Theoretical Basis to understand class relations in Transition in Agriculture – Kobad Ghandy

There is need to understand the theoretical basis on which to assess whether relations in agriculture are semi-feudal or capitalist. Often we come to conclusions only after viewing certain aspects, rather than looking at the phenomena from an all-sided view. This results in incorrect conclusions. It was Lenin in his Vol. III (Development of Capitalism in Russia) who further developed Kautsky’s writings on the issue who gave a comprehensive understanding into this process of change. This was further developed by Lenin himself in the various “Agrarian Programmes” written by him at different times. It is these writings that can act as the theoretical basis for our study of the situation in India. It is these principles as enunciated by Lenin that we will try and summarise here, after a brief reiteration of Marx’s basic principles of capitalism. But first a small note from Mao on the direction one should have for social investigation: He said that the aim of social and economic investigation is to arrive at a correct appraisal of class forces and then to formulate correct tactics for the struggle”. 
He further added: The object of our investigation is all the social classes and not fragmentary social phenomenon. Of late, the comrades in the Fourth Army of the Red Army have generally given attention to the work of investigation, but the method many of them employ is wrong. The results of their investigation are there—as trivial as a grocer’s account or resemble the many strange tales a country bumpkin hears when he comes to town, or are like a distant view of a populous city from a mountain top. This kind of investigation is of little use and cannot achieve our main purpose. Our main purpose is to learn the political economic situation of the various social classes. The outcome of our investigation should be a picture of the present situation of each class and the ups and downs of its development. For example when we investigate the composition of the peasantry, not only must we know the number of owner peasants, semi-owner peasants and tenant peasants, who are differentiated according to tenancy relationship but more especially we must know the number of rich peasants, middle peasants and poor peasants, who are differentiated according to class or stratum. When we investigate the composition – of the merchants, not only must we know the number in each trade, such as grain, clothing, medicinal herbs, etc. but more especially we must know the number of small merchants, middle merchants and big merchants. We should investigate not only the state of each trade, more especially the class relations within it. We should investigate the relationship not only between the different trades but more especially between the different classes. Our chief method of investigation must be to dissect the different social classes, the ultimate purpose being to understand their interrelations, to arrive at a correct appraisal of class forces and then to formulate the correct tactics for the struggle, defining which classes constitute the main force in the revolutionary struggle, which classes are to be won over as allies and which are to be overthrown. This is our sole purpose.
In our investigation we should give attention to the state of all these classes or strata. Only the industrial proletariat and industrial bourgeoisie are absent in the areas where we are now working, and we constantly come across all the others. Our tactics of struggle are tactics in relation to all these classes and strata. ”
Mao Tse Tung-“Oppose Book Worship”, May 1930.
First of all there is need to understand what is meant by semi-feudalism. By this we mean that within the embryo of feudalism there has developed capitalist relations to different degrees, but this has not as yet developed into full-fledged capitalist relations. Dialectics teaches us that it is quantitative changes that finally results in a leap resulting in qualitative changes. Without such a leap it can be said that no fundamental change has taken place in any phenomena/object. So even if in the past decades there has been a growth in capitalist production relations, there is a necessity to assess whether this has resulted in a leap to change the basic relation of production, even if in a particular area. In what Lenin referred to as the “Junker path” capitalist relations are introduced from the top, which results in distorted capitalist growth. But, even while assessing this distorted development, it is necessary to assess whether this has led to a qualitative change or not. If it has not, it is still basically semi-feudal, within which distorted capitalist growth has taken place. If it has, it means it is basically capitalist, with feudal remnants. The other path mentioned by Lenin in the change in the relations takes place in agriculture is from below, where the old production relations are smashed and capitalism emerges.
Now, before coming to Lenin’s understanding on the issue let us briefly reiterate Marxist principles of political economy, that may have a bearing on understanding this question.
Some Marxist Principles of Commodity Production
It is important not to confuse commodity production in general with capitalism. It is true that only under capitalism “all or even a majority of the products take the form of commoditiesBut the converse is not true; commodity production does not necessarily imply capitalism. In fact a high degree of commodity production is a necessary pre-condition to the emergence of capitalism.” What existed before capitalism was “simple commodity production”.
