to use bourgeoislegal processes to sanctify the theft ofknowledge which belonged traditionallyto some community. Thefts of rights overtraditional plant varieties and over tradi-tional herbal medicines are some examplesof the latter process. If some othereconomicagent wishes to use such monopolisedscience and technology, it has to pay asubject to royalty. Technology (for ex-ample, genetic engineering) too is used togenerate such monopoly. Seeds are beingso engineered that plants that are born ofsuch seeds are incapable of reproduction.Monopoly over immobile resources gen-erates rent for the owner.The immobility of resources may beused in either of two ways to generate rent.The immobility may be used to depress thepayment to some input purchased by capi-tal, or the right to the immobile resourcemay be appropriated by global capital itselfto extract a rent from the user of thisresource. The immobility of labour is themost striking example of the former, whilethe appropriation of land by global capitalfor realty business is a common exampleof the latter kind of rent extraction.Rent generated by the immobility oflabour and appropriated by global capitalraises some thorny theoretical issues andtherefore calls for some elaboration. Sinceits inception, trade in services had beenexcluded from the purview of the GeneralAgreement on Tariffs and Trade (GATT).The reason that was generally advancedwas that in the case of services, unlike inthe case of goods, production and sale aresimultaneous events. As a result,insistenceon free trade in services would amount tothe insistence that every country shouldallow every other country to set up serviceproviders. This would not require just freeaccess for foreign capital, but also theindisputable right of foreign enterprises toset up shop with their own personnel. Itwas argued that this would infringe on theright of sovereign nations to allow ordisallow foreign nationals the right to enterthe country. However, at the Uruguay roundof negotiations it was decided to includetrade in services within the purview ofGATT under an agreement called GATS– the General Agreement on Trade inServices. Subsequently, it was also in-cluded within the scope of the WorldTradeOrganisation (WTO). Trade in labourservices was however kept out of the scopeof GATS. One of the reasons offered forthis exclusion was the same as thatadvancedat the initial stage of formationof GATT for exclusion of trade in servicesin their entirety.The real reason was that the exclusionof labour services from the purview ofWTO implies that the unemployed in India,for example, cannot migrate to the US in
Economic and Political WeeklyApril 7, 20071283search of jobs, though the provisions ofGATS ensure that an American insurancecompany can set up an establishment inIndia as a service provider. The companycannot be barred from employing person-nel from the US either. Because labour isimmobile the wages in high unemploy-ment areas like India are less than thewages in say, the US. This is also com-pounded by the difference in the sociallyconditioned needs of labour. Thisculturallydetermined difference, in turn, is sustainedpartially by the immobility of labour. Thewage difference allows global capital toearn super-normal profit by fragmentingthe production processes controlled bythem, outsourcing parts of the process tothe low wage areas. If we designate anyearning above the normal that originatesin the immobility of resources as rent thenthe additional profit that is earned by apublishing house in an advanced countryby outsourcing editing, proof reading, etc,to some concern in the low wage areas canbe called rent. Such rent earning is notrestricted to parent concerns located in theadvanced countries alone. Enterprisesowned by global capital and located inpoor countries like ours can also earn rentfrom the immobility of labour by puttingout parts of its production process to smallerenterprises which are exempt from statu-tory regulations relating to minimum wagesand other benefits for labour, environmen-tal standards, etc, which are applicable forlarger concerns to which laws like theFactories Act apply. This has a significantimplication, which we have mentioned inpassing.7 The “first world” is not geo-graphically specific any longer. This is oneinstance of the impact of globalisation ofcapital. There is little point in distinguish-ing big capital in terms of origin, even ifthis were actually possible. Their objec-tives are the same and therefore theiroperations would cause the same kind ofimpoverishment.Rent extraction by global capital origi-nating in the immobility of labour hasanother important theoretical implication.Immobility of resources generates rent.The so-called scientific laws of demandand supply do not decide the distributionof the rent originating in the