Theoretical Justification of Semi-feudalism

(This article was first published by Radical Publications in 2007 in a book named ”Indian semi-feudalism and imperialist plunder” . Its hereby reproduced. )


1) There are the two paths of capitalist development breaking feudalism. One is the genuine revolutionary path and the other is the Prussian Path. Such Prussian Path, in the Leninist sense, plays a two-fold role: It opens up a process of capitalism in a limited way by pushing feudalism in a snail’s pace, on the other hand such reforms provide ample scope to feudalism to sustain. If such two-fold role of such reformation is not grasped one might draw an exaggerated picture as happened in the end of the 19thcentury and first years of the 20th century. Even comrade Lenin and all Russian Marxists at first blew up the consequences of 1861 reforms as stimulating and bringing in capitalism in the Russian agriculture. Self-critically Lenin mentioned the mistakes contained in the First Agrarian Programme of Russian Social Democracy. In his writing ‘The Last Valve’ [Collected Works, Vol. 18] Lenin clearly wrote in 1912 why feudalism strongly remained despite reforms. Lenin said that maintaining the big landholdings Stolypin reforms could not destroy bondage and labour service. There remained the existence of small landholdings depending on big holdings. Such big landlords not only exploited farm labourers, they exploited as a consequence of the korvee system the small peasants.
Such way of reforms maintaining the big landholdings resulted in the sustenance of decaying pre-capitalist system. So the slow process of capitalism could not guarantee its development for the existence of bondage and labour service.

2) Export of capital replaced export of goods under imperialism. This was because, as Lenin said, the developed capitalism fails to find ‘profitable’ investing field for backward agriculture and people’s poverty in the countries of its origin. This capital is ‘surplus capital’. Lenin discarded the petty-bourgeois view of ‘realizing’ value imperialist capital is exported for the over production. Marx rejected this view in Capital (Vol. II) and in ‘Theory of Surplus Value’. He showed it that the market of produced goods can expand despite the slow growth of consumption capacity by way of expanding market of tools of production. Marx made it clear that as technology of the first departments is more developed than the second department, such investment invariably increases the macro level ‘organic composition’ of capital. And this continuous increases of organic composition at the macro level leads to the possibility of downward move of the rate of profit and it makes the investment unprofitable.
Secondly, capital is exported to the backward regions for the backwardness making the low organic composition of those regions. This makes the imperialist capital profitable to receive more profit through investment to those countries. This also helps that capital check the decreasing return in profit. In such backward countries capital is scarce and the rate of wages is less. And there the need of constant capital is also comparatively less and industries are basically labour intensive, not capital intensive. Besides that the circulating capital for raw materials is less costly.

Here it should be remembered that despite such increasing rate of profit the whole of capital investment does not shift to the backward countries. The main reason behind such impossibility is that the economic foundation of those backward countries is not conducive to materializing such a shift. Secondly, if such a situation arises then both the regions – backward and advanced – shall make a parity or equality, making the rate of profit theoretically same in both the regions, economically advanced and backward. Thus, for the very existence of the imperialist Europe the vast backward regions are inevitably needed for the export of surplus capital. This structural situation makes it imperative for the imperialist capital to retain the vast regions for the export of only surplus capital keeping those regions perpetually backward. It wants that much capitalist development of those countries as warrants the intake of surplus capital from the west. The imperialist capital does never want huge capitalist development to do away with the gap between the west and the Third World as that condition is detrimental to world capitalism. This task of capitalist development abolishing feudalism completely falls on the revolutionary proletariat.

However, this dependence on imperialism at least opens up the scope for a limited development of capitalism in the backward countries, and imperialism resorts to such a development as unconscious tool of history. Thus this process of dislocation to an extent of the feudal elements and the simultaneous strengthening of the feudal system in various ways go on in tandem. This partly creates market oriented industrial products as well as industrial raw material and food material for the cities. As profit too enters the agrarian process in a limited sense, reproduction and reinvestment take a part in the rural economy paving the way for a limited development in the productive forces. This tendency of reinvestment is under compulsive situation.
In the state of the imperialist control the productive forces find limited development in agriculture basically maintaining the monopoly of feudal landowners in land ownership. With the penetration of imperialist and comprador capital in industry the indirect influence on the development of productive force in agriculture must be limited as the monopoly imperialists and native compradors’ capital bring about very marginal development in the market of agricultural commodities leaving very little scope for the function of market profit reinvestment cycle. Simultaneously pre-capitalist wealth or new commodities are critically handicapped for the new investment in industry.
The atmosphere of capitalist development and modernization is taken by imperialism and neo-colonial regime to initiate the reformist path to avert revolution.

3) In semi-colonial and semi-feudal countries like India along with the proletariat the national bourgeoisie also want anti-feudal agricultural development and struggle. But such weak national bourgeoisie are linked up with the comprador and imperialist capital in many ways, reducing them to play a very limited role.

4) In the backward countries like India, imperialism shall never prefer complete abolition of the big landlords but does take a limited land reforms form above. This process in the semi-colonial countries carries on both the erosion and simultaneous sustenance of feudalism. Yet the long-drawn process of effecting partial penetration of capitalism in agriculture helps in the slow growth of a capitalist agriculture. It should be mentioned here that consequent upon continuous inflow of finance capital in the colony and semi-colony it tends to reduce the rate of super profit. And to check this trend imperialism takes recourse to a limited expansion of capitalism in those countries. Such problems were not faced by the western countries.

5) It is not true that if the big landlords evict the peasants in large scale to supervise agricultural operations that does automatically and essentially brings about capitalist transformation. Simultaneously it is not the inevitable result of capitalism if landlords themselves supervise agricultural operations.

6) Marx spoke of capitalist agriculture in the following words “….Ground rent, therefore, is here that form in which property in land is realized economically, that is, produced value. Here, then, we have all three classes – wage labourers, industrial capitalists, and landowners constituting together, and in their mutual opposition, the frame work of modern society.” [Marx, Capital, Vol. III, Progressive Publishers, Moscow, 1986, p.618]. For Marx differential rent is a differential surplus arising from the unequal results of equal quantities of capital ‘applied to different plots of land of equal size’. Marx discovered it that “Private property in land does not create that portion of value which is transformed into surplus profit, but it merely enables the landowners to coax this surplus profit out of the pocket of the industrial capitalist into his own. It is not the cause of the creation of such surplus profit, but is the cause of its transformation into the form of ground rent”.