Under “simple commodity production” each producer owns and works with his own means of production; under capitalism ownership of the means of production is vested in one set of individuals while the work is performed by another. Both means of production and labour power, moreover, are commodities; that is to say, both are objects of exchange and hence bearers of exchange value. It follows that not only the relations among owners but also the relation among owners and non-owners have the character of exchange relations. The former is the characteristic of commodity production in general, the latter of capitalism ONLY. In “simple commodity production” the producer sells his product in order to purchase other products which satisfy his specific wants. He starts with commodities, turns them into money, and then once again into commodities. Commodities constitute the beginning and the end of the transaction which finds its rationale in the fact that the commodities acquired are qualitatively different from those given up. Marx designates this circuit symbolically as C-M-C. Under capitalism, on the other hand, the capitalist, acting in his capacity as a capitalist, goes to market with Money, purchases Commodities (labour power and means of production), and then, after a process of production has been completed, returns to the market with a product which he again converts into Money. This process is designated as M-C-M. Money is the beginning and the end; the rationale of C-M-C is lacking, since money is qualitatively homogenous and satisfies no wants. Indeed it is evident that if the M at the beginning has the same magnitude as the M at the end, the whole process is pointless. It follows that the only meaningful process from the standpoint of the capitalist is M-C-M’, where M’ is larger than M.
The simple circulation of commodities — selling in order to buy — is a means of carrying out a purpose unconnected with circulation, namely, the appropriation of use values, the satisfaction of wants. The circulation of money as capital is, on the contrary, an end in itself, for the expansion of value takes place only within this constantly renewed movement. The former is an indication of a pre-capitalist mode of production, while the latter is of capitalist production. A cobbler, from time immemorial, has produced for the market, but he is not a capitalist. He sells only to satisfy his own needs, similar to much of the small/middle peasantry today.
 For there to be capitalist relations of production, quite necessarily there must exist a capitalist and a labourer. He alone is a capitalist who uses his money in production to generate more capital — the capitalist’s sole objective is the accumulation of capital through the generation of surplus value. In capitalism the labourer must own nothing except his labour power; he must be totally divorced from ownership of the means of production. Therefore the labour power must be free wage labour to be bought and sold on the market like any other commodity. Exploitation of this labour power by the capitalist generates surplus value and results in continuous accumulation of capital. This continuous accumulation is what makes capitalism a dynamic, growing system compared to the systems of previous times.
These are some of the principles that need to be kept in mind when analyzing the mode of production in India or in any part of the country. In any semi-feudal system, which indicates a system in transition from feudalism to capitalism, it is likely that in many regions one may not witness classical forms of feudalism and capitalism, but varied over-lapping forms of production relations from which one has to determine which is the predominant mode of production, whether in the country or in a particular state.
Some principles Outlined in Lenin’s Development of Capitalism in Russia
(1) Growth in Manufacturing:
Lenin has said that “it is the development of capitalism in manufacturing industry that is the main force which gives rise to, and develops capitalism in agriculture”. Unless manufacturing grows, the population displaced from agriculture cannot be absorbed to into new (capitalist) relations of production. They therefore remain as a mass of under-employed, living a hand-to-mouth existence. With productivity  in agriculture being low, relative to industry, the former is unable to absorb the displaced population resulting from the differentiation of the peasantry. This development is to be seen in all the developed capitalist countries. Due to the lack of other sources of employment the burden on the land continues to grow, with the masses living in a state of semi-destitution eking out a living doing odd jobs living amidst the existing backward relations of production.
(2) Growth in Consumption:
The mere existence of commodity production in itself does not mean the overall prevalence of capitalism. As Lenin said “Capitalism is commodity production at its highest stage of development, when labour power itself becomes a commodity”. So, while assessing the growth in “consumption” and “distribution” patterns in the rural areas, it is necessary to see what its impact on the relations of production is. Casual examples of growth in the consumption of commodities, may indicate some growth in capitalist relations but is not sufficient reason to prove basic change. As Lenin added “one cannot even discuss ‘consumption’ unless one understands the process of the reproduction of the various parts of the social product…. It is not with ‘production’ that political economy deals, but with the social relations of men in production, with the social system of production. Once these social relations have been analysed, the place of production of every class, and consequently, the share they get of the national consumption is thereby defined”.
