5 The ‘Mode of Production Debate’ in Indian Agriculture

Manish Thakur

INTRODUCTION

For the students of agrarian structure in India, the mode of production debate in Indian agriculture has been of utmost importance given its theoretical sophistication and empirical rigour. Primarily, it was a debate carried forward by the scholars of Marxist persuasion. The debate started in the late 1960s and continued for more than a decade, mainly in the pages of the influential journal Economic and Political Weekly (Nadkarni, 1991: 99). Scholars were mainly concerned with issues such as the replacement of pre-capitalist mode by the capitalist mode, the nature of labour (free or unfree), and the progressive unfolding of capitalism in Indian agriculture. The mode of production debate in Indian agriculture is, in a way, an offshoot of the findings of Farm Management Studies conducted in the mid-1950s (Chattopadhyay, 1972: A42). Scholars such as Ashok Rudra (1971), UtsaPatnaik (1971, 1972), PareshChattopadhyay (1972) AmitBhaduri (1973), Nirmal Chandra (1974) contributed to this debate.

The Mode of Production debate in Indian agriculture has been one of the most engaging scholarly, albeit non-conclusive, debates in Indian social sciences. In essence, the debate has been about the nature of transition in Indian agriculture – from a feudal mode of production to a capitalist mode of production (Alavi, 1975: 160). We can discern three sets of issues – identifying and circumscribing the capitalist mode of production in Indian agriculture, tracing the colonial roots of the existing mode of production and discussing how Indian agriculture is essentially marked with colonial remainders; and lastly the nature and character of the formation of agrarian classes and its implications. In this module, we try to summarize the main arguments put forth by some of the scholars.

THE INDIAN CONTEXT

One of the important questions which have drawn the attention of scholars of the “agrarian question” is the development of capitalism in agriculture. In India, the mode of production debate started with the question as to what the development of capitalism in agriculture entailed. There were two approaches to this: first, did not see any qualitative difference in growth of capitalist relations of production between colonial and post-independence India except for varying speed of transition. According to this viewpoint the growth of wage-paid labour as part of the process of commercialization of agriculture was exploitative in nature. The landlord-petty tenant relationship was interpreted as a “capitalist” one ignoring the difference between profit and rent. After independence also the same trends continued but at a much faster rate.

The second approach stressed a definite qualitative difference between the colonial and post-independence process of the growth of capitalist production in agriculture. The colonial set up was revenue-cum-rent exploiting in nature which led to pauperization of peasants rather than proletarisation. Post-independence even though the agrarian structure carried this legacy in the form of underemployment and unemployment, the new economic environment initiated a new phase of agrarian accumulation. Further, accepting the distinctiveness of the colonial experience and rejecting the viewpoint that growth of capitalism in India is merely a homologous transformation of what applied to the sovereign industrializing countries in the west the solution was sought by extending the concept of “colonial mode of production”. But this was soon realized to be it was difficult to identify any specifically colonial social existence- form of labour power. Doing such an analysis would mean considering as many “mode of production” as were there historically. Hence the debate would be located in the post-independence time horizon but keeping in view the specific macroeconomic processes of the entailed in India due to the colonial legacy.

Post-independence agriculture sector was subjected to great amount of empirical investigation. The Studies in Economics of Farm Management conducted by the Ministry of Food and Agriculture in the mid-1950s is significant as it brings out the inverse relationship between farm size and productivity. It was shown that there exists decreasing return to scale. The reason for this anomaly as given by AmartyaSen (1962) lies in the advantage gained by the involvement of family members in small farms as compared to large farms. In large farms generally wage labourer is employed who not work at wage would rate below their marginal productivity. However in case of small farms since it is feasible to be managed by family members and they would work even at a wage rate below marginal productivity. Hence, the cost of labour reduces. The labour per acre increased as the size of the farm became smaller. This meant that productivity when measured in terms of production per acre of land would be more in case of small farms as compared to large farms. In 1968, Ashok Rudra while opposing Sen’s view argued that this result cannot be generalized across all regions as there are other reasons to better productivity of smaller farms. This could be better quality of smaller land holdings or that all family members were engaged because of absence of any other employment opportunity. In a joint paper in 1980 Rudra and Sen pointed out that since there is no clear evidence of inverse relationship between farm size and productivity there should not be any concluding idea regarding peasant or capitalist form of farming. There should rather be a balanced approach including the advantages of both like Co-operative form of farming. Since the mid-1960s the mode of production debate has had two perspectives. One, wherein scholars like Ashok Rudra, UtsaPatnaik, PareshChattopadhyay et al have raised questions on whether at all Indian agriculture exhibits any capitalistic tendency. The other is wherein AmitBhaduri and Nirmal Chandra et al. bring out strong semi-feudalistic production relations in the agrarian structure.