7) Capitalist economic system is a commodity based economy where labour becomes wage labour and commodity.Here as owner of the labour power the worker participates in the market of buying and selling labour power freely. Secondly, this capitalist system is based on the law of increasing reproduction and by this law the surplus value is further invested to the production as new capital. This reinvestment is not found in the feudal system where luxuries of the feudal lords, use of money as usurious capital etc., negate such a possibility.

8) The agrarian capitalist economy is obviously conditioned by the essential component of the existence of wage labourers, the evicted peasants from land. The peasant proletariat is free in the double sense: he is free to sell his labour power to any capitalist farmer and he is also free from the tools of cultivation. Marx writes on the emergence of capitalist and wage-labour in Europe (which is beyond imagination in the caste-based society existing in rural areas in India. He says :
The handicraftsman or peasant who produces with own means of production will either gradually be transformed into a small capitalist who exploits the labour of others or he will suffer the loss of his means of production ……… and be transformed into a wage-labourer. This is the tendency in the form of society in which the capitalist mode of production predominated”. [Karl Marx, Theories of Surplus Value, Vol. 3, p.409] This is obviously the revolutionary path of capitalism from below. And we can now conceive the situation in India with its predominance of the caste system negating generally the same person to be having the potential of a capitalist as well as a wage-labourer.

In the chapter Genesis of Capitalist Ground in Capital Vol.III Marx brilliantly presents one very relevant point as to the definition of class – capitalist or feudal, when the landlord himself switches over to agricultural production, owning all instruments of production and even employing ‘free or unfree bondsmen’ paying wages. Let us listen from Marx’s words.
We need not further investigate slave economy proper (which likewise, passes through a metamorphosis from the patriarchal system mainly for home use to the plantation system for the world market) nor the management of estates under which the landlords themselves are independent cultivators, possessing all instruments of production, and exploiting the labour of free or unfree bondsmen, who are paid either in kind or money. Landlord and owner of the instruments of production, and thus the direct exploiter of labourers included among these elements of production, are in this case one and the same person. Rent and profit likewise coincide then, there occurring no separation of the different forms of surplus value…” [Karl Marx, Capital Vol. III, p. 804, Progress Publishers, Moscow, p.804]
The above is a brilliant exposition of the character of such landlord. Marx here sheds light on the slave system inclusive of the modern slave system as found in plantation and particularly the landlords transforming into employers of wage laborers (also unfree bondsmen) while controlling the instruments of production. We in India find great similarity as since the 1960s many landlords underwent such changes to become employers of wage labours by also owning all the instruments of production. Marx makes it clear that in such case with the apparent absence of subject peasants there is no ceassation of ground rent. Rather in such case in contrast to the capitalist ground rent here ‘rent and profit likewise coincides , occurring no separation of the different forms of surplus value. “Such a situation negates the very important difference between ground rent and profit and ground rent is abolished here. It is not capitalist production”. Marx did not stop at that. Marx here also considered the cultural aspect of capitalism or feudalism. He refers to the capitalist outlook in the following words soon after saying the above “…….where the capitalist outlook prevails, as on American plantation, this entire surplus value is regarded as profit; where neither the capitalist mode of production itself exists, nor the corresponding outlook has been transferred from capitalist countries, it appears as rent.” [Ibid, p.804]
Thirdly Marx points to the basis of appropriation of surplus labour to determine capitalist or feudal mode of production. In his words “…..The income of the landlord, whatever it may be called, the available surplus-product appropriated by him, is here the normal and prevailing form, whereby the entire unpaid surplus-labour is directly appropriated, and landed property forms the basis of such appropriation.” [Ibid, p.804, Emphasis added]
In the Indian context those three aspects as stated above are to be taken into account. We have emphasized the portion ‘and landed property forms the basis of such appropriation’. It is wrong to make such sweeping conclusion that cultivation conducted by landlords is inevitably capitalistic by nature. Marx made it clear that here the process of production, outlook of the landlords, the appropriation of rent, etc. are contrary to capitalist production. And in such a case the “landed property”, not the “investment of capital, is the basis of such appropriation” Here the surplus emanates not necessarily as surplus value but as rent. The factors of money payment, engagement of free or unfree bondsmen, means of production owned by the landlords, etc. are apparently capitalistic but in reality feudal mode of production. We have to keep in mind that the basis of feudal exploitation is not capital but the ‘landed property’.
A capitalist invests capital to buy or borrow instruments of production and buys land on the basis of capitalized value of ground rent or takes land on lease on the basis of absolute and differential ground rent. Such capital investment generates surplus value after paying the labour the equivalent of necessary labour and a portion of capitalized value of ground rent. It is notable that the value of agricultural commodity generally remains above the cost of production and the surplus value also remains above profit. The private ownership in land restricts the surplus from being equal to profit and so from the surplus a portion is paid for absolute ground rent. In such cases it is noticeable that despite the prevalence of ground rent, the basis of production here is not land but capital as reflected in the surplus value.
As a result in both cases (absolute and differential) of rent the limits are not based on extra-economic characteristic of force and such other methods. The labour power also operates on the basis of capitalism. The reverse is seen when the land ownership is the basis of expropriation. Here market rules do not prevail and the market for the buying and selling of labour power is not essential. So in such cases of what Marx identified as landed property forming the basis of appropriation feudalism is the order not capitalism. We must have to keep it in mind that capitalist ground rent is different from feudal rent.

9) In Germany after the failure of revolution of 1848 the reforms initiated by Bismarck was from above in a slow process and capitalism flourished adjusting itself with the pre-capitalist forces. It is the Prussian Path leading to the feudal landowning junkers to introduce capitalism. In such reforms ordinary peasants had no participation. However, Prussian Path was also resorted to in other countries as well. In Russia also this Prussian Path was followed for the development of capitalism. It goes without saying that in Russia despite the announcement of emancipation of serfs in 1861 capitalism assumed a reformist way keeping hundreds of types of ties with feudalism. During the Stolipin period between 1906 and 1914 the second stage of reforms with initiated by allowing peasants to sell and buy lands. This led to land transfers and rich landlords gained more lands than the poor peasants. Lenin called it the Prussian Path.

10) Its evident that the process of eviction of the agricultural-laborers from their lands can produce a per-capitalist nature of surplus extraction while this process of eviction and surplus extraction executed by the feudal lords creates have-nots rather than the formation of proletariat. This condition of pauperization makes it possible for the existence of attached labour. The least chance of getting absorbed in the alternative mode i.e. capitalist industries constrains the very process of proletarianisation. Pauperisation as we witness in India as a common feature is not necessarily the outcome of capitalism in agriculture. Such distressed peasants become attached agricultural majdoors, not free workers in land. The slow growth of industry perpetuates this general process while proletarianisation of agricultural workers remains an unimportant and disturbingly slow process in countries like India. Thus the landlord-based transformation in agriculture fails to fulfill the first principle of smoothing the capitalist process in agriculture.