immobilityof a resource. This shows up the claim ofthe scientific logic of the marketplace tobe part of the ideological apparatus thatis generated in the course of capitalistgrowth and which is essential for persuad-ing the doubters, of the efficiency of thesystem. The business process outsourcing(BPO) enterprises located in the low wageregions enjoy a cost advantage on accountof the low labour cost. This generates rentthat is attributable to the immobility oflabour. But this rent does not accrue to theBPO enterprise. It is appropriated mostlyby the enterprise owned by global capitalthat puts out work to the BPO unit. Thedistribution of rent is determined by thedistribution of economic power. In thepresent age this is entirely the preserve ofglobal capital.The question of power, with all its“unscientific” connotations, is something,that the discourses of both neoclassical andtraditional Marxist political economy treatas an aberration in the age of capitalism.A revaluation of rent in the age of capitalhowever shows power, which cannot bereduced to any economic index, as aninseparable aspect of the capitalist eco-nomy. This is global capital’s “feudalplunder”.8Primitive Capital AccumulationIn order to facilitate rent earning of globalcapital the state must actively ensure boththe proprietary rights of capital over re-sources and also the immobility of theseresources. The process of acquisition ofthese rights is what constitutes primitivecapital accumulation (PCA). So rent extrac-tion and PCA are fundamental aspects ofthe economy in this era of globalised capital.A concept, that is central to our analysisof the international economic organisationsis PCA. Let us elaborate this concept andits centrality in the current phase of capi-talist development. Since the demise of theprimitive tribal communities,9society hasbeen divided into the surplus producingworking classes and the surplus appropri-ating classes. In each society, surplus isappropriated in a specific way.For a par-ticular mode of appropriation to be viable,a particular state structure, containing aspecific legal apparatus is necessary. Themodern capitalist state and its legal systemmay appear to be non-discriminatorybecause, in a formal sense, they are im-personal.10 But this blase indifference canbe sustained only by a very crude andfundamental discrimination below thesurface. A process that is both prior andsimultaneous to the working of the “non-discriminating” capitalist market consti-tutes this discrimination. The capitalist isable to earn profit through the process ofbuying and selling in the market, whichjust requires this neutral state apparatus,only because the working classes havebeen dispossessed of all means of produc-tion other than the ability to labour. Withoutthis the component that is common to allproduction processes – labour power –would not become a purchasable commod-ity. This process of dispossession, whichsimultaneously creates capitalist propertyrelations, together with the laws and regu-lations for contract and exchange, is calledthe process of primitive capital accumu-lation. This is, of course, a commonplaceof Marxism, but one whose deep signifi-cance has conveniently been forgotten bymany Marxists, particularly those runningstates, which are trying to curry favourwithglobal capital. How else can one explainthe eagerness, verging on greed, with whicha state government run by Marxists isdisplacing farmers to provide land forsetting up industrial ventures, up markethousing complexes, and so on.The Tatas have reached an agreementwith the Leftist government in West Bengalto set up a car-manufacturing unit at a placecalled Singur. The land earmarked for theproject is very fertile and producesmultiplecrops. Conversion of multiple-crop land tonon-agricultural land has violated the stategovernment’s own announced policy, butthat is a separate issue. The farmers were,by and large, vehemently opposed to thegovernment’s plan to acquire their landsfor handing over to the Tatas. A majoropinion, which comes through in the inter-views given by the farmers is that all thetalk of compensation – even if one wereto ignore the failure to keep the promisesmade previously by the state governmentin similar cases – was quite meaninglessto these peasants. What was the correctquantum of compensation? They led a lifethat quite satisfied their material andcultural demands. For this they weretotallydependent on their plots of land. It was asmuch a part of their culture and life, as itwas a means of livelihood. The peasantshad a holistic culture that directly opposedthe commodity culture of globalisation.The concept of land as a commodity wasthoroughly alien to their culture. From ourcultural perspective, which refuses anyholistic or ecological position, we caninvent a justification of their stand: lossof land will deprive the peasants of theopportunity to work (which is the realis-ation of human existence), even if they canearn sufficient interest income from themonetary compensation without doinganywork! The state government was defi-nitely using violence to intimidate the