This key understanding is often forgotten by the ‘Marxist’ political economist who focus attention merely on “consumption” and “distribution”, without analyzing its impact on the relations of production. For example because of the extra burden on the land (due to lack of employment in other spheres, with each successive generation the no. of people living off the same small plots of land continues to grow — and the land is regularly fragmented with each successive generation). To survive these families have to increase productivity, so many of such families began to adopt HYV and were drawn into the market tough they continued to remain at subsistence level of existence and within the framework of the old production relations. Today’s crisis in agriculture has further aggravated the situation.
(3) Simple Commodity Production:
As a corollary to the earlier point, simple commodity production in the rural areas, in the form of handicrafts, small peasant farming and widespread fragmentation of production, does not necessarily indicate capitalist development. Marx has said that “small landed property pre-supposes that the overwhelming majority of the population is rural, and that not social but isolated labour predominates….”. He adds that “proprietorship of land parcel by its very nature excludes the development of social productive forces of labour, social forms of labour, social concentration of capital, large-scale cattle raising and the progressive application of science”.
Due to the lack of other sources of employment the burden on the land continues to grow. To meet the basic needs of the growing number of dependants on the small plots of land with each successive generation, many turned to HYV varieties to increase production to meet their needs.
Besides the fact that most of the households are in a state of bankruptcy today, due to the crisis in agriculture ( as a result of the aggressive imperialist policies), there is need to determine to what extent surplus value is generated through such commodity exchange, or to what extent it just serves basic needs. Growing commodity exchange, if it is not linked with the accumulation of capital it results in simple commodity production, not capitalism.
(4) Capital Accumulation:
The extent of the capital accumulation in agriculture is measured by the extent of reinvestment of surplus value generated in agriculture and the amount of investment in it by the government of private sources.
This, in fact, is one of the factors in the determination of capitalist growth, as a fundamental law of capitalism is that constant capital (ie. production of means of production) must grow at an increasingly fast rate. Therefore, in capitalist farming the kulak must reinvest his surplus in the farm in improved technology. Thereby he would increase the productivity of his farm and the surplus value extracted from it. So, we have to investigate to what extent surplus is being generated in agriculture and to its mode of utilization.
We find that with the crisis in agriculture, except for the first decade of the Green Revolution, due to the disparity between the rise in price of inputs and falling price of agricultural output has resulted in a continuous squeezing of the surplus. In the period of globalization of the 1990s the crisis has got even deeper not only reducing this surplus even further, but pushing thousands of peasants to suicide. So, according to data available gross capital formation in agriculture dropped from 11% of the total in the
1980s to 7.6% in the 1990s.
Share of Agriculture in GDP and Gross Capital Formation (All India)
Gross Capital Formation
Source: Indian Economic Survey, Government of India, New Delhi (2000)
Besides this low generation of surplus in agriculture, even that generated goes primarily to other spheres. With the return on money-lending and trading far more profitable, a large proportion of this surplus is not re-invested in agriculture, instead finds its way in such spheres of activity. In fact, as long as usury continues to dominate the countryside as a most profitable sphere of investment, it will restrict the growth of capitalist development. Of course, with the inception of the ‘green revolution’ things have somewhat changed; but the limited extent to which it has generated capitalist farming can be seen from the poor levels of capital investment in agriculture taken as a, whole.
If we turn to the level of government investment in the rural sector of the economy it dropped from 14% of GDP in 1981 to 5% in 2001. Rural Development expenditure fell from 14.5% of GDP in 1990 to 5% in 2003/04.
Afterall, if at all there is capitalist farming there must be a capitalist, and its counter-part —- free wage labour.