11) The next very important question in such landlord-based capitalist agriculture is whether it follows the rule of extended reproduction. A part of this surplus value is further converted into capital and so over and over again. This transformation of surplus-value into capital for self-expansion is called accumulation of capital. It should be added here that in capitalist system of agriculture and industry are based on the expanded reproduction whereby the surplus capital is reinvested in production. Luxurious spending, hoarding of money, etc. are contrary to the basis of capitalist reproduction. In simple reproduction the main trend remains it that landowners spend the surplus in trade, usury, etc. not in agriculture.

12) One thing is to be added here is that the intensity of eviction from land makes the peasants landless and paupers but this evection does not generally lead to proletarianisation of the evicted poor and landless peasants who generally expect to get back their lands. This is the feature of the landlord-based agricultural operation. Pauperisation of this type is not the sign of capitalism.

13) Lenin said that paucity of land and the burden of tax had caused the increase in attached labour in vast areas of individual ownership of land, but this did not develop capitalism. Attached labour increases as the scope of absorption of evicted peasants from land does remain a very inconsequential process in countries like India. Extra-economic exploitation is the basis of such a situation.

14) As commercial or usurious capital wants to maintain small producers, the latter generally do not try to increase greater production or greater productive activities. The small producers are so much exploited in extra-economic way that this does not lead to productive development. For this reason commercial and usurious capital does not lead to expanded reproduction. However, a small amount of such landlord-based agriculture with agricultural implements, etc. leads to a portion of surplus capital as fixed as well as variable capital towards fulfilling the conditions of reproduction.

15) Landlord-based agricultural operation can go on without free labour and without following the rules of capitalism. Such cultivation with the practice of usury and commerce can also hinder the productive development. However, with the other conditions being fulfilled such agriculture can also open up the path of capitalism. As commerce and usury are more profitable and can be easily carried on such landlords in the backward countries get involved in such practice without going in for capital investment in agriculture.

16) In addition to point 10 it can be said that the rent given for the monopoly of landownership to the landowners is the continuation of feudal rent. Such rent is different from absolute and differential rents based on the capitalized value of ground rent taken in case of capitalism. This obstructs impersonalized market operations. Here the basis of exploitation is not capital but land ownership. Without following the market rules, this type of exploitation by landlord-based agrarian operation as expressed in attached labour, caste-based exploitation, etc. stand out as the developed form of feudal rent system as the control over land being the source of exploitation

17) In barga-system the landlords receive a rent for the cultivation of land while investing a portion of working capital.Here land is hired on the basis of land rent and also interest on the capital is invested. This is not an indication of capitalism. Such a situation was defined by Marx as a transitional stage from the original form of rent to capitalist rent. So it is neither pure feudal nor pure capitalist rent. To quote from Marx “As a transitory rent, we may consider the metayer system, or share-cropping, under which the manager (farmer) furnishes labour (his own or another’s) and also a portion of working capital, and the landlord furnishes, aside from land, another portion of working capital (e.g., cattle) and the product is divided between tenant and landlord in definite proportions which vary from country to country. On the one hand, the farmer here lacks sufficient capital required for complete capitalist management. On the other hand, the share here appropriated by the landlords does not bear the pure form of rent. It may actually include interest on the capital advanced by him and an excess rent. It may also absorb practically the entire surplus-labour of the farmer, or leave him a greater or smaller portion of this surplus labour. But, essentially, rent no longer appears here as the normal form of surplus-value in general. On the hand, the sharecropper, whether he employes his own or another’s labour, is to lay claim to a portion of the product not in his capacity as labourer, but as possessor of part of the instruments of labour, as his own capitalist. On the other hand, the landlord claims his share not exclusively on the basis of his landownership, but also as lender of capital” [Karl Marx, Capital, Volume III, Progress Publishers, Moscow, 1986, p.803]
Rent is here basically a form of feudal rent in the transitional stage and landlord’s claim to his share is “exclusively on the basis of his landownership”. Once again to quote Marx “ In all these forms of ground rent, whether labour rent, rent in kind or money-rent (as merely a changed form of rent in kind), the one paying rent is always supposed to be the actual cultivator and possessor of the land, whose unpaid surplus-labour passes directly into the hands of the landlord. Even in the last form, money-rent in so far as it as it is “pure”, i.e., merely a changed form of rent in kind – this is not only possible, but actually takes place” [Ibid, p.802]
The whole thing is clearly stated by Marx. Even the money rent in so-called pure form of capitalism is nothing but rent in kind. In such arrangement share-cropping might inspire the landlords to invest because of the prospect of differential rent but the sharecropper is least influenced by this prospect and he knows that he might be evicted from land so he is not inclined to invest in the land. This transitional form might continue for decades with little perceptible change as is evidenced in India.
Share cropping is a form of semi-feudal exploitation. The rent is not the generalized from of surplus value. In such a transitional stage the peasant can not be transformed into capitalist farmer for the lack of adequate capital. Such a cultivation might assume capitalist form if and when the peasants accumulate enough capital in course in time and then invest a portion meeting capitalized ground rent i.e. if they cultivate land buying the lands and employing wage labour. Such transformation is practically impossible in countries like India. It is also wrong to think that with the process of developing agrarian capitalism ground rent must transform into capitalist rent. In a word some apparent elements of capitalism do not automatically lead to the opening up of capitalism in agriculture. As long as land remains the basis of exploitation it remains semi-feudalism. What we stress is that the obstacles are so many and so well-structured that the transformation becomes extremely limited and structurally thwarted. When we say India is semi-feudal we mean it is not purely feudal with the infiltration of capitalism. Here the character of capitalism is also quite different from that of Europe. Such capitalism compromises with feudalism. Thus such semi-feudal and distorted capitalism too are enemy of democratic revolution. In semi-feudalism feudal and distorted capitalist elements remain fused.

