The fundamental starting point in social policy reform is a profound revision of the linkages with macroeconomic policy, particularly fiscal policy. Macroeconomic stability is presented in social terms as the promise of fair distribution of the potential benefits of growth. In this respect, fiscal policy has an important role to play and a current area of debate refers to the possibilities of expansion of expenditures even in the presence of a sound but restrictive fiscal policy.
This article takes the position that restrictive policies (e.g. overadjustments to inflation) should be used only over specific, limited periods and should give way to an overall policy of combating poverty; neither a one-digit inflation policy nor a fiscal surplus can be considered only in terms of the needs for a macroeconomic policy, but within the framework of their linkages with social policies. Redistributive policies cannot be set aside until stabilization is achieved because of the latent fragility generated on the political scene which, in turn, has an impact on economic stability. The challenge of stabilization and its difficult development into sustainable growth rests with its linkages to social policy. Otherwise, while the policy is being oversimplified (stability by economic repression does not by itself create growth) it loses relevance regarding the final objectives of any economic policy - the social welfare of most of the population.
On the other hand, a public expenditure policy is not the only way to address the problem of linkages between economic and social policies. There are policies that can favour a better distribution of resources. A clear example is represented by agricultural policies; macroeconomic considerations cannot be reduced to a simple equation of what the general profit will be, but should also take into consideration which population groups will benefit, which will lose and how much they will lose, and how to create the appropriate conditions for redistributive flows through productive reconversion projects and training of the labour force. All of these actions have the final objective of increasing the number of potential beneficiaries of the economic reforms.
Attempts made by the specialized agencies of the United Nations and by multinational financial institutions to overcome traditional (orthodox) strategies in terms of redistributive policies are beginning to answer some of the key concerns of the current situation: which measures can improve income distribution? which measures effectively address the deficiencies in health, education, housing, employment, social welfare and above all food security? and which are the available policies that can address equity, reduce the regional disequilibrium, integrate social policies within productive processes and enhance democratic participation?
The following is an outline of the possible answers to these questions. The order of presentation does not correspond to a priority or hierarchy of the different proposals:
With regard to the deregulation of basic grain markets, it is critical to assist small groups of producers for self-consumption through three interconnecting channels: by promoting those organizations and associations that generate lower transaction costs and improve access to productive services; by fostering rural infrastructure and local microenterprises to satisfy the demand for products that are absent from the regional market; and through direct support programmes to improve peasants' incomes.
FAO, the Economic Commission for Latin America (ECLA), the United Nations Development Programme (UNDP), the International Labour Organization (ILO), the Inter-American Development Bank (IDB) and the World Bank all recommend, with different emphases, that economic growth with improved equity should be accompanied not only by efforts to provide greater productive capacity for the modern and export sectors, but also by an increase in the productivity and income levels of the most disadvantaged segments of society. These agencies also point to the urgency to renew and broaden massive training programmes in the informal sector, to provide better marketing opportunities and to disseminate management skills to microenterprises in the formal economic sector. In an optimistic scenario of growth for Latin America, UNDP estimates that during the 1990s the role of the informal economic sector in creating employment will continue to be decisive. It is estimated that 70 percent of the total of new jobs created in the region between 1980 and 1987 were generated by the informal sector, while the corresponding figure for the last decade of this century would amount to between 50 and 60 percent.
Thus, rather than direct governmental effort to create employment, what the economy needs is a massive programme to enable improvements in productivity and incomes. To achieve this objective three basic components are required: organization to reduce transaction costs and improve access to public services and productive resources; training; and institutional capital formation schemes, technical assistance and commercialization suitable for the operation of microenterprises. Worldwide technological changes that have made small production units competitive, together with the shocking reality of the peasant and informal urban economies have laid the basis for a re-evaluation of these forms of production.
With the support of these forms of informal economy, a high degree of efficiency in the transformation of welfare resources can be achieved. Resources generated by these means do not need to be redistributed, because they are already in the hands of the target population which, in addition, has the family's well-being as its main concern. In the context of the informal economy, work represents more than just the generation of income, but also the establishment of better social conditions that encourage solidarity, identity and greater creativity, thus increasing the potential of the organized community.
