Thoughts on economics and liberty
2nd April 2022
In 2011, Harold Demsetz had sent me his 2008 book, and I recently acquired his 1982 book: Economic, Legal, and Political Dimensions of Competition. Amazingly, it had his signature of 1992, his last personal copy.
Can anyone decipher the person to whom he had gifted his 1982 book?
1st January 2022
I’ve compiled what I could find.
8th December 2021
Came across this.
Have converted into Word and PDF.
The problem is that there are a lot of errors – this was probably OCR of a scan – someone needs the original book to correct the errors.
Despite that, this book provides a glimpse into Sharad Joshi’s thinking.
8th December 2021
Found this (PDF). It has no clear date of publication or authorship but is well written. Have converted to Word and OCRd. HTML below.
VISIONARIES OF A NEW “BHARAT”
“SHETKARI SANGHATANA”
The Farmers’ Organization in Maharashtra
The Shetkari Sanghatana (SS) in Maharashtra functioning since 1978 is a true representative of the present epoch of farmers’ movements.
The SS has been spearheading the developmental and ideological debate. The SS was kick-started in the late 1970s by Sharad Joshi (For bio-data see Annexe1). The SS is a non-political, non-communal, non-violent and non-pastoral union of peasants with a single point programme – “Securing remunerative prices for the agricultural produce”. The single point may seem to be extremely simplistic, but, according to the thought of SS, it is the key to the economic development of India.
HISTORY OF FARMERS’ MOVEMENTS IN INDIA
Movements, agitations, uprisings and revolts by peasants are as old as history itself. The primary objective of the farmers’ uprisings, agitations and conquests during the period of British Rule was to seek abolition of the Zamindari as against the Ryotwari (lease holder) system. In the long tradition of Indian history, the land in the village belonged to the village Panchayat. The division of agricultural labour continued from generation to generation between the cultivators and the artisans. The British brought in their own revenue system based on private ownership of land. Land was measured, numbered and allotted to prominent villagers who undertook to collect their revenue for the government or to those whose traditional role came closest to that of the cultivator/accountant.
The British land tenure system had two effects. The invasion of the Indian domestic market by cheap products of the British industry, particularly textiles, crippled the village artisans and dried up the money inflows into the village economy. Under these circumstances, levy of land-taxes payable strictly in cash, drove even the relatively well-off farmers to borrow money from whoever happened to have some spare cash, howsoever paltry. In very short time, indebtedness mounted and the mortgaged lands passed on to the moneylenders/zamindars. The resultant discontent was directed at the moneylenders and revenue collecting landlords instead of the prime villains i.e. the Colonial State. The newly English educated and articulate nationalists movement blamed the state of Indian agriculture on the internal contradiction between the rich farmers and the small peasants. Till the independence in 1947, the poverty of the countryside was attributed to either the weaknesses of the cultivator or to the exploitation by the landlords and the moneylenders. The independence in 1947 brought in the abolition of both the revenue collector zamindars as also the moneylenders. The despised institutions were replaced by a rigid credit and bureaucratic institutions and that did not attenuate the level of exploitation but carried the agricultural surplus away from the countryside to the urban areas.
The independence and the partition marked the beginning of the years of food shortages and famines. The new national State started taking draconian measures calculated to take-away food surplus from the villages to urban industrial areas. The commonly prevalent notion, at the time, was that the poverty of the farmers was due to low productivity, illiteracy, poorer health conditions and age-old social customs. The generally pervading spirit of nationalities did not permit the emergence of any farmers’ movement directed against the State.
The Green Revolution of 1960s changed all that. The agricultural productivity in most areas and crops multiplied manifold. The farmers found, nevertheless, that their income was inversely proportional to the yields they obtained. India had a “Green Revolution” producing abundance of crops but leaving the farmers indebted and poor.
This signaled the right moment for the emergence of a Nationalist farmers’ organization. The blame for the poverty could no more be put on the moneylenders or on the landlords. It was no more possible to blame the illiteracy, the indolence and wasteful social customs. The time survived for the emergence of the Shetkari Sanghatana.