18)  Features of capitalism: 

a) Large operational holding makes possible for capital-intensive agriculture. Such holding ensures increasing returns in comparison to smallholding. If both the small and large operational holdings go in tandem for decades then we can justifiably say capitalism is yet to make real inroads. In feudal or semi-feudal system large holdings tend to concentrate by the use of force without the laws of market. The relative importance of small or medium holdings over a period of time points to semi-feudal existence not capitalism.
b) The presence of wage workers without any prolonged (yearly or such) obligation to particular landowners.
c) The increase in the dimension of industry and also industrial population with the dwindling of agriculture population.
d) The development and increase in rich share-cropping peasants. The share-cropping working on small holdings points to the existence of pre-capitalist features.
e) Lessening of usurious capital
f) Commercial capital tending to help develop the production process, not merely limited to exert control over commodities.
g) Developing standard of technology
19) A few words are necessary on the absolute rent. We learn from Marx that the worst land does not pay any rent. Only such land that produce a surplus-profit pays rent. But this is not the whole truth. Where land is under private ownership, even the worst land brings in a rent. The minimum sum of money without which the landowner will not permit the capitalist farmer to exploit his land is called absolute rent. If the worst land cannot be brought under the plough without paying a rent, the market price of its produce must exceed its own price of production by the amount of such rent. Owing to the barrier raised by landed properly, the market price must rise to a level at which the land can yield a surplus over the price of production, i.e. yield a rent, said Marx. In other words while in case of absolute rent the amount of rent is determined by the difference between the value of agricultural produce and its production cost. On the other hand the differential rent is determined by the productive power of the worst type of land.
What is notable is that absolute rent is a phenomenon of pre-capitalist stage and it continues even in the capitalist stage as an obstacle. Only, Lenin said, through the nationalization of land it can be abolished.
20) In the past three decades capitalism has penetrated in agriculture. The consumption of electricity, increased use of fertilizer, use of HYV seeds on a greater scale, etc. are symptoms of capitalism. Such development in the reformist way has come form the above.
The proponents of capitalism in agriculture further point out to the following phenomenon
a) The sale of a part of agricultural produce even by small and middle peasants on the market.
b) Almost half of the village people depends on wage labour.
c)Increased use of the above said elements like pump sets, HYV seeds, etc.
d)Agricultural tools are mainly produced in industries and bought for agricultural operation.
e)Share-cropping in various forms has decreased and whatever remains is mainly capitalist share-cropping
The stress is given on the presence of market covering 100% for industrial agro-commodities and about more than half in case of food and cereals. This is grossly exaggerated statement. It is true that market-surplus for agro-commodities have increased over years. However, this does not necessarily signalize adequate yardstick of capitalism. This basically indicate increasing inroads of commercial capital in the wholesale trade. When commercial capital works to control agricultural production forcing the peasants to sell their produce below market price as mostly distress sale based on unequal trade, this phenomenon does not lead to reinvestment for reproduction to open up capitalism on an increasing pace. Such capital remains as stumbling block. The seasonal rise and fall in the price of agricultural produce do not show the phenomenon of capitalism in the first place.
Let us now see what Marx said on commercial capital The transition from the feudal mode of production is two-fold. The producer becomes merchant and capitalist, in contrast to the natural agricultural economy and the guild-bound handicrafts of the medieval urban industries. This is the really revolutionary path. Or else, the merchant establishes direct sway as a stepping stone – witness the English, 17th century clothier, who brings the weavers, independent as they are, under his control by selling their wool to them and buying their cloth – it can not by itself contribute to the overthrow of the old mode of production, but tends rather to preserve and retain it as its precondition. The manufacturer in the French silk industry and in the English hosiery and lace industries for example, was thus mostly but nominally a manufacturer until the middle of the 19th century. In point of fact, he was merely a merchant, who let the weavers carry on in their old unorganized way and exerted only a merchant’s control, for that was for whom they really worked. This system presents everywhere an obstacle to the real capitalist mode of production and goes under with its development. Without revolution alising the mode of production, it only worsens the condition of the direct producers, turns them into mere wage-workers and proletarians under conditions worse than those under the immediate control of capital, and appropriates their surplus-labour on the basis of the old mode of production……. [Karl Marx, Capital, Vol. III, Progress Publishers, Moscow 1986, pp. 334-335]
While discussing market presence we have to grasp the reactionary role of commercial capital, how much it is thwarting the process of commodification through unequal trade. Further the distress sale or below production price sale of agro-products does not augur well for capitalism in agriculture. The people who point to the operation of market as indication of capitalism do not take into account the reactionary role of commercial capital appropriating surplus labour on the basis of old mode of production. Those people do not consider the operation of commercial capital. The revolutionary path by which the producer becoming merchant and capitalist is patently absent in India or is not a general rule.

21) Indian Scenario 

Agricultural labour
The orthodox petty bourgeois parties swearing by Marx’s and Lenin’s name point to the increase of agricultural labourers as a clear sign of rising capitalism. We have to make a clear differentiation between pauperization of peasants in search of jobs in acute crisis and stringent conditions and the wage labour free in the Leninist sense, free to earn his bread for subsistence above value.