In order to increase the well-being of marginal or unprotected groups, it is essential to improve the quality of their lives and their access to knowledge. What really matters is a social policy that provides incentives and opportunities to its social target groups by means of investments in human capacity building. The worldwide tendency to increase productivity by "investing in people" has acquired a crucial role in development strategies. Productivity increments should also be envisaged, not only as a result of technological developments, but following the institutional changes propelled by technological innovations.
To sum up, institutional changes involve a transformation of the social production function in the same way as technological changes transform the production function according to conventional theory.
The evaluation of social arrangements has not only been scarce, but it has been done in isolation or in flagrant confrontation with a key issue that is being incorporated in the debates about legal and state reform, i.e. greater participation and the leadership role of the private sector in the countryside.
Some common beliefs about the sustainability of the reformed sector indicate that economic agents will increase their investments only in small sections of commercial agriculture. There are other beliefs that have a pessimistic view of the collapse of community property in the presence of free markets.
This subject presents the
following main elements: security and regularization of land tenure;
new spaces for the participation of private agents; and the gradual
dismantling of the division between the private and the so-called
social or third sector, while at the same time recognizing their
different approaches to production and productivity.
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Land tenure reforms are usually part of a broader economic and political reform process and can stem from diverse conditions. They can, for example, emerge as a consequence of a revolution, as was the case in China, Mexico and several European countries during the nineteenth and twentieth centuries. Similarly, however, land tenure reforms can occur as the result of specific conjunctural conditions or unique local events, such as the position of a country in the international community or a local calamity or major disruption. The examples of Taiwan, Province of China, the Republic of Korea and Japan embody these formative causes. Despite the difference in formative impulse, there is a common trait that characterizes all land tenure reforms - the displacement of a political coalition from government.
Land tenure experts have frequently resorted to an over-simplistic typology of land reforms; those initiated from the "top" and those initiated from the "bottom". In fact, all land tenure reforms are top-down; an enlightened elite with a sense of statehood conceives of reform as a mechanism for the consolidation of its power in relation to other elites. A more visionary and politically astute elite, however, not only displaces competing coalitions, but does so through the construction of the state and its necessary political, economic and legal relations. Land tenure reform is crucial in this context because the recognition of property rights infers a corresponding recognition of the right to participate in the political community, and citizenship does not refer merely to the provision of social, civil and political rights (as defined in the Marshallian conception of citizenship), but is grounded on a recognition that the effective use of these rights might, and indeed should, lead to the enhanced welfare of citizens and future generations. In this context, it is important to realize that land reform does not occur in a social vacuum. Many land reforms, for example, are prefaced by pressures from the bottom - the action of new social movements in rural areas frequently precipitates reforms and can prompt the emergence of a political elite willing to push for land reform. The justifications for specific land reforms are diverse, but at a general level can be divided into three sets of broad considerations; economic, political and social. It could be argued, however, that the single most important thrust invariably relates to political considerations, namely, issues of governance. A concern with governance does not mean that land reform occurs only as a result of major civil disruption or the threat of disruption, but also in circumstances in which popular support is required in order to ensure the consolidation of a political elite.
Land tenure reforms are sometimes reduced to a single dimension; the redistribution of land through either confiscation or buyout. That was of course the implicit meaning of the agrarian reform concept in both Mexico and China and the model that was proposed during the 1960s in Latin America under the umbrella of the Kennedy/Johnson Alliance for Progress initiative. Two lessons can be drawn from these experiences: land reform must be accompanied by corresponding institutional reforms relating to land tenure and rural development; and land reform must be accompanied by policy reform. These sensitivities can help to clarify the broader concept of land tenure reform. Security of land tenure should be linked to both a supporting legal framework and the formation of necessary institutional arrangements to permit the effective functioning of the supportive legal matrix. Institutions are vital - they import the necessary rules through which land transactions, for example, are organized. As a result, it becomes clear that land redistribution only assumes significance following the creation of the necessary legal and institutional instruments to ensure that the land is held as a right according to whatever tenure conditions are defined in the reform process. These arguments allow the recognition of three "types" or (in order to reflect the temporal/historical dimension) "generations" of land reform. The first refers to land reform in which land is issued or redistributed by the state according to defined discretionary rules, the second to cases in which land is purchased for redistributive purposes and the third generation refers to cases in which land reform occurs in the context of a comprehensive supporting institutional framework that enshrines rights and security. Of equal importance, third-generation land reform is distinct in that it does not concern itself solely with landless groups, but also seeks to utilize reforms as a means to strengthen the economic and productive potential of existing producers who are constrained by pre-existing tenure arrangements and institutional dysfunction.