The articulators in the Shetkari Sanghatana propounded a new thesis drawing lessons from the scissors debate on of the Stalinist epoch and established an innovative normal genesis of the problem.
The abysmal poverty in India of agricultural region was caused by the fact that the proceeds of the crops did not cover even the bare minimum cost of production. The situation was caused by deliberate policies followed by the national government under the banner of “low-cost economy”. The policy, in brief, amounted to a deliberate neo-colonial exploitation of the agriculture in order to provide the cheap primary capital for the Indian industry.
THE NEW AGRARIAN MOBILIZATION
Though it manifested in full strength in the early 1980s, the new agrarian mobilization was launched in the early 70s. The farmers’ agitations did not start in the poorest of the states but in the more developed and progressive ones such as Coimbatore district of Tamil Nadu in 1970 and Ludhiana district of Punjab in 1972. Unlike many parts of the country having subsistence agriculture, these districts were well endowed with irrigation facilities and their agriculture, by the late sixties, had already become heavily market-oriented. The leaders of agitations in Maharashtra and Tamil Nadu showed a remarkable capacity to formulate effective political strategies and articulate powerful idioms for rural mobilization. Sharad Joshi, in Maharashtra in particular, stood out as the strategist and communicator, whose imaginative slogan of the ‘Bharat-India’ divide became a new idiom of rural mobilization.
With “remunerative agricultural prices” and “Freedom of access to markets and Technology” as its principal slogans, the Shetkari Sanghatana and other associated farmers’ organizations led many successful agitations under the banner of the Kisan Co-ordination Committee (KCC), which attracted farmers in numbers ranging between 1,00,000 to 5,00,000 on successive occasions over the last three decades.
By 1982, over 36 farmers were shot down by the police for the ‘crime’ of demanding fair prices. At the global level, this was far more massive movement than the one lead by Lech Walesa in Poland. The farmers’ cause is not a popular one in the urban intellectual milieu. Consequently, the farmers’ revolt in India went largely unnoticed.
THE ROLE OF SHETKARI SANGHATANA (SS)
SS underlines five distinguishing features of the new agrarianism.
First, the new agrarianism does not put on a pedestal lifestyle as being particularly virtuous for its blissful simplicity and spiritual richness.
Second, it does not glorify the pastoral/agrarian pattern. Rather, the new agrarianism is aimed at ensuring, for the farmers, highest possible degrees of freedom as also a life of self-respect on par with that of the non-farming communities.
Thirdly, The SS recognizes that capital formation of the new industry needs to come out of surplus from agriculture. In the Soviet Union, the matter was debated in during the Stalin reign, to the conclusion by Stalin sending tanks against farmers. In India, the debate was resolved by establishing a complex of economic system which encouraged higher production but denied the farmer remunerative prices.
Fourthly, unlike peasants’ movements of the past, which pitched tenants against the landlords, the lower castes against the higher castes the SS farmers’ movement was not ‘divisive’ of the rural community. The significant line of internal contradiction was between “Bharat” and “India”. Mahatma Gandhi as also Marx have emphasized the conflict between the town and the country. Sharad Joshi’s view does not make a geographical division. As he states it,
“Bharat is that notional entity which continues to be exploited by the same policies as those of the Colonial Rule even after the British left; while India is that notional entity which has obtained the inheritance of Colonial exploitation.”
The misery in the village is not caused by the “slightly” better-off farmers in the neighborhood but by an “outside exploiter” – the urban India. “Transcontinental imperialism” represented by the British has been replaced by “internal colonialism.”
Finally, since surplus in agriculture expropriated through a policy of cheap raw materials and artificially depressed prices constitute the main technique used by the exploiters (the government) the agenda of the SS has been to bring in a one-point programme of “Remunerative prices”.
The remunerative prices for their agricultural produce are to be acquired not through a hackneyed system of Agricultural Produce Marketing Committees (APMCs), Commission for Agricultural Costs and Prices (CACP), Food Corporation of India (FCI), and Public Distribution System (PDS). These four institutions have been the basic instruments of exploitation of the farmers. A genuinely free market assures a price that adequately covers the cost of production. Freedom of market and opposition to all forms of State interventions in the market mechanism becomes the basic plank of the farmers’ movement.