  Dharam Kumar in her book Land and Cast in South India rejected the view that imperialism was responsible for the creation of a large class of landless labourers. In her own estimates, from early census date on population by castes in Madras Presidency, show that if all members of ‘untouchable’ castes are assumed to have been laboureres in bondage, at the most 12 to 15 percent of rural population would have fallen into this category according to the four decennial Censuses between 1871 and 1901. By 1921 in Madras, agricultural labourers mode up 36.1 percent of rural population and this trend had jumped to 52.1 percent by 1931.
Utsa Patnaik comments that this does not mean capitalism in agricultural capitalism. The pre-capitalist employer-labour relations transformed into a magnetized basis, peasant proletarianisation, etc., are necessary ‘but not a sufficient condition for defining agrarian capitalism which emerges only when the employment of hired labour is accompanied by accumulation, i.e., reinvestment of surpluses and expansion. We see no reason to change this judgment today” Utsa wrote it in 1985 [Utsa Patnaik and Manjari Dingwaney, Chains of Servitude; bondage & slavery in India, Sangam Books, p.6, 1985]
In India what is going on is the steady reduction of employment and increase in landlessness. Of the total peasant working force in Indian agriculture the agricultural workers (both engaged in agriculture and allied activities) were 24.04 percent in 1961 and this numbered soared to 32.65 percent or 81.2 million in 1991. In 2001 the figured further went up to 34.2 percent or 102.89 million. In absolute term the number increased from 1991 to 2001 to 2 crore 16 lakh 86 thousand and 895. The demographic census showed it that the number of female workers significantly increased by 38.15 percent between 1981 and 1991.
On the other hand the National Sample Surveys (NSS) make it clear that since 1947 the year 1991 showed significant dwindling of employment. The 2001 census on population and NSS in its 55 round point to the drastic reduction in employment. Between 1991 and 2001, the number to agricultural workers increased in India from 7 crore 46 lakh to 10 crore 70 lakh. While the average working day increasingly got reduced in this period. From 1981 the figure was 123 and in 1991 it was 100 and in 2001 it further came down to 78. And it further reduced to 72 in 2003.
There is no strict rule to the working hours of agricultural workers, it might vary in many places from 10 to 12 hours a day. The above grim picture only drives at this basic fact that dispossession of land.
Capitalist labour both in industry and agriculture is conditioned by the very existence of force labour. When capitalism develops in agriculture it must build up a positive relationship with the condition of unhindered selling of labour power and this condition is very much dependent on the investment of capital in a steady scale. The recent researches on the Indian agriculture found no positive correlation between the increase in the number of agricultural labourer and investment of capital in agriculture. Secondly we do not find any clear relationship between the rate of growth of production and the increase in the number of khetmajoors.
The village India rather presents a picture of various types of khetmajoors besides the bonded labourers. And the free labour in the capitalist sense is never the predominant feature of Indian agriculture.
This apart the monstrous presence of caste system greatly determines which caste-class people are to do manual labour and which are not. More than 25 crore people in India are Dalits, comprising 24.4 percent of the Indian population. If we break-up the figure we find scheduled castes constitute 16.2 percent i.e. 17 crore and Scheduled Tribes constitute 8.2 percent i.e. more than 8 crore. With the increasing number of Khetmajoors in a situation of agricultural downswing among the 25 crore SCs, and STs 81 percent is khetmajoors and work in others’ lands.
According to the central government’s estimate between 1991 and 2001 the number of khetmajoors increased from 7.46 crore to 10.74 crore. Simultaneously, the working days steadily reduced between 1981 and 2005 from 123 days to only 70. [Ganashakti, 24th March 06]
This caste based society prevailing throughout India stands as a fiercely retarding factor to the normal development of capitalism. It is not our arguments that capitalism has not at all penetrated Indian agriculture. What we stress is that stumbling blocs are too many and too powerful for a smooth development of capitalism.

22) On Userer’s capital

Marx wrote “…Userer’s capital in the form whereby it indeed appropriates all the surplus-labour of the direct producers, without altering the mode of production; where by the ownership or possession by the producers of the condition corresponding to this – is its essential prerequisite; where by, in other words, capital does not directly subordinate labour to itself, and does not therefore, confront it as industrial capital – this userer’s capital improvises the mode of production, paralyses the productive forces instead of developing them, and at the same time perpetuates the miserable conditions in which the social productivity of labour is not developed at the expense of labour itself, as in the capitalist mode of production.” [Karl Marx, Capital, Vol. III, Progress Publishers, Moscow, Chapter XXXVI, pp. 595-96]

The supreme hold of usurious capital on the peasants instead of lessening has tightly gripped them. The exact amount of debt of the peasants is beyond calculation. Yet the large-scale suicides by peasants in a number of states pointedly refers to the indebtedness of the peasants. So long among the most indebted peasants were identified in Andhra Pradesh, Karanataka, Pubjab, Haryana and Rajasthan. Most cases of suicides were recorded in Andhra Pradesh, Maharashtra, Karnataka, etc.

The NSSO’s report (2005) clearly states that in the rural India every household carries an average loan of Rs. 442. The NSS report categorically states that the tendency to incur debt is not so much from the banks but from usurers. The banks have already considerably wound up their credit facilities from the rural India allowing the usurers to play a major player to bind the Indian peasants to various conditions of loan payments. To follow Marx, such usurious capital is not capitalism but a form of capital characteristic of pre-capitalist formations. The massive hold of usury capital in rural India only points the semi-feudal character of village economy.

Institutional loans also help middlemen and the rich. According C.H.Hanumatha Rao, “The existing large differential between the concessional rates of interest charged by institutional sources and market rates is responsible for loan-seeking by the middlemen who relend credit, especially to the poorer households, at high rates of interest. Large farmers have been the major beneficiaries of long-term loans at a concessional rate of interest….” [C.H.Hanumanthe Rao, Liberalisation of Agriculture in India, In India Agriculture in the ……p.70]

23) Capital Formation

One of the very important barometers of rising capitalism in agriculture is the rural infrastructure. The degree of capital formation in rural India is not only the indicator of progress in agriculture but also the trend in the development of capitalism.
According to one estimate the gross capital formation in agriculture as percentage of GDP has fallen from 4 percent in 1979-80 to 2.1 percent in 1990-91 to 1.4 percent in 2003-04. Further, the share of the public sector declined more sharply than the private sector. [The Telegraph 9th November, 2005]
For all capitalist development, even after 50 years of direct colonial rule electricity consumption in rural India lags for behind any western countries. Indians as a whole (both in cities and villages, with the former remaining as major consumers) use just 545 kilowatts of electricity per head per year, compared to 1,672 units in China. Rural India with two Third of our population, accounts for only 13 percent of electricity consumption. [The Telegraph 9th November 2005]
Not only in electricity consumption, in respect of the use of tractors, HYV seeds, fertilizers Indian agriculture can never match any of the capitalist country in the world. Such sluggish development of capitalism is caused by the semi feudal and semi-colonial condition. When capital formation in agriculture is so low one can imagine why the old mode of production can not still holds in India.
The table below clearly shows the steady decline in capital formation in agriculture.
Rs. (Billion)
Year Investment in Agriculture percent share Investment in agricultural as % of GDP
Public Private public private
   Year       Agro-investment             Percentage             Percentage of
(in crores )                                                  GDP
      govt       private            govt       private                           

1990-91      43.95      104.41              29.60     70.4                1.92

1995-96      48.49      108.41              30.90     69.1                1.57
1996-97      46.68      115.08              28.90     71.1                1.51
1997-98      39.79      119.63              25.00     75.0                1.43
1998-99      38.70      119.25              26.00     74.0                1.26
1999-00      42.21      130.63              24.40     75.6                1.37
2000-01      39.27      129.80              23.20     76.8                1.28
2001-02      49.69      122.50              28.90     71.1                1.24
 2002-03      43.59      138.81              23.90     76.1                1.27
 2003-04      52.49      152.61              25.60     74.4                1.31
  • Quick Estimates
Source: Economic Survey, 2004-2005
The above estimates clearly point to the downward move movement of capital formation. Instead of steady capitalist development, the above data prove that the very very slow rate of capital formation going against the logic of capitalist development. Capitalism has no doubt entered as does in a semi-feudal condition and that development goes in tandem with semi-feudal existence, thwarting the growth of capitalism.