Economic and Political WeeklyApril 7, 20071284organisation formed by the peasants toresist the attempts of the government toevict them from their land. But also “left-ist” mass organisations had been asked to“explain” to the peasants that the moneybeing offered was more than sufficientcompensation. In other words, theseorganisations were being deployed to carryout the task of cultural transformation –from a holistic culture to the commodityculture that is consistent with the needs ofglobal capital. This experience also teachesanother important lesson – the significanceof an overdeterministic or interdependentapproach. It is not just a question of eco-nomic transformation that was involved,but changes at all levels of social existenceand perception.The recent spate of state violence againstfarmers to force them off their land in orderto hand it over to global capital for realestate business or for setting up industrialenterprises11reminds one vividly of thepassages on primitive capital accumula-tion in Marx’s Capital. The passages onthe transformation of arable land intopastures in Capital read eerily like a de-scription of the eviction of farmers for thecreation of SEZs.Marx quotes Bacon on an Act of HenryVII, promulgated in 1533 and commentson it:The device…was profound and admirable,in making farms and houses of husbandryof a standard; that is maintained with sucha proportion of land unto them as maybreed a subject to live in convenient plenty,and no servile condition, and to keep theplough in the hands of the owners and notmere hirelings’ what the capitalist systemdemanded was on the other hand, a de-graded and almost servile condition of themass of people, and the transformation ofthem into mercenaries and of their meansof labour into capital [Marx 1954, p 674].This Act was a sort of act, which wenowadays call a “Land Reform Act”. ThisAct even contained a clause that limitedthe number of sheep that could be ownedto 2,000, where it was reported that someeven owned as many as 24,000. If a cottagewas built for an agricultural labourer it hadto have an attached plot of arable land ofat least four acres in size.the cry of the people and the legislationdirected, for 150 years after Henry VII,against the expropriation of the smallfarmers and peasants, were alike fruitless(ibid, p 673).…The rapid rise of the Flemish woolmanufactures and the corresponding risein the price of wool in England gave thedirect impulse to these evictions…The newnobility was the child of its times, forwhich money was the power of all powers.Transformation of arable land into sheep-walks was, therefore, its cry (ibid, p 672).In place of wool one has to just substitute“cars”. True, there is no produce of the soilthat the car manufacturer, Tata, directlyneeds. None the less, every materiallyproductive activity requires land. Fromthis point of view, it is immaterial whetheragricultural land is transformed into pas-tures or is converted into the site of afactory shed or is traded off as real estate.Further on Marx quotes Bacon:Inclosures (sic) at that time (1489) beganto be more frequent, whereby arable land(which could not be manured (sic) withoutpeople and families) was turned into pas-ture, which was easily rid by a few herds-men; and tenancies for years, lives and atwill (whereupon most of the yeomanrylived) were turned into demesnes (ibid,p673).So we see a re-enactment of the samesequence of events that occurred in Britainin the 16th and 17th centuries. The attemptto prevent the expropriation of the peas-antry that was attempted by Henry VII,could not withstand the onslaught of PCAin the late 17th and the 18th centuries. Bythe time of ElizabethI, it was officiallyrecognised that these laws had fallen intodisuse and that pauperism was rampant.This was implied in the passage of the poorrates. Of course, the poor laws were to beused to wring out the maximum hours ofwork from those who had been dispos-sessed as a result of the enclosure move-ment and the general tendency of landconcentration in that period (ibid, p 667).We even find parallels to the privilegesthat are being offered to the capitalinvestedin the SEZs.After the restoration of the Stuarts, thelanded proprietors carried, by legal means,an act of usurpation, affected everywhereon the continent without any legal formal-ity. They abolished the feudal tenure onland, i e, they got rid of all its obligationsto the state, “indemnified” the state bytaxes in the peasantry and the rest of themass of the people, vindicated for them-selves the rights