The rationale for the remunerative price agenda is as follows:
Thus, the overall philosophy of the Shetkari Sanghatana is that price incentives in agriculture and a “natural” process of capital accumulation driven by an agriculture revolution can benefit the entire economy and break the vicious circle of poverty. As opposed to this, an accumulation process driven by industrial revolution (before agricultural revolution takes place) is always premised upon a coercive expropriation of agricultural surplus.
The SS is the only farmers’ organization in favour of an uncontrolled market in agriculture produce and international free trade in both inputs and outputs in agriculture. Though regional in base, the Shetkari Sanghatana has been able to force a debate on the developmental path chosen by India in the context of its demands at the highest level. The organization has played a crucial role in shaping the ideology and the demands of the largest coalition of farmers’ organisations in India.
In the 1980s, Sharad Joshi, the founder of the Shetkari Sanghatana, put forth his theory that, the primary contradiction in the country was between “Bharat” (primarily the villages but also including the unorganized urban sector: “refugees from Bharat in the cities”) and “India” (the westernized industrial bureaucratic elite, inheritors of colonial exploitation.).
The issue raised by this radically different farmers’ organization was one of exploitation, in which surplus was being extracted from the peasantry via the market mechanism and unequal exchange. The key to fighting this exploitation was the demand for higher prices to meet the costs of production for their crops, i.e. the “remunerative prices”.
In January 1982, the Shetkari Sanghatana held its first Plenipotentiary conference in a small taluka place in Nashik District, with 18,000 delegates representing more than half the districts in Maharashtra and a concluding rally of over one lakh. The one-lakh figure became the defining standard to gauge the success of major farmers’ agitations and rallies for years to come.
One of the issues consistently raised by the SS has been the Government’s imposition of negative subsidies. For over forty years since independence, the Indian planners maintained that Indian agriculture was highly subsidized, while the industrialists and the traders stood on their own feet. The big lie was exposed by the submissions of Ministry of Commerce, regarding agricultural subsidy, to the WTO in 1989.
It now stands recognized that Indian industry was the most protected in the whole world and that the Indian agriculture suffered from the worst negative subsidy estimated at – 87% (1996-997). Even the Government of India admitted that the so-called subsidies on farm inputs like water, electricity, fertilizers etc. have benefited everyone but the farmers for whom they were originally meant.
Planning in India was based on strategies calculated to deny farmers legitimate price through deployment of a large number of tactics including bans and restriction on commodity export, dumping of agricultural produce form abroad in the domestic market, restrictions on trade, movement and processing, compulsory levy procurement at prices at inadequate levels and high exchange rates. The planners and the established economists spread the message that low agriculture prices are good for the Country, for the farmer and finally, for the consumer. But, the experience of the post-independence period has shown that higher prices and better terms of trade in agriculture benefit not only the surplus producers but also the agrarian community as a whole. The Dunkel proposals and the GATT treaty completely vindicated the stand of the Shetkari Sanghatana and demolished the doctrines of Indian planners.
The above-mentioned anti-farmer polices in the last six decades caused erosion of agricultural land, capital and high levels of income disparity between the agrarian sector vis-à-vis the non-agrarian sector. In 1951, the ratio between the per capita agrarian and non-agrarian income, at constant prices, was 1:1.4; now it stands at 1:10.6. In 1950-51, Agriculture contributed 63% of the Gross Domestic Product (GDP) and supported 74% of the population. Today, agriculture contributes only 27% of the GDP but the proportion of agrarian population, nevertheless, persists at about 70%
The SS proved beyond any reasonable doubt that the Essential Commodities Act was used deliberately as an instrument of depressing agricultural prices and obstruct the progress of Indian agriculture. This act was designed to deny the farmer access to latest international technologies, purchase of quality seeds and other inputs. The Act also encouraged dumping of imported commodities in the Indian market, thereby causing further losses to Indian farmers. A replica of the World War II days, this Act has been extended indefinitely from year to year. It gives the government parental powers to play mayhem under the guise of ensuring public distribution of essential commodities, but surprisingly omits really essential things like medicines, etc.