24 ) Land reforms:
In the first decades of planning (1951-61) intermediaries at the top layer were mostly abolished and about 40% of tillers of the cultivated area became owners. According to G. Parthaswrathy, Indian land reform, conceived as a programme of conferment of rights of ownership on tenants and public distribution of the land of the big owner in favour of the small farmer and landless land of the big large, been a failure. The only exception to this sad record is the abolition of top level mostly upper caste-class intermediaries.
The direct effect of the public distribution programme to alter the structure of ownership holdings and of cultivation holdings were only marginal except in select pockets. However, the absentee landlord was of less importance in the early 70s than in the early 50s. His importance waned much more in the day areas than in the irrigated areas in which land is much more valuable. Transfers of land, under the fore-warning impact of tenancy and ceiling legislation, to the resident landowners was on a much larger scale in the dry than in the irrigated areas. The result of shifts in land from the absentee to resident landowner was a decline in tenancy.
The forewarning effects of tenancy and ceiling legislation had also some effects on the structure of ownership holdings among the residents. Decline in tenancy, resulting in transfers of tenanted land at least in a very small part to the owner cultivator groups, resulting in the drift of tenants into landless, combined with demographic pressures and poor absorption of the growing number in non-agriculture had led to a rise in the class of rural proletariat even in the absence of expansion of the large farm. Where tenants had not been evicted, tenancy was pushed underground with informal arrangement and security of tenure.

The emerging agrarian structure revealed that less than one-fourth of the rural households controlled more than 70 percent of the land, another one third less than 30% and the rest two-fifths, among whom the majority are the landless agricultural labourers. This trend is likely to increase.
According to the noted economist S.K.Roy, “On balance, there seems to be some reasons to conclude that agrarian reorganization in India has failed to make any considerable impact on the socio-economic conditions of the working cultivators. Appu, who championed and spent a considerable part of his career in administering land reform programmes noted
Thus the programmes of land reform implemented since the transfer of power did not lead to any significant re-distribution of land, or, the removal of all the obstacles to increasing agricultural production…….in the case of tenancy reform and ceilings on holdings, the policies adopted were ambivalent and there gaps between policy and legislation and between legislation and implementation. We have seen that as a result of the implemtation of the tenancy laws, tenants became owners of or acquired rights in only about 4 percent of the operated area. The enforcement of celling led to the redistribution of less than 2 percent of the operated area. Thus these two measures taken together led to the redistribution of only about 6 percent of the operated area.” Appu wrote it in 1995 [Quoted in Kapila p.205]

He further said “If the political will in favour of meaningful land reform was weak at independence and weaker still later on, it is non-existent today. Land reform has practically disappeared from the agenda of most political parties. …….With the abolition of top layer of intermediary interests of the erastwhile superior tenants belonging mostly to upper and middle castes acquired a higher social status. Rise in agricultural productivity, rising land values and higher incomes from cultivation have added to their economic strength. Substantial landowners who wield great authority in rural India are bitterly opposed to ceilings on agricultural holdings……As for tenancy reform is concerned, there is a certain commonality of interest between all landowners – large, medium, small and all of them are opposed to conferring benefits on insecure tenants. In the first round of land reform only the intermediaries were adversely affected. They were few in number and were weak politically. They had also made them obnoxious by aligning themselves the colonial power. So it was easy enough to abolish intermediary interests. And it was done without hurting them too much. But injuring the interests of the present class of landowners is and entirely different proposition. No political party that wishes to win elections and come to power can afford to do that……” (Appu 1995, pp. 232-233 in Kapila p.205)

25) Failure of all methods to develop capitalism:

Economists generally provide 3 options for agricultural one extensive farming, intensive agriculture and three, scientific knowledge-based technical change. According to Bhupat M. Desai extensive farming increased production by bringing hitherto uncultivated land under plough. Intensive agriculture does so by increasing the use of same inputs such as land, labour, irrigation-water, fertilizer etc. Desai writes that scientific knowledge-based technical change increase production (including product innovations) at the same level of all inputs or same level of output at lower level of all inputs. “But the scope for extensive farming is more or less exhausted” writes Desai about India. And about scientific knowledge-based technical change with the use of HYV seeds, dry farming technologies though contributed accounted for the increase in crop productions since 1966-67 the present picture is gloomy.
Both Rosegrant and Evenson in their study in 1994 based on data from 271 districts covering 13 states (Rosegrand, Mark W and Robert E Evenson 1994) “Total Factor Productivity and sources of Long-term Growth in Indian Agriculture,” Paper submitted to IFPRI/IARI workshop on Agricultural Growth in India, May 1-6, New Delhi] and in the study of Desai [Desai, Bhupat M, [1994] “Contribution of institutional Credit, Self-Finance and Technological Change to Agricultural Growth in India,” Indian Journal of Agricultural Economies, Vol. 49, No. 3, July September] Concluded that deceleration in total factor productivity in the second half of 1980s. Desai made in clear that the relative contribution declined to 30 percent while the increase in absolute contribution declined to 2.3 times. “This is despite, Desai observed, the increase in per hectare use of most market purchased inputs in which now technology in embodled. And hence it suggested that the distinction between intensive agriculture and technical change …… has become blurred.”
So one thing is clear that even the technologic inputs particularly in Green Revolution areas had already taken the back gear and in the present context the scope and viability of technological inputs have reached a dead end. And for this reasons economists are groping for alternatives.