5) Question of Free Wage Labour:
For capitalism to exist there must be capitalists and free wage labour. Free wage labour means labour where the worker owns nothing except his labour power and is not tied to the owner of the means of production in any way. One important aspect of capitalism is that wage power must be divorced from
the instruments of production. That means the he should not own himself any instruments of production—– for example if a labourer goes to work with his own tool then he is not totally free wage labour as he owns some means of production. Free wage labour means not bonded in any way; i.e it should not be family labour; hours of work, however long, should be fixed; the payment should be on a regular basis; payment should be in cash and not kind, etc etc. Social investigation needs to understand the nature of the
labour involved in production. If it is totally free it would mean that it is capitalist; if there are different shades of dependency it indicates various degrees of the pre-capitalist/semi-feudal mode of extraction of surplus.
So though a greater number of the peasantry may be dispossessed from the means of production and land and though wage labour may have increased with the green revolution, it has to be seen whether the bulk of the labour takes on the form of regular free wage labour or not. So, in each area it must be seen whether the clear differentiation of a rural proletariat and a rural bour geoisie has taken place. In India where there is not significant growth in industry the continuing displacement of labour will result in
greater amount of labour power turning into a commodity coupled with further impoverishment of the peasantry. Yet this sale of labour power will more take the form of simple commodity production rather than capitalist production. For, say, a middle peasant is unable to carry out his farming operations with family labour and so hires three to four workers during the season. Yet, if the bulk of the produce consumed by his family, his exploitation of wage labour gives him no surplus value and so takes the form of simple commodity production even if his produce is a cash crop – say cotton. It is to be seen to what extent the labour power sold in the Indian countryside takes this form, and though because of it
commodity production expands, the home market grows and there is some change in agrarian relations, but fundamentally it takes the form of simple commodity production with a growth of small-scale farming without generating capitalism or a rural bourgeoisie. Also, it should be observed to what extent labour-service in the form of share cropping and family cooperation co-exist and continue together with the emerging wage-labour system in Indian agriculture.
6) Usury & Moneylending:
Usury & Moneylending are indications of a pre-capitalist mode of production, while bank credit is an indication of a modern capitalism. Marx has said that, “Usurer’s capital as the characteristic form of interest bearing capital corresponds to the predominance of small scale production of the self-employed peasant & small master craftsman” &, “Usury centralises money wealth where the means of production are dispersed. It does not alter the mode of production, but attaches itself firmly to it like a parasite and makes it wretched. It sucks out its blood, enervates it and compels reproduction to proceed under even more pitiable conditions.
In India, during the period of the green revolution, the amount of bank credit vis-à-vis moneylending, had increased. Yet moneylending continued apace. In the period of globalization, with the privatization of banks and removal of preferential rates of interest, bank credit has again begun to decline, and once again
moneylending is on the increase. It has to be assessed to what extent this has taken place.
Though this rule generally applies we find that even the nature of the credit may not be purely feudal or capitalist. For example today in many places moneylending may not have the form of typical credit of the old-time landlords but may be usurious credit from the trader varying from 36% to over 100% per year. Also today much of the bank credit is taken by rich peasants and others and then again given out at usurious rates. So we must try and understand the essence of the nature of the credit being given out today to understand whether it is basically feudal or capitalistic.
7) Productivity Trends in Agriculture:
It is a general law of capitalism that productivity must continuously develop in order to survive in a competitive market. Or else the capitalist will get swallowed up by their competitor. During the beginning of the Green Revolution there was definitely a growth in productivity in agriculture but after that growth rate has declined drastically by the mid-1980s itself. Ecological destruction and a drop in public investment in agriculture, particularly in the 1990s and after, has led to a significant drop in productivity. The extent to which productivity has dropped has to be analysed and its impact on capital accumulation assessed. This drop is primarily due to the impact of imperialism on agricultural economies as India.
Also, why is there such a discrepancy between input-output values? For two reasons: Firstly, inputs are priced higher in order to give massive profits to the multinationals and comprador big bourgeoisie who manufacture fertilisers, pesticides, tractors, pump sets, etc. while the price of agricultural output is kept low in order to provide cheap raw materials for industry and for the imperialists. Secondly, though modern techniques of production are being adopted the necessary infra structural development has not taken place, making the yield dependent on the monsoon. Also the poor capital base of the peasantry adds further to his unscientific utilisation of inputs leading to still further drop in yield. Due to all these factors the yield is not as high as potential HYV seeds have, and the value of this product in the market is kept low by a government that favours the imperialists and comprador big bourgeoisie. It is for this reason that there continues to be fluctuations in crop production, though there may be a general upward trend.