of modern privateproperty…(ibid, p 676).The owners of the enclosed lands, there-fore, were exempted from the normalfinancial obligations to the state, much inthe same way that the enterprises withinthe SEZs are exempted today.There is a widely held view that PCAoccurs prior to the establishment of capi-talism. The seeds of this idea are there inMarx’sCapital.12In reality this process isendlessly entwined with capital’s expan-sion. Marx discussed the process of dis-possession in the context of right to land,but the process of dispossession/occupa-tion, which is essential to the survival, andexpansion of capital can be treated as atheoretical concept. For its expansioncapital does not appropriate just land. Itacquires rights over knowledge, culture,nature and even the games that peopleplay. In fact the process of acquiring controlover markets can also be seen, theoreti-cally, as a part of PCA.Importance of RentOne is aware that this is a somewhatdifferent way of looking at PCA than wasproposed by Marx. Never the less, onefeels that expropriation of the right of acommunity to any resource and the simul-taneous conversion of that resource toemployable physical capital can be termedPCA without violence to the essential mea-ning of the term. One is also conscious thatthe concept of PCA is being deployed hereto understand a process that has not beenanalysed through PCA. To us what isimportant is that on the basis of exclusiverights acquired by global capital, it appro-priates rent, which is concealed as profit.The laws of the state and economic rulesand regulations are changed, even drasti-cally, whenever necessary to facilitate thiswar of occupation. Marx did not discussthis significance of PCA. But, as we havediscussed, rent earning is perhaps the mostsignificant aspect of global capital today.So we find the repetition of historysomewhat as a farce. The grotesque aspectis that the “leftists” who had once de-manded land reforms that were expectedto give some security of tenure to the actualcultivators (though understandably therewas never any legal measure adopted togive land to the tiller) are now champion-ing the expropriation of peasant rights.There is a significant difference betweenthe course of economic history that isunfolding in India today and the coursenarrated by Marx. PCA was supposed toconstitute the prehistory of capital, but wefind that it is also a simultaneous event.This is not much of a surprise. In thesepostmodern times we have long ceased tobelieve in purity. The idea of society movingthrough fated stages, where each stage isborn through the dialectical supersessionof one stage by another, is no longergenerally accepted as a valid proposition.
Economic and Political WeeklyApril 7, 20071285What were previously the dominant posi-tions in society are distorted and appro-priated by the dominant positions in thesucceeding order. The new dominantposition also mutates in the process. Thereis no purity in the positions of the dominantand the subordinate positions within asociety, either. Both mutate in the interestof systemic stability to generate a modifiedkind of hegemony of the dominant. Thishas been called “synthetic hegemony”[Chaudhury, Das and Chakrabarty 2000].Capital does not, therefore, abrogate pre-capital. It distorts and appropriates it. Inthe process it too is modified. (This ofcourse begs the question whether one can,even theoretically, conceive somethingcalled “pure capitalism”. Quite obviouslyour position would be that this is notpossible.) Our discussion of the impor-tance of rent to global capital is rooted insuch a conception of transition.Imagining an AlternativeIn conclusion we will talk about ima-gining an alternative. We have remarkedthat the ruling left does not really have anoption. It has to expropriate the rights ofthe peasants. There is no point, other thanthat it has some rhetorical worth, to blamethis party and that leader. If one goesthrough the large number of leaflets pub-lished by the various left-of-left-frontgroups criticising the ruling left front, onecan sense their theoretical discomfort. Theycriticise the government for lying, for sup-pressing truth, for police repression, andsuch other violations of what are broadlyliberal bourgeois ethics. It is important tocriticise the violations of bourgeois humanvalues. The barbarity of the government,its violation of the constitution must behighlighted. Such critiques can serve therhetorical purpose of showing up the heart-lessness of thesystem. But if there is nopossible alternative path of developmentthen in the current age of global capitalwhat is happening is inevitable. Unfortu-nately, the left has also abdicated its re-sponsibility of imagining an alternative.And this goes for almost all shades of left.One proposes that the search for analternative should