26) Institutional and technological approach: 

The talk about and some announcements on land reforms were made in the late 50s for institutional change to remove agricultural handicaps. The technological approach to agricultural development came in the mid 1960s. With the latter, the new production technology in combination with a variety of institutional support such as extension, credit, subsidized input supply, product price and marketing assistance, spread over various regions.
In recent years, the technological approach has reached a dead end. “The technology weariness reflects itself, interalia, in stagnating and falling yield rates for a number of crops, in a number of regions…..(The green revolution technology) if not (by) unwise use, (was) guided by short-term gains at the cost of long-term losses. It is awesome to count the rate of resource depletion, most markedly for land and water that has been occurring in different parts of Indian agriculture, in the name of agriculture technology…..” [G.K.Chada, Indian Agriculture in the New Millennium, In…….Vol. I p.296]

Chada emphasizes  “The accelerated pace at which the groundwater resources have been exhausted, without replenishment, has thrown the most valuable ingredient of modern agricultural system out of gear, tubewell irrigation that acted as the most decisive harbinger of the green revolution technology, was largely responsible for introducing new crops and re-shaping existing crop combinations, and was the most domineering instrument in pushing up cropping intensity, is now inflicting technological and commercial infirmities, not only on the small and marginal farms but on the medium and big farms as well. The depletion of ground water resources now stands among the most serious concerns of Indian agriculture in as much as irrigation availability, agricultural productivity, cost of production and efficiency, income distribution in fact for the total edifice of agriculture, in many parts of Indian economy.
In many parts, the ground water table has gone many times lower so that the centrifugal tubewell irrigation technology which was once well within the means of the small farmers is now beyond the investment capability of even the medium and large farmers. Many parts of Punjab and Hariyana is now in the midst of crisis. As many as 12 of the 15 tubewell dominated districts in Punjab, as many as 13 of their 17 counter parts in Haryana witnessed a fall in the water table exceeding 20 cms/year
Similarly excessive use of surface irrigation water in combination with poor sub-surface drainage,
a typical characteristic of most of the canal irrigated areas, has created water logging and salinity in certain canal commands.
G.K Chadha then refers to depletion of land resources. First there has been steady, perhaps surreptitious, trend of ‘taking away’ agricultural land for non-agriculture uses. Land under non-agricultural has witnessed a continuous increase over time, at category. The interesting side is that with the reduction in land areas the net sown area has remained nearly completely Thus the land base of Indian agriculture under a serious threat.
The third aspect that Chada refers to is that the investment in the Indian in general, and for agriculture and rural development in particular has ceased to expand in the current years which, in turn, has made serious inroads into agricultural growth and its associated variables such as agricultural productivity, rural employment and poverty on the one hand, and a general, economy-wide slow other. The slow down in the rate of investment is largely attributed to a slow down in the rate of domestic savings which, in turn, is attributed to slow down in the rate and the changing compositions household savings, this time around in favour of physical assets rather than financial holdings. [Tusher K. Mohanty, “Rising share of Physical Assets in Domestic Savings Choking up Investment”, The Economic Times, New Delhi, December 17, 2001]

This clearly shows that instead of capitalist development investment capabilities now turn towards physical assets. G.K.Chadha concludes that “In the ultimate analysis, it is the dwindling pace of investment in general, and of public investment villain of the piece.” [p.310]
From Chadha’s writing again. Against a negligible growth rate of investment of 0.42 percent during the 1980s it was 2.14 percent during early 1990s. It was marginal increase and then the real slackness ensued after 1995-96. The rate of growth of investment in agriculture and its allied sub-sector fell steeply from 3.19 percent per annum during 1991-92/1995-96 to a low of 1.13 percent per annum during the post-1995 years. The decline in the primary sector as a whole was for more serious, from 7.67 percent to – 1.39 percent. The rate of growth of principal crops also simultaneous tell along with employment in agriculture. [p.310]
If the period of intense globalization in the 1990s made possible to the MNCs to make inroads in certain spheres through contract farming, etc. what is noticeable is that Indian agriculture showed clear signs of decline not robust capitalist development. The NSS data do clearly confirm this. The rate of growth of employment for rural workers engaged rate of growth of employment for rural workers engaged in agriculture and allied activities fell from 1.38 percent during 1983 and 1993-94 to 0.18 percent during 1993-94 and 1999-2000. And the industries in the cities had already been weakened and crisis-stricken to absorb rural work force. This scenario hardly matches with the European capitalist development. G.K.Chadha wirites “Agricultural technologies of the late sixties and seventies have run out of their life cycles, and the new technologies are not evolving at the rate that they should.” [p.317]

G.K.Chadha then refers to the third important aspect to assess the growth possibility for introducing aspect to assess the growth possibility for introducing new technology by way of the compatible improvement new technology by way of the compatible improvement of educational standards. For capitalist development through the operation of market, accounting, etc. introduction new technology etc. the educational uplift is a great indicator. The emerging technology-institutional – human interfaces are likely to defy the frontiers of ordinary human capabilities, especially those revealed by the glaring educational deficiencies of the present generation of the farming community. For the new technology in agriculture one has to face the web of bio-tech and genetic complexities.
In 1987-88, nearly tow thirds of rural persons employed in agriculture were illiterate; in 1993-94,their proportion declined to 60.7 percent, and in 1999-2000, it declined further to 56.7 percent. But the decline is only sluggish and marginal. Following the common practice, we take secondary or higher level of schooling as the dividing line between educated and uneducated workforce. As late as 1999-2000, just about one fourth of rural males, only about one-of rural persons engaged in the non-farm sector constituted the ‘educated workforce’; the proportion of educated workers in agriculture was pathetically low: 12.2 percent among males, 2.2 percent among females, and less than one-tenth among rural persons.
Even in 1999-2000, nearly 32.8 percent of rural children (age group 5.9 years) did not go to schools, that percentage for urban absenteeism of children was 17.5 percent. The 28 percent of the rural children (age group 10-14 yrs) did not go to schools. [Ibid326-33].
If the massive loss and scarcity of ground water resources is attributable to technological inputs from above without institutional i.e. structural change of the land relations. This scarcity in the West.With 65% people still engaged in agriculture this vast agricultural land did not move towards genuine capitalist development, rather the enclaves like in Punjab, Haryana, etc. bodes ill for the Indian agriculture as such. This is not development in the long run but short term gains with the destruction of agricultural land.
Secondly the growing feature of depletion of land directs only urbanization and very sluggish or only marginal industrialization. The pressure on land with 65% population engaged in it is not capitalist development but unplanned process from the top leading to agricultural crisis.
The third feature of lack of or steady decline in the investment scenario both in agriculture as well as industry can not lead to capitalist development absorption of work force in industry and do not enhance the purchasing power of peasants.
The fourth feature of so far marginal development of human resources in the form of educated workforce in the rural areas do not enhance the speed of capitalist development but only a stagnant state.