8) The Home Market
The growth of capitalist production inevitably results in the expansion of the home market. In the rural areas this takes place through the process of differentiation of the peasantry into capitalist farmers and rural proletariat.
The differentiation of the peasantry will lead to an expansion of the home market. Imagine a poor peasant with two acres is turned into an agricultural labourer and the land is taken over by the landlord money lender. Prior to the expropriation of his land the entire produce from the land would be consumed by the poor peasant and his family. After expropriation, though his conditions of life may worsen, as a seller of labour power even the little he consumes will add to the commodity circulation. Also, the produce from the two acres will now also finds its way into the market. Thereby mere differentiation of the peasantry, may worsen the conditions of life, but may yet add to the expansion of the home market.
As Lenin said, the very growth of commodity production destroys the scattered condition of small economic units that is characteristic of natural economy and draws together the small local markets into an enormous national (and then world) market. Production of oneself is transferred into production for the whole of society, and the greater the development of capitalism, the stronger becomes the contradiction between this collective character of production and individual character of appropriation.
Thus it is important to see to what extent production is for consumption and to what extent for the market and what is the trend today; to what extent payment is in kind and to what extent in cash; to what extent has the purchasing power of the masses increased; to what extent has the rural market been opened out for industrial goods; to what extent have the labour displaced from agriculture been absorbed in industry/manufacturing (or do the bulk continue a subsistence existence on the periphery of society); and to what extent has agriculture itself been integrated into industry.
All this also needs to be investigated to see to what extent relations have been transformed.
9) Personal Dependence
Lenin said that capitalism eliminates the forms of personal dependence that constituted an inalienable component of preceding systems of economy……. In rural India we have to see to what extent clan, caste and other forms of social and personal forms of dependence exist, or whether these have been broken down into pure relations based on class differentiation. Also in the forms of assertion of feudal authority to what extent clan and upper caste structures play a part …….. as for example the Khap system
in Haryana. In fact with capitalism comes greater mobility of the population which shatters all earlier forms of personal dependence reducing the bulk of the population to the common factor of dependence totally on the market and capital.
So, while investigating we have to find out to what extent all forms of personal dependence are being reduced and to what extent this is being reduced by the introduction of pure cash relationships.
10) Differentiation of the Peasantry& Urban/Rural Divide
There are two aspects to this. The first is that to what extent have the rural population been differentiated into a rural proletariat and capitalist farmer (or kulak). And the second aspect is to what extent has this differentiation, resulting in the displacement of the peasantry, led to migration to the urban areas.
Taking the first aspect, the growth of capitalist farming results in the differentiation of the peasantry, with large modernized capitalist farms, utilizing a very small fraction of the village populace as wage labourers. In this process the small peasants and even a large section of the middle peasantry are displaced and large capitalist farms are formed. In the ‘Junker path’ where this transformation takes place from above (i.e. landlords becoming kulaks) this transformation involves various forms of intermediary forms of transition, and our investigation will require us to asses to what extent there has been basic transformation to capitalist farming and to what extent it continues as semi-feudal, with certain capitalistic changes. This can only be assessed by taking into consideration all the other aspects mentioned here.
But, inevitably with capitalist development the displaced labour cannot be absorbed into agriculture itself as it will be able to employ only a small fraction of the displaced population. So a large proportion will have to be absorbed by industry which will grow simultaneous to the growth of the home market, thus increasing the urban population at the cost of the rural population.
Lenin said that capitalism necessarily creates mobility of the population, something not required by previous systems of social economy and impossible under them on anything like a large scale…… capitalism constantly reduces the proportion of the population engaged in agriculture and increases the number of large industrial centres.
So, differentiation can only proceed in agriculture when there is a simultaneous growth in industry in urban areas to absorb the displaced population. Explaining this entire process Lenin said that,
“the development of commodity economy means the divorcement of an ever-growing part of the population from agriculture, ie. the growth of the industrial population at the expense of the agricultural population”. 