From the 1980s until the present, major changes have occurred in terms of the role of the rural sector in different countries. Of course the specific traits of these reform efforts vary from one country to the other, but they can be summarized according to four dimensions: reform of public institutions; reform of the legal framework; reform of the policy instruments; and transformation of the relation between farmers and the state. The approach adopted for legal reform in countries that have already developed some agrarian reform processes - such as those in Latin America - is relevant for this discussion.
The often wide distinction between legal prescription and reality and practice has been acknowledged. Land transactions occur throughout rural areas, often regardless of whether they are prohibited or restricted. Illegality or restriction, however, does have a direct impact on the form and function of land transactions. The instability and precariousness of the situation, for example, mean that many of the transactions are short-term and discourage long-term investments in the land. In many cases, the removal of these obstacles and constraints is a vital precondition for the encouragement of further private investment in the rural development process and, in particular, investment from the non-agricultural sector. While these sources of external investment are certainly important, the immense investment contribution derived from within the farming sector must also be recognized (FAO, 1996). It is therefore important that legal reforms direct specific attention to the need to remove the obstacles that discourage or inhibit farmers' investment in their own land. Many third-generation reforms have indeed focused on this issue (while recognizing the importance of the clear prior clarification of individual rights to specific parcels of land).
Recognition of the vast and diversified range of land transactions is crucial to avoid classifications that, if implemented, could create additional rigidities and constraints. As a result, it has been recognized that tenure and accompanying legal reforms must respect and reflect the immense diversity of the transactions that occur in rural areas. (This recognition, itself, directs greater general attention to the transaction issue.) Furthermore, one common condition has been identified in almost all recent third-generation land reforms - farmers must have access to a wide range of land tenure options in order to allow them to respond strategically and effectively to changing conditions, opportunities and external constraint environments.
Some reformist thrusts recognized the importance of informal rules and agents in shaping informal land markets. In particular, it was recognized that certain specific agents enjoy a privileged position stemming from their ability to influence and guide the nature of informal land transactions. These agents do not operate in a vacuum and, invariably, the absence of formal rules, procedures and enforcement has allowed them to establish networks and linkages that heighten their benefits but that also permit certain selected aspects of the transaction process to be covered by the existing framework. In other words, the absence of formal rules and procedures and/or their enforcement is invariably matched by the emergence of a parallel but informal system of rules, procedures and, most importantly, beneficiaries. The existence of these agents is important; clarification of the rules of land transactions and extending the role of the state and formality represent a challenge to the power, control and perhaps wealth of those individuals who have benefited from informality. The state, or those charged with the reform of a system, cannot afford to ignore these individuals. They represent a powerful focus of potential opposition and dissent. Similarly, it is important to analyse the informal rules that have arisen because they invariably reflect local conditions, needs and capacities. At the political level, it may often be important to incorporate these agents into the new coalitions and networks owing to their already existing linkages with farmers and other important groups in the land transaction equation. It is possible to conclude, therefore, that land tenure reform is basically an institutional reform with clear legal, political and economic consequences. From the economic side, through the recognition of existing land markets and, ipso facto, of different types of transactions, third-generation land reforms have a direct impact on production processes and the allocation of resources. Above all, it is clear that this type of reform (and other types of land reforms) constitute political reforms by implying the displacement of a category of social agents (the informal rule-makers) and the simultaneous constitution of a new social force (the newly enfranchised farmers). This latter group, the farmer beneficiaries of the reform process, may become part of a new post-reform governing coalition.
Owing to the inherently political nature of these different types of reforms, the results have been mixed. Institutional vacuums have frequently appeared - the transformation of state intervention in this regard and the establishment of new institutions invariably take longer than the passing of the legal reforms, resulting in the emergence of an intervening institutional vacuum.