In India, the rapid technological innovations and mechanization adopted as part of the Green Revolution created a divide in the social system. A group of farmers, mostly rich ones, were able to reap the benefits of the green revolution technologies, whereas the small and marginal farmers could not. This increased the disparity in incomes amongst farmers. Green revolution is an example of technological advantage which was limited to few big farmers. Green revolution did impact the agriculture sector but differentially. Dhanagare argues that the accessibility of the green revolution technology was constrained in the hands of few large farmers who could afford it. As a consequence, the prosperity unleashed by the green revolution was distributed differentially to different categories of farmers putting the small and marginal farmers at a relative disadvantage (Dhanagare, 1987: 137). Any technological upgradation requires a considerable amount of capital. Only big farmers can afford such luxury of buying expensive machines and technologies. Also there is a vested interest of capitalist to bring agriculture in their arena. They use technology as a vehicle to introduce capitalism in agricultural sector. There have been many instance of contract farming which essentially promote capitalist growth in agriculture.

The mode of production question thus emerged in India in this context of rapid technological and social change associated with the Green Revolution and the incipient threat of a Red revolution. These changes were bringing agriculture in the folds of capitalism and this resulted in a shift in alignment of the class system. Prior to green revolution, it can be said that essentially non-capitalist relations existed, however, with the revolution came the precursors of pre- capitalist mode of production in agriculture (Cleaver, 1976: 6).

SEMI- FEUDAL MODE OF PRODUCTION

Another point of contention with reference to Indian agriculture is whether it has semi feudalistic characteristics. It was argued by AmitBhaduri (1973) based on a study conducted by him in some villages in West Bengal that rather than capitalist transition taking place in agriculture it is more of semi-feudalism that is prevalent. The main features about Indian agriculture that led him to draw this conclusion are: Sharecropping, continued indebtedness of peasants, presence of two modes of exploitation- usury and landownership by same economic class and lack of accessibility to market for small tenant farmers. He argued that the landowning class in lieu of land lease to peasants demands a share of the net harvest. Around 40-50% of the peasants in his sample lived under such a condition. In the absence of capital for purchasing inputs these peasants are generally in need of credit. The land owners play to dual role of money lenders in the informal credit market. In the absence of any other formal credit market peasants have no other option but to pay the high rate of interest. A large share of the harvest therefore goes away to pay back the credit and the peasant is left with a small share of the harvest. In this process the serfdom is created and only exacerbates the conditions of inequality over a period of time (Ghosh, Mukherjee and Ray, 2000). This is described as the interlocking of two factor markets: credit market and labour market. Such exploitation hampers generation of capital in the agriculture and hence limits productivity. Bhaduri argues that it is because of these conditions that capitalistic transition in agriculture is not happening. He mentions that the transition can happen only if wage labour increases or through peasant revolt. Nirmal Chandra, as mentioned in Alice Thorner (1982), verified these findings.

The feudal and sometimes semi- feudal structure of Indian agriculture prevents the development of capitalist system in agriculture. Brass argues that the shift towards casual labour has been engineered by the capitalist farmers who continue to maintain, or even tighten, control over these labourers through the mechanism of debt and find it comparatively cheaper (Brass 1995:6971). AmitBhaduri posits that capital investments in agriculture in India are minimal (Bhaduri, 1976:122). In his study on West Bengal, he made a mathematical assertion that after recovering his cost of production, the peasant is left with capital which is below his consumption requirement. To maintain consumption, the farmer is forced to borrow and this perpetuates the usury business. Further, a farmer running short on consumption monies cannot be expected to have surplus to reinvest: a fundamental feature of the capitalist mode of production (Bhaduri, 1976: 135). To keep the farmer perpetually indebted to the owner or money lender is an essential feature of feudalism. Since the semi- feudal landowner derives his income from property rights and usury; he will be discouraged to introduce technological improvement as this will increase farm productivity and the agrarian labourer may cease to be indebted (Bhaduri, 1976: 135). Bearing pure economic consideration in mind, it may be profitable for the land owner to improvise and mechanize agriculture. But the social and political context is also important and land is a source of power and domination in India. Thus, in a way, the powerful are restraining the improvisation of agriculture in order to withhold their domination in the semi-feudal Indian agriculture system. As discussed by Adhikari, PradhanPrasad (1973) makes similar observation for Bihar. He states that perpetual indebtedness of tenants, land ownership and usury lies with the same set of economic and social actors (Adhikari, 2011: 7). Landowners purposely refuse technological innovation and mechanization to perpetuate the bondage of semi- feudal system. It can be concluded that feudal or semi- feudal mode of production ceases to remain feudal or semi-feudal once it gets embedded in capitalist system. The external capitalist system of production is so overwhelming, that semi-feudal system soon loses it nature. When integrated into capital ‘feudal’ modes are no longer ‘feudal’ (Cleaver, 1976: 11). Also, semi-feudal forms of surplus product extraction, through the institution of tenant cultivation and share-cropping, have declined over time (Basole and Basu, 2011: 56). Additionally, the semi-feudal position marked with the dominance of landlords in agrarian production relations hampered the development of capitalist class relations and constituted a substantial obstacle to growth (Lerche et al., 2013: 341).