start from this clashofethics involved in the process of primi-tive capital accumulation – the ethics ofthe peasantry versus the ethics of themarket,of global capital; the ethics of theforest dependent people versus the ethicsof the market which proves with its “cost-benefit” analysis that it is efficient policyto displace these traditional right holdersand construct dams. In general terms thealternative must emerge out of the clashbetween the ethics of the local and theethics of the globalised. We do not thinkthat the beginnings of an alternative lie inensuring global mobility for one who islocally confined. The entirety of what isrooted in a local space can never begloballymobile. If that were possible then thisessentialism would be correct – nature,culture all have but one essence, which isexpressed in market price. Culture cannotbe globalised. It either dominates or isdominated. The manifestations of so-calledfusion cultures involve a hierarchybet-ween the fused cultures. I think even appre-ciation of a culture by one who belongsto another culture involves a relation ofdomination or fragmentary appropriation.Nature, too, cannot be globalised. The localcommunity had rights over what was partofthe natural balance of the locality. Actually“right” is a misnomer in this context.Perhaps one can say that the relation ofnature with the local people was one ofmutual dependence. Wood becomes theproperty of one who uproots the tree. Thisproperty owner appropriates rent. Treesbecome wood. And the one who initiatesthis metamorphosis after death becomesthe rent-appropriating owner.The project of constructing an alterna-tive path of development must stop rentextraction by the global while respectinglocal differences. The locally rootedworking people are the bearers of thesedifferences. Cooperative-based productionmust emerge from the initiative of thelabouring people. And some kind of machi-nery for direct interaction will have to becreated to prevent rent extraction. Thealternate globalisation that we are talkingabout is the globalisation of the relationsbetween these cooperatives.The proposal perhaps begs more ques-tions than it answers. A basic question –why should the labouring people be thebearers of local specificity? Consider onewho is employed in a factory. The personcan no longer be identified as a worker ifthis factory shuts down. So if the particularregion or locality, the factory, loses itsspecific characteristic – that of producingaparticular good – the worker ceases to existqua worker. On the other hand, the ownerof the factory is not the bearer of thisregional specificity. The capitalist’s calcu-lations are based on the generality of marketexistence, on the expression of this uni-versal – the market price. It is with profitscalculated at market prices that the capi-talist is concerned. The capitalist has noqualms about shutting down a factory toconstruct luxury apartments on the land ifthis business promises greater profit. One’sidentity as capitalist, what we can after afashion call capitalist class position, remainsunscathed but the working class positionceases to exist if the factory shutsdown.The characteristic of a factory is toproduce manufactures. The bearer of thischaracteristic is the labourer engaged inthefactory. The characteristic of agriculturalland is to produce agricultural crops. Thatiswhy when the government takes over agri-cultural land for construction of industryor amusement parks the peasants opposesuch moves. Does it mean that one isopposed to all change, to the productionof new goods and services, to all relocationof labour? No. But we do insist on the neefor working out a participatory change.Even the development of science and tech-nology is responsive to the powerstructure.So a cooperative relation must grow bet-ween science and technology and an alter-native development. It is now almostacliché that education and the pursuit ofknowledge and science must be adaptedtothe needs of production. I would not dis-agree. But I would be specific: the relationmust be cooperative. In the presentsituationthis slogan simply amounts to the demandthat education, knowledge and sciencemustall be subservient to the needs ofglobal capital.This proposal for exploring alternativesis rather inchoate and, therefore, likely tobe confused with various kinds of civilsociety movements. A possibility that israther unpalatable is to be equated withradical environmentalists. So let us markat least some of our distance from them.They have a tendency to forget history andpresent some position in time as if it wasthe original, unsullied, natural situation.So when one talks of “locality” one mustremember that it is also the result of somecomplex historical process through whichsome communities had been displaced.The current natural and demographic struc-ture has a history, which includes displace-ment of adivasis and spoliation of a pastnatural balance. The attempt to disownhistory or the complex process that hasbrought the present into being may workin favour of some self-seeking interests.Just as we should not disown history, soalso we cannot reject the present. Moderndevelopment creates refugees of develop-ment by constructing industry or housing