 Comparison Between India and Other Countries: 
Through technology played a crucial role in alleviating India’s poverty trap in the seventies, its contribution to agricultural growth has not been impressive.
International comparisons reveal a wide gulf in India’s performance between achievements in output and productivity. While India compares favourably in terms of total output, it compares poorly in terms of yield per hectare. For compares poorly in terms of yield per hectare. For example, India has 60 million hectares of land under irrigation compared with just 47 million in China, but its foodgrain production is barely 40 percent of China’s output.
India’s World Ranking for Selected Agricultural Commodities 
Crop         Total output      yield Per Hectare
Groundnut       1st                      68th
Jute                  1st                      10th
Rice                 2nd                     52nd
Wheat              2nd                      35th
[From K.P.Kalirajan and R.T.Shand, Sources of Output Growth in Indian Agriculture, In India Agriculture…Vol.1, pp.197-1998]

28) Marginal Farms and Holding: 

One of the major problems facing the agricultural economy of this country is the dominance of the marginal and small farmers. Not only interms of numbers but also interms of the area. Cultivated, they constitute a significant entity. Approximately three-fourths of the operational holdings (78.0 percent to be precise) are below 2 hectares; they cultivated in 1990-91, nearly one-third (32.2 percent) of land. These households also constitute the bulk of the rural poor in our country.” [V.S.Vyas, Ibid, p.248]
On the other hand 71.3% of the operational holdings owned by 15.1% holding owners. “….A number of studies have shown that there is a severe problem of seasonal employment and under-employment in large parts of our agriculture. The intensive cultivation by itself is not likely to make a dent on the employment situation. The labour intensity in an agriculture dominated by the field crops is low, increase in employment ranges between 0.4 and 0.5 with one percent increase in the output.” [V.Ratan Reddy, “Some Estimates of Labour Demand in Rice Cultivation”, Indian Journal of Economics, Vol. 71, Part IV, No. 283, April 1991.) This is not obviously a feature of steadily flourishing capitalism.

29) Small-Scale Agro-Industry & low productivity : 
Agro-based industry refrers to the subset of manufacturing that process raw materials obtained from agriculture and its associated sectors such as animal husbandry, forestry and logging and intermediate products derived from other industries such as semi-processed hides and skins for manufacturing leather and leather products, and edible oils for manufacturing hydrogenated oil. For a typical economy, some part of agricultural production does no go directly to final consumption, it undergoes the ‘value-adding’ process ranging from simple preservation such as drying, grading and storage to production paper, rubber, etc. through modern capital-intensive methods. This value added processing of primary products is a path to industrialization.

In India when an agro-based operation carries on without the help of any hired worker it is described as own-account manufacturing enterprise (OAME). An enterprise run employed on a regular basis is called an establishment. An establishment employing a total of not more than five workers is known as a non-directory manufacturing establishment (NDME), while one employing a total of six or more workers is categorized as a directionary manufacturing establishment (DME) Directory manufacturing establishment employing ten or more workers and use power and those of employ 20 or more workers without using power are categorized as organized manufacturing enterprises.
Agro-industry continues to be a dominant constituent of the industrial sector. In rural India, in the mid-1990s, agro-enterprises accounted for 71.3% of the number of industrial units, 70.6% of industrial employment, and 43.4% of industrial employment, and 43.4% of industrial output in India. In 1994-95 at the all-India level three figures corresponding to its share in the number of units, employment and output were 65.0%, 63.0% and 35.0%, respectively.
In rural India, as many as 71.4% of the unorganized manufacturing units, 71.5% of workers employed by them and as high as 69.5% of value added in this segment, was contributed by agro-based manufacturing around mid-1990; in urban areas too, the relative strength of agro-based industry can be gauged through their 48.3 percent share in the number of unorganized manufacturing units, 51.2 percent share in employment and 46.9 percent share in value added. In sum, agro-industry has a strong presence in the industrial sector of the Indian economy; in rural India, agro-industry simply dominates. And agro-industry is largely a house of small-scale enterprises.

However, in 1994-95, productivity among the total of agro-based enterprise was only 36.0 percent of that among their non-agro based counter parts; in 2000-01, now in post-reform period are the rural unorganized agro-based manufacturing enterprises, and amongst them, the group of tiny own account enterprises, which constitute a very big proportion of the agro-based enterprises. The abysmally low levels of productivity in these segments is the real Achilles’ heel lies among the lowest rung of the unorganized agro-based units (OAMEs). For example, the ratio of productivity between the directory manufacturing units and the own-account enterprises increased from 2.2:1.0 in 1994-95 to 3.5:1.0 in 2000-01, for the food processing units; came down from 4.4:1.0 to 3.6:1.0 for the other agro-based industrial units, and nearly unchanged (3.5:1.0 against 3.2:1.0) for the total of agro-based enterprises. As a whole agro-based industry in India continues to suffer substantial productivity losses in comparison to non-agro bases industry. [From G.K.Chandha and P.P.Sahu, Small Scale Agro-Industry in India, In Indian Agriculture…..Vol.1, pp.257 to 292]

In a robust flourishing of capitalism, agro-based industries play a prominent role. However, the situation is too gloomy and after the introduction of LPG that minimum scope of capitalist development is substantially thwarted in India. 


30) Economic access to food: 

Using the implicit retail prices derived from the consumer expenditure surveys of National Sample Survey Organization (NSSO), it is observed that the average per capita income required to buy a quintal of wheat in the urban areas which declined from 16.2 percent in 1973-74 to 10.1 percent in 1983-84 came down further to 71. percent to 1990-91. For the rural areas, the percentage of per capita income required to buy a quintel of wheat declined from 15.4 percent in 1973-74 to 8.7 percent in 1983-84 and further to 5.9 percent in 1990-91. This happened in the case of rice also. In 1993-94, the per capita income required to buy a quintal of wheat and rice was nearly the same as that in 1990-91. But in 1994-95, based on the retail prices for rural areas compiled by the Labour Bureau, it is observed that the percentage of average percapita income required to buy a quintal of wheat and rice came down further to 5.0 and 7.8 percent, respectively.

31) Market failure : 

“….when the farmers start getting right price signals, they look for adopt the modern inputs and new technology for increasing the production. If production responds to expansion in marketing infrastructure, it essentially means, the price response is positive and strong. A recent World Bank study “The Economics of Agricultural Price Intervention in Developing Countries, volume 4 of the Political Economy of Agricultural Pricing Policy, A World Bank Comparative Study, The Johns Hopkins University Press, Baltimore, 1993] provides evidence that a failure to get prices right can have enormous adverse effects on the growth of agricultural output. If prices received by the farmars are not at appropriate levels, they can dominate everything else – education, research, adequate input supplies – by destroying incentives. [In Acharya, p.129]

we have tried to come up with certain points in brief to clarify the theoretical position of semi-feudalism. There are many other things which can also be applied to explain semi-feudalism. We do need to study this with an investigative attitude.

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