In explaining the entire process, Marx clarified that, “It is in the nature of capitalist production to continually reduce the agricultural population as compared to the non-agricultural, because in industry the increase of constant capital in relation to variable, capital goes hand, in hand with an absolute increase, though relative decrease, in variable capital, on the other hand in agriculture the variable capital required for the exploitation of a certain plot of land decreases absolutely; it can thus only increase to the extent that new Land is, taken into cultivation but this again requires as a prerequisite a still great growth of the non-agricultural population”.
In India there has no doubt been an increase in the urban population over the years, but the increase is very gradual. As far as the differentiation of the peasantry into agricultural labourers and capitalist farmers to some extent this may be seen in few minor pockets of the country; in most other places it is in some stage of transitional forms …….. it is this latter factor that primarily has to be assessed and also the exact extent of the former.
11) Handicrafts
If capitalist industry and capitalist relations were to grow it should first and foremost oust these ancient and backward forms of production and service. But these continue to co-exist together with industrial growth. Also a differentiation of the peasantry would simultaneously see the collapse of the household sector, coupled with the growth of modern indigenous industry. Lenin has said that, “Domestic industries are a necessary adjunct of the natural economy, remnants of which are nearly always retained where there is a small peasantry” .
In India, not only does caste based household labour continue, but the household industries are propped up by the state and comprador big bourgeoisie. For example, in the year 1981-82 the total grants plus outstanding loans to the Khadi and Village Industries was Rs. 338 crore – Khadi Rs. 208 crore and Village Industries Rs. 130 crore – given by the government. The very fact that this sector not only continues to exist but is propped up even in the face of expanding industrial production, is a clear example of the compromise struck by imperialism and the comprador big bourgeoisie with the backward pre-capitalist modes of production which they use as a social base for their existence.
Though most of this sector is in a severe crisis with lakhs of families (particularly weavers) living a hand-to-mouth existence there is no outlet for other suitable employment. So, thousands have been committing suicide every year. It should be estimated to what extent handicrafts continue to exist in the rural and semi-urban areas as weavers, mochis, goldsmith, village barbers and various other forms of labour service.
12) Productivity Trends
In the system of capitalist production generally capitalist relations result in increased productivity due to the need to survive in the face of stiff capitalist competition. This should be seen in industry as also in capitalist agriculture. But, in India though yields have increased, we do not see yields even equal to that of many other backward countries of the world. Also profitability has been declining due to the impact of imperialist policies on the country in order to maximize profits imperialists and CBB who produce the major inputs.
Inputs are priced higher in order to give massive profits to the multinationals and comprador big bourgeoisie who manufacture fertilisers, pesticides, tractors, pump sets, etc. while the price of agricultural output is kept low in order to provide cheap raw materials for industry and for the imperialists. Secondly, though modern techniques of production are being adopted the necessary infrastructural development has not taken place, making the yield dependent on the monsoon. Also the poor capital base of the peasantry adds further to his unscientific utilisation of inputs leading to still further drop in yield. Due to all these factors the yield is not as high as potential HYV seeds have, and the value of this product in the market is kept low by a government that favours the imperialists and comprador big bourgeoisie. It is for this reason that there continues to be fluctuations in crop production, though there may be a general upward trend.
So while investigating the nature of relationships it is necessary to also try and understand the growth of productivity on the farms and their relationship with backward production relations and imperialist penetration into the economy.
So, while conducting social investigations we should seek answers to at least these 12 factors to understand in a comprehensive way as to what extent feudal relations have weakened and to what extent transformation into capitalism has taken place. When we say that India is a semi-feudal country we will find that typical landordism may not be widely prevalent and that it is in various states of transitional forms. It is these varied stages of transitional forms that will have to be studied to determine the exact class relations in agriculture in the different regions of the country. It is then on this basis an agrarian programme would have to be prepared to clearly state the various types of slogans that would have to be used depending on the varied forms of transformation.
This article gives only a skeleton of the basis of social investigation. Also the CPP (Philippines) experience and the PCP (Peru) experience need to be studied and their basis for concluding their countries to be semi-feudal, where, in fact, capitalist relations are far more developed than in India. Meanwhile, we hope this can help us do a more comprehensive social investigation.

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