One further point regarding the Mexican experience demands examination. The Mexican government undertook a third-generation reform between 1991 and 1992, and two major household surveys, carried out in 1990 and 1994, sought to examine the impact of the structural changes in rural areas. A total of 28 000 households were surveyed, representing a statistically valid total universe of over 3.5 million households. The work was undertaken by a joint team from the University of California at Berkeley led by Alain de Janvry and the Ministers of Agriculture and Agrarian Reform from Mexico (de Janvry, Gordillo and Sadoulet, in press). For the purposes of this discussion, it is worth highlighting some of the findings. The most important finding, confirmed by several different indicators (including, for example, increases in sharecropping and intercropping) is that once state agencies withdraw from certain activities of the rural development process (e.g. the provision of inputs, credit, marketing), various forms of farmers' production that had been repressed by state intervention, but had not disappeared, resurfaced immediately. This, then, defines one of the specific characteristics and consequences of command-style economic management systems in rural areas; it subordinates small-scale forms of production but does not suppress them. Instead, traditional or customary arrangements are invariably adapted to accommodate the demands and dictates of an external productive rationale stemming from state intervention. Similarly, the withdrawal of state agencies from certain crucial productive functions and the development of new forms of markets, will lead to further adaptation of existing customary arrangements and practices. The survey demonstrates the rationale that precedes this adaptation. The general finding is already well rehearsed in the specialized literature; farmers, as is the case with any other rational economic agents, seek to reduce risks. The two surveys clarify the specific strategies that are adopted in order to cope with risk in a rapidly changing economic and political environment. They identified four models for coping with risk but the common characteristic of all four models refers to the utilization and adaptation of previous customary - and generally informal - arrangements. These findings shed light on a crucial aspect; land tenure reforms, through the clarification of property rights and the transactions that accompany them, should also create a sufficient legal space in which the different options pursued by farmers in order to adapt to changing conditions, can occur.
The following conclusions can be distilled from the previous arguments:
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Superior political incentives, the availability of information and the legitimacy of democratic regimes prepare them for a better economic performance than their authoritarian counterparts, whose overestimation of their own historical legitimacy or successful government performance make them more vulnerable than democracies during economic crises, particularly when authoritarian regimes base their legitimacy on good economic performance.
Democratic performance, however, depends on the political institutions that channel the conflicts arising out of economic reforms. The experience from developed countries shows that there are a broad range of political institutions compatible with a market economy and a representative government, but the transition towards these institutional arrangements is difficult and reversible. In some cases the change towards social pacts is an important step in building a feasible democratic government; however, such action cannot replace the creation of a less-fragmented party system with a capacity for aggregation and consensus building.
On the other hand, economic equity facilitates democratization and slows down the negative impacts of economic reforms. When citizens believe that the costs associated with reform are fairly distributed, the reform can be more successful and the democratic regimes have greater possibilities to survive. When democracies protect less-advantaged groups from intolerable suffering, they show that solidarity is a basic component of their legitimacy.
Finally, one of the great surprises of the last years has been the coexistence, apparent compatibility and even complementarity of democratization processes with economic reforms, although there is no adequate theoretical interpretation to explain this fact. More needs to be known about the distributive implications of economic reform and how traditional vested interests have been organized and reorganized in response to that reform. Until the mechanisms by which political and economic reforms can be mutually reinforced are known, it will not be possible to create policies designed to support either one effectively.
Agents in the rural sector interact with institutional change; these active agents are, at the same time, subjects affected by the transformation. Not all agents participate in the same way, or at the same time, in the institutional change, but the repercussions are felt by everybody although to different degrees. Indeed, institutional change in a rural setting presupposes that certain agents risk that their existence be questioned or have to adopt a different collective identity.