NEED FOR NEW TECHNOLOGIES IN AGRICULTURE
AS early as 1991, Sharad Joshi had stated in his book “Answering before God” that:
Establishment of an alternative package of technologies and practices is a matter of utmost importance and urgency. The research needs to be carried out in a highly professional manner, in a scientific spirit, as regards both the technical and economic aspects of exploitation at micro and also macro levels. This again emphasizes, the forward-looking attitude rather than the Luddite attitudes of environmentalists. New technology creates some problems, but they cannot be avoided by shutting down the doors of new technology but rather by welcoming future strides in technology, which resolve the problems of the past epoch.
FORMATION OF A UNIFIED FARMERS’ MOVEMENT
On 31 October 1982, an Interstate Coordination Committee (ICC) comprising of farmers’ organisations from twelve states was formed at Wardha (Maharashtra state). It was a historic step by itself, because until then most farmers’ agitations in the country arose on purely local issues and died down without spreading into surrounding regions. ICC was the first attempt at creating an all India representative body of farmers of divers states producing different crops. An earlier attempt to create a more unified All India body under one banner and one leader had floundered on the question of the role farmers’ organisations had to play in active politics. Bharatiya Kisan Union (BKU), in spite of diversity in thought and names, could have under one banner, one leader and one name, but floundered miserably because the convener himself gave up apolitical position and formed a political party.
In 1989, some difficulties arose, because in certain states no one organization could claim a substantial following of the farmers. The ICC, therefore, was reconstituted as Kisan Co-ordination Committee (KCC) with 55 member-organisations coming from 14 states.
The KCC has often mobilized its strength to lend support to farmers agitating in one state by mobilizing farmers from other states. For example, in 1984, the agitation of farmers in Punjab was dragging on for years without any solution. The ICC organized a Gherao of the Raj Bhavan in Chandigarh in which 80,000 farmers form different states participated. The Government was forced to appoint an expert committee on the dispute, which finally resulted in a solution acceptable to farmers.
In 1990, the farmers in Punjab were agitating against Government’s dumping of imported wheat. Over 50,000 farmers from other states came to Punjab and Haryana to lend their strength. Ultimately, the Prime Minister was forced to call the leaders of the KCC for discussion to seek the solution.
The KCC is, on the lines of the SS, a nonpolitical, non-communal, non-violent and non-pastoral organization. It represents farmers from all across the country who demand free trade as a sine-a-quo-non for progress in the next millennium. Shetkari Sanghatana has been the most active element in the agitations and advocacy of the KCC’s philosophy. The KCC acknowledged the fact that it cannot completely solve the problem of negative subsidy, but it could definitely ensure that whichever government came into power, it could assure that farmers were not affected by the change.
TIME FOR A CHANGE IN INDIAN AGRICULTURE:
THE ERA OF LIBERALISATION
The 1990s was been a momentous decade. It witnessed great strides in India’s progress towards true freedom. Statism, Apartheid and Racism went on the retreat. Pre-1990s farmer had been the scapegoat for all repressive regimes in India. After a millennium, the farmer was finally able to hear the sound of his shackles cracking. The beneficiaries of the old regime are upset at the new trend and are still trying to prevent economic reforms. The beneficiaries of the old statist socialist regime
include politicians, bureaucrats, organized labour and those producers who lack confidence in their capacity to survive in a free market without governmental intervention. Most of these groups have identified themselves by coming out openly against the Dunkel proposals and economic reforms in the field of agriculture. The anti-liberalization groups of NGOs and the protectionist farmers’ groups have demonstrated a sizeable capacity of misinforming and misleading the farmers and the general public against the benefits of liberalization in agriculture.
The SS and the KCC are probably the only farmers’ organisations in this country to defend Dunkel proposals. In spite of opposition to the Dunkel proposal by the politicians and the economists, the Shetkari Sanghatana was successful in convincing the government to adopt the same. Today it continues to be the most articulate proponent of freedom of economy and technology in India.
In the year 1991, Shetkari Sanghatana chose the Educational Approach to reach out its message to the farmers in the country.
The educational approach had a four-pronged program to achieve the same.