EPW
Economic and Political WeeklyApril 7, 20071287construction of a small car factory. This hasbeen interpreted as a public purpose becauseitis claimed that it will provide employment tothe people of the state. Even if one does notcontest the veracity of this highly improbableclaim, one can still ask how the employmentof workers by a profitable enterprise in orderto enhance its profits can be termed as a deedwith a public or social purpose.3We will elaborate this alternative later.4Rent is earned on the basis of monopoly ofrights over resources that are not replicable.Marx discusses this in volume III of capital[Marx 1959]. Primitive capital accumulation(PCA) is discussed in volume I of capital [Marx1954]. There are now three classes of economicfunctionaries. There are the landlords who havedispossessed the traditional right holders oftheir rights and established sole proprietaryrights over land. There are the capitalists whotake this land on lease against payment of rentto the landlord to use the land for profit. Andthere are of course the labourers who work onpayment of wages.Discussing the basis of the ability to extractrent, Marx says, “…the monopoly of the so-called landed proprietor of a portion of ourplanet, enables him to levy such a tribute”[Marx1959, p 625]. Marx then goes on to divide rentinto two analytical parts: differential rent (thatis generated by the extra productivity of someplots, which causes the product to fetch morerevenue than is sufficient to cover normal wagecharge, material cost, other charges and profitat the normal rate); and absolute rent (that isgenerated by diminishing wage and/or rate ofprofit on capital invested on such plots). Thislatter is rendered possible because such capitalor labour has no alternate field of employment.Marx cites the case of the small farmerswhocannot hire in large plots of land. Because ofthe large numbers of such farmers in comparisonto the number of such plots available, the ownersof such plots were able to depress the profiton capital of the small farmer and so extractabsolute rent.To my mind the key factors that allow rentextraction are barriers to the ability to replicate– this aspect Marx mentions explicitly [Marx1959: 633] – and monopoly. The planet earthis not replicable and so monopoly over fractionsof this earth allow the owners of these titlesto extract a payment,called rent from thecapitalist who would employ thisresource. Butifthese attributes exist or are created in otherfields then rent could be extracted fromthesefields too.The discussion that follows may besimpler to follow if we introduce another aspect:the aspect of immobility at this point. Let uselaborate. Suppose all the landowners in Indiaget together and decide to charge at least aminimum rent, irrespective of productivity ofland. The capitalists who are land dependenthave to foot the bill because land being immobileacross market boundaries cannot be obtainedwithin the geographic area of India withoutpayment of such absolute rent. If land couldbe imported competition among rentiers wouldreduce this component of rent ultimately tozero. Like in the case of what is called quasi-rent in neoclassical economics – free entry offirms into the competitive markets force downrent to zero in the long run by wiping out whatis a virtual monopoly in the short run. Marxdiscusses the converse case [Marx 1959, p629].The owners of worst grade small plots wereable to extract absolute ground rent becauseof the competition among a large number ofsmall capitalist farmers for such plots. Thiswas not out of their pockets but squeezed outof the labourers, who could be paid low wagesbecause of the unavailability of alternateemployment. In the long run, however, suchrent could not be paid because the emigrationof labourers led to wage increase.If these attributes are present in other fieldsthe right owners can extract rent. We discussjust one example. The free flow of knowledge(ie, its mobility) is cut off through theimposition of suitable patent laws. This rendersknowledge, science and technology non-replicable. The owners of patents then havemonopoly of rights in these fields that can beused to extract rent.Another direction in which we have expandedMarx’s idea of rent is that though the functionsof the owner of rights that entitles one to rentand the function of the capitalist are separated,in our discussion they vest in the same entity.Marx