Thus, it is clear that the whole society does not decide or elaborate reforms in a jointly and unilateral manner. Reforms have universal elements, but their implementation is the result of a convergence between several forces in favour of a specific hegemony in the correlation of political forces. Convergence is not unanimity, it means the articulation of the common interests, in relation to specific policies, of different social subjects who, at the same time, might confront partial or complete disagreements on other policies. The consolidation of convergences implies shaping the social base among convinced social subjects to carry out the agreed reforms. To maintain these convergences it is necessary to keep the equilibrium that exists among the concerted interests under the umbrella of an inclusive project. When that equilibrium is broken, through the intervention of extrinsic or intrinsic factors, and there is no possibility for repayment, there is a risk of losing consensus, diminishing the power of the leading group and diluting the social base developed for institutional transformation. It is important to underline that the base for a convergence, a coalition and even for the establishment of a hegemonic project in a democratic system implies a general consensus on basic rules.
Institutional reform in the rural sector requires first a simple social legitimacy in transforming the institutions, but its translation into legal reform needs a political convergence that recognizes the ability of the reform to consolidate the social base for transformation. The efficiency factor in institutional transformation cannot be separated from the distributive factors involved in all types of institutional reform. It involves power shifts and political processes. This means that, in the case of an agricultural sector with a high degree of social polarization, for real modernization to take place reform should be highly inclusive. Thus, the cornerstone of an effective rural development strategy consists of incorporating all the social agents, i.e. small producers, family farms, indigenous populations, women, commercial farmers, investors and others, in the new institutional rules.
The transforming role of farmers' movements is worth noting because of the difficulties involved in the implementation of reform projects in the rural setting. No institutional change policy can succeed unless it is supported and promoted by farmers. Removing all institutional obstacles (legal, political, economic and cultural) that hinder the transformation capacity of rural societies implies the conviction that there is no greater incentive to productive reorganization, the rational use of natural resources, increased productivity or technological innovation than the mobilization of the farmers themselves.
Within this framework social mobilization as a means of production and the challenges that farmers and their organizations have to address are the following:
The recent economic and political reforms have exhausted the power of convening that results from criticism of old models including the paternalistic thrust. Today, the debate over reforms and alternatives to authoritarian models, centralism and corporativism in the management of agricultural policies is at the top of the agenda.
The replacement of authoritarian regimes can become the cornerstone for resolving the complex crisis of the agricultural sector. Authoritarian forms of designing and managing agricultural policy present ramifications that have been unknown to a certain extent, which point to the seriousness and negative effects of authoritarianism in the agricultural sector and include:
The effects of these changes, however, are blocked by the continuous presence of an authoritarian culture and the lack of initiative by producers' representatives to advance towards a type of genuine, joint and co-responsible management of rural programmes and policies.
The limited changes in agrarian corporations that have occurred in the Latin American scenario over the past ten years have not yet coalesced. There are several reasons for this, among which are:
In the event that rural society reaches the right conclusions about the political possibilities that favour decentralization, a strengthening of federalism, people's participation and social organizations in the management of public policies, the rural agenda will also have the means to limit and eventually dissolve the authoritarianism that still characterizes the management and implementation of rural policies.
Another way of doing away with authoritarianism is found in decentralization and social participation, which are closely linked with the issue of governability and inclusion in the modernization project. It is within the rural environment that most demands and possibilities exist to carry out these two issues and to find solutions to economic stagnation in the countryside as well as to the frail social stability of many regions.
There are also pending matters, such as the absence of concrete debate about the frontiers between the rural public and private sectors, which would establish which demands and issues are of public interest, and belong to the federal, regional or local agenda, and which need to be dealt with within the boundaries of the interactions among economic agents under the legal framework and the legal administrative apparatus. These definitions would also limit the influence of authoritarianism.
The above issues indicate the importance of creating and agreeing on a solid form of decentralization in rural development. A course of development that, in accordance with the new agricultural paradigm and under the assumption of increasing democratization in the agricultural sector, proposes the creation of local conditions for effective social participation, where the final destiny of public resources allocated to the region and the implementation of policies are decided.
The creation of these local conditions is not enough. It is crucial to reorder the central institutional arrangement that guarantees a strategic national vision in the development of the agricultural sector and that has the real capacity to define, unite and manage the principal rural policies and programmes. This aspect is the key to put an end to the institutional dispersion that has traditionally decided and managed agricultural policies.
The above issues outline the premises for an effective re-evaluation of the regional context in the design process and the management of rural policies.
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