Experiment on our own on technological possibilities e.g. Marigold grown around green chillies reduces the impact of diseases (Seeta Sheti).
Raw agricultural produce should not be taken to the market from the farms in its brut form. But it should, at least, be cleaned thoroughly, be graded and then packaged adequately to get appropriate prices (Majghar Sheti).
The Sanghatana believed in the corporate movement of farmers. It propagated the concept of “Entrepreneurism” within the farming community (Trading and Domestic Marketing i.e. Vyapar Sheti).
To undertake these operations the SS encouraged farmers to start joint stock companies for their own business and not lend themselves to the bureaucratic co-operatives, which were controlled exclusively by the State. (Niryat Sheti).
(The SS opened a path-making initiative but questioning the pluralism as regards the forms of business organisations in agriculture and industry. Joint Stock Company is the most common form of business organization in the urban area. On the other hand, most agricultural business including banking and credit comes under the cooperative sector, which is largely State-dominated. Most of the farmers’ agitations were fought against the injustices inflicted on the farmers by the
cooperative sugar factories, the cooperative banks as also the cooperative marketing agencies. A large number of farmers who committed suicide between 1995 and 2008 had borrowed money from the cooperative banks. In an epoch where cooperation was supposed to be the only pathway to progress, the SS launched a movement for formation of farmers’ joint stock companies. The normal feature of the farmers’ companies was formation of the equity capital by conversion of land, labour into share capital. This conversion of immovable land into movable equity also proved to be a major boost to the cause of the women’s property rights. The Shetkari Mahila Aghadi had even earlier promoted the cause of women’s property rights by launching a campaign for voluntary transfers of family’s land into the name of the domiciliary women.)
Shetkari Mahila Aghadi
Another distinguishing feature of Shetkari Sanghatana is that it recognizes the principal role of women as toilers in the field and organized a separate Women’s Front of the Shetkari Sanghatana, the Shetkari Mahila Aghadi (SMA). It encouraged all farmers to participate in its Laxmi Mukti programme. The programme was a voluntary movement of farmers to transfer share of their landholdings and assets in the name of their wives. At least 2,00,000 documented transfer of land in name of their wives were registered during the period from 1991 to 1996. Sharad Joshi, the founder of the organization is the most revered farmer leader among the rural women folk. This is clearly evident
from all the public gatherings organized by the Shetkari Sanghatana where the percentage of women was always more than 40%.
The Shetkari Sanghatana does not look upon government intervention as being beneficial to farmers at all. This approach created a lot of resentment from political leaders who were against the opening up of the system.
As put in the words of Sharad Joshi,
“The quality of life of an individual, as also of a community is to be assessed by the degrees of freedom it enjoys. The four degrees of freedom are:
The larger the number and the variety of means at disposal, the higher will be the degrees of freedom. Hence, material opulence is desirable in itself not for the enjoyment and happiness: it brings increased production, higher productivity and accumulation of capital form the very core of all social and economic activity.
The Shetkari Sanghatana, over the past 30 years, has become the mainstream source of research information in the Indian agriculture sector. It is non-pastoral and does not glorify village-life. It always keeps a distance from environment lobbies as it feels that they do not understand the ground realities of agriculture.
SS VIEWS ON ‘FARMERS AND INTELLECTUAL PROPERTY RIGHTS’
The attitude of farmers on the IPR is diametrically opposite to that of the urban intellectuals, Luddite environmentalist groups and nonsensical NGOs. According to the SS, farmers have reason to welcome the breakdown of the license-permit Raj, the trade restrictions and subsidies. They appreciate that if all kinds of subsidies are being abolished, obviously, advantages of free R&D cannot be claimed as a right by any party. India lags behind the most advanced countries in the field of agricultural technology by 100 years. If the farmers can have immediate access to frontier technologies on payment for a period of twenty years and free of cost after that, we ought to be grateful to the developed world for that. The farmers are confident that they will be able to ensure that transfer of technology does not remain a one-way traffic. The third world countries have a natural advantage due to its rich bio-diversity. The advanced countries have substantial lead in the field of biotechnology, which permits invention or a new discovery or process. They will continue to make breakthroughs and farmers will be willing to pay for any worthwhile technological innovation rather than be forced to pay, not much less, for the shoddy wares of the ‘local peddlers’.
Challenges in the future
The SS started 30 years back like a thin rivulet demanding improvement of road linkages between villages and remunerative prices for onion. Over three decades by pursuing strenuously agitations for remunerative prices of onion, sugar cane, tobacco, Milk, paddy and wheat, it advanced logically with the generalized demand for abolition of all agriculture loans as being both illegal and immoral. It also became the front ranking articulator for economic performance, liberalization as also globalization.
Today it’s postulate that the government deliberately depressed agricultural prices, which had the effect of keeping agriculture a losing proposition and generating poverty has been widely accepted.
More recently, SS has been confronting the agricultural policies followed by the UPA government under the influence of its leftist parties aimed at reviving the old policies of imposing negative subsidies as also discouraging the most open of the free markets i.e. the spot and the future commodity markets.
SS has spread its wings to support a number of agriculture related industries like pesticides, micro and macro sprinkler irrigation systems, plantation, crop processing industries whenever these latter came in difficulties because of the protectionist anti-dumping policies of the government.
The SS has steadfastly supported the WTO rules of multilateral trade, disinvestment in nonviable public sector units, after giving them a chance to prove themselves by exposure to competition. It also supports generalized entry for foreign direct investment (FDI) as also the foreign institutional investment (FII). It holds that entry of electronics in future commodity markets has made them accessible even in far off villages. It is necessary to augment the level of liquidity and depth of these markets by opening them to the FDIs and FIIs. This will end all the problems of shortage of investment and credit in agriculture.
Unfortunately, the UPA government under the strong influence of its leftist allies tends to promote the stock markets but hesitates to give similar opening opportunities to agricultural marketing institutions.
Contrary to a number of other farm outfits who oppose special economic zones (SEZs) for the development of industry in the country, the SS supports the formation of the special economic zones with the reservation that the land that they require there for should not been forcibly acquired from the farmers. It recognizes that almost 40 per cent of the farmers find agriculture not worthwhile proposition and are, therefore, seeking opportunities for a decent exit. The SS has always defended the fundamental right to property and opposed forcible acquisition of land. Nevertheless, under the present circumstances when the sale prices of land are going high, the SS has strongly supported both the
farmers right to property as also their freedom of choice of vocation. A farmer has a right to continue agriculture as he has been practicing cultivation in some of the hardest epochs. The government can not claim the right to acquire the lands of such farmers. On the other hand, if farmer is unwilling to continue agriculture in future he will have the right to dispose of his land to any person, at any time and at any price that is acceptable to him.
The soaring of international prices of crude oil has opened up the possibility of yet another revolution in agriculture. The development of the technology to extract bio-Diesel, bio-fuels from sugar cane, sugar beet, molasses, corn and almost any form of wet biomass is putting agriculture in an entirely new perspective. The peasant is now on par with the oil sheik of the middle-east. The farmer’s might yet to become the most preferred vocation in the society. The traditional enemies of the farmers have already started working to deny the farmers this opportunity. The government is trying to introduce a license-permit system for the manufacture of bio-fuels and keep in hand the right to decide the proportion in which the bio-fuels can be mixed with petrol/diesel as also the right to control the price regime thereof. The main confrontation of the farmers movement in the near future may not be for the freedom of access to markets/technology relating to agricultural produce; it may very well be for the freedom of bio-fuels.
Yet another area in which the agriculture will face serious difficulties, is the manifold consequences of global warming. The global warming might accentuate food shortages and defeat the gains made over the last century in respect of the food grains, milk and food processing. The mankind with its infinite capacity for ingenuity and innovation has, in the past, overcome the constraints of land and resources that the environmentalists had threatened humanity with. Global warming cannot be overcome by going back into obscurantist modes of production. It will call for a further and more rapid advance of technology that will counter all suggestions of a retreat on the technology front. Recent discovery of water and possibilities of agriculture on planets that are not too far from the planet earth, has also added yet another dimension for the expression of human ingenuity and innovation.