UtsaPatnaik opines that agricultural labourers are not free. They are similar to bonded labourers. She pegs her arguments on two broad features. She states that there is lack of productive reinvestment of surplus and accumulation of capital. There is a small but gradually expanding class of capitalists within the pre-capitalist agriculture sector (Adhikari, 2011: 7). The relationship between land owner and tenant is more personal than economic. Traditional money lenders still thrive in a large proportion in rural India. Patnaik argues that Indian agriculture is characterized by a limited and distorted development of capitalism which has not revolutionized the mode of production (Patnaik, 1970). Lerche et al. argue that unfreedom itself is a matter of degree under capitalism (Lerche et al., 2013: 342). This begins with generalised form of commodity production and expansion of the market for the goods thus produced. Breman has described this neo-bondage in detail. He asserts that rural economy has an inherent bondage system existing in its social structure. The incidence of debt bondage is widespread in the informal sector economy, particularly among female migrant workers equipped with a social identity which makes them vulnerable to exploitation and discrimination from the better endowed castes and classes (Breman, 2010: 330).

CAPITALIST MODE OF PRODUCTION

In the mid-1960s Ashok Rudra with A Majid and B D Talib conducted a survey of big farmers (with size of land holding above 20 acres) in Punjab. As per this study with the decrease in farm size the intensity of cropping decreases. Also, per acre receipt of income and expenditure increased sharply beyond a threshold of 75 acres. Even the use of capital equipment and value of output per acre cultivates went up after crossing this mark. To imply the extent of capitalist tendency in the mode of production in agriculture it was suggested to observe the following features in a cyclical manner:

a)  Percentage of land rented out to total land owned

b)  Wage payment in cash per acre of farm size

c)  Value of modern capital equipment per acre of farm size

d)  Percentage of produce sold in market to total produce and

e)  Rate of profit per acre for comparison between capitalist and non-capitalist farmer.

It was suggested that in case of a tendency of capitalist mode of production there should be positive correlation between the 10 pairs of variables listed above. The data did not show any positive correlation between any of the pairs. It was therefore concluded in this study that there no visible transition towards capitalistic mode of production in Indian agriculture.

This study was critiqued by R S Rao (1970). He argued that a cross sectional approach to understand the development of capitalism would not be sufficient. He challenged the required condition of strong association between variables by saying that in a cross-sectional study dealing with micro units in a sector like agriculture which lags behind industry anyways, a strong association between variables may not be necessary to prove the existence of capitalism. The transition may be in its initial phase and the expected features may not be exhibited. It’s highly probable that a large farm is using a mix of both older as well as modern farming equipment at the same point of time. In such a situation a time series data instead of a cross sectional analysis as done by Rudra would be more relevant in bringing out a trend in change in the capitalistic characteristics. The choice of variables in Rudra’s was also questioned by Rao. In Rudra’s study wage payment calculation was considered only in cash. However, wage payment may also be in kind which is not an indication against capitalistic transition. The variable, profit per acre is also doubtful. This only measures the efficiency of the farm rather than whether the mode of production is capitalistic or not. Capitalism in farming as defined by Rao is use of hired labour and use of substantial amount part of the surplus for deepening or widening of business. Only a time series analysis would be able to disclosure of what is “becoming” than what “is”. He suggested that indicator like increases in capital over a period of time or proportion of surplus spent on asset formation to better reveal the capitalistic features.

In the next series of study by UtsaPatnaik in early 1970s the historical process of transition of agricultural production relation in India is discussed. In colonized India the capitalism process was similar to the one which existed in Europe. This involved the creation of a large pool of pauperized proletariat class of agricultural labourers. Land and labour market was also created. But still an important aspect of capitalism was missing; creation of surplus and reinvestment of the same to expand production in a continued manner. In the post-independence period however, due to emphasis by the state on growth of agriculture, surplus from agricultural production began to flow back into agriculture. It is hence implied that the transition in agriculture is a capitalistic one.

In Nov 1971, Rudra challenged her conclusive remarks on Indian agriculture by seeking more clarification on methods applied by her to calculate surplus value or profit. He also brings out fallacies in the way she calculated the rate of profit without considering fixed capital which is difficult to measure in case of agriculture. To this there was a sharp reply from Patnaik in December 1971 based on the survey she conducted. It was done by selecting large farmers based on purposive sampling method across ten