treats this as an exceptional case,ratherthan as the rule [Marx 1959, p 751].This is simply caused by the changedhistoricalcircumstance, which also explainsthe simultaneity of global capital’s expansionand PCA.5There is some difference between this and thediscussion in Capital. See fn 4.6Marx calls this surplus-profit and treats it asa kind of absolute ground rent [Marx 1959,p775].7See footnote 1.8The term “feudo-capital” has been used todesignate this symbiosis [Chaudhury andRaychaudhury 2003].9Such societies, which are arguably the earliestform in which humans organised themselves,have been characterised as classless. Classdivision, that is the division into surplusproducers and surplus appropriators, can occuronly when society produces a surplus over andabove its subsistence requirements. In otherwords, surplus production is a necessarycondition for the existence of class divisions.Since science and technology were (are) veryrudimentary in these societies, such societiesdid not (or do not) produce any surplus. Henceclass divisions do not exist.10The capitalist has the necessary finances topurchase the inputs (including labour power)that are required for production. The laws ofprivate property ensure that the inputs belongtothe capitalist because he/she has purchased itin the market. So the output produced fromthese inputs also belong to the capitalist. Themoney earned by selling this final product inthe market constitutes the revenue of thecapitalist. The excess of the revenue over thecost of purchase of the inputs is the surplus,which, naturally belongs to the capitalist. Sofor appropriating the surplus as profit, all thatseems to be necessary is that the market shouldfunction.The market is the place where exchange ofgoods and services occurs. In an act of exchangetwo parties simultaneously give and take twoproperties that are of equal worth. For example,I give ten rupees to the shopkeeper and theshopkeeper gives me a ball-pen. They are ofequal worth, in the sense that we have bothagreed to this. Otherwise the transaction wouldnot have taken place. This exchange is possiblebecause I was recognised as the legitimateowner of rupees ten, and the shopkeeper wasrecognised as the owner of the ball-pen. Alsoonce, the shopkeeper and I had agreed to theprice, exchange required that we kept thecontract to exchange the ball-pen and themoney. In plain words, it was necessary thatI did not run away with the ball-pen when itwashanded over to me. Thus, for the marketto function only the laws of private propertyand contract are necessary. These laws areimpersonal. Anyone who has the money canown property (the state does not designate byname who can own property). Any two personswho own property can contract toexchange(the state does not bar any propertyownerfrom exchanging the property).11Ultimately it will be impossible to prevent landhanded over to capital for industrial venturesfrom being transformed into real estates if itis more profitable. All indications are in thatdirection. According to the projections of MerrillLynch, the Indian realty sector will grow from$12 billion in 2005 to $ 90 billion in 2015. Thefact that Merrill Lynch has invested $ 50min Panchsheel Developers, a regional deve-loper, Morgan Stanley has invested $ 68 m inMantri Developers, a medium-sized Bangalore-based developer, indicates that this is not allhype. Real estate funds set up abroad forinvestment in India alone totals $ 2.7 billioncurrently (‘Land Grab and Development Fraudin India’, Analytical Monthly Review, editorial,September 2006).12“…but the accumulation of capitalpresupposes surplus-value; surplus-valuepresupposes capitalist production; capitalistproduction presupposes the pre-existence ofconsiderable masses of capital and of labour-power in the hands of producers of com-modities. The whole movement, therefore,seems to turn in a vicious circle, out of whichwe can only get by supposing a primitiveaccumulation (previous accumulation of AdamSmith) preceding capitalist accumulation; anaccumulation not the result of the capitalistmode of production, but its starting point”[Marx 1954, p 667].ReferencesAMR (2006): ‘Land Grab and Development Fraudin India’, Analytical Monthly Review,September, Kharagpur.Basu, Pranab Kanti (2001): Asiatic Feudalism,Capitalism and (non)Transition, PhD disser-tation, Department of Economics, CalcuttaUniversity, Kolkata.Chaudhury, Ajit Dipankar Das and AnjanChakrabarti (2000): Margin of Margin: Profileof an Unrepentant Postcolonial Collaborator;Anushtup, KolkataChaudhury, Ajit and Sarthak Raychaudhury (2003):Feudocapitalism, Other Voice, Kolkata.Marx (1954): Capital, Vol I, Progress Publishers,Moscow (reprint 1974).– (1959): Capital, Vol III, Progress Publishers,Moscow (reprint 1974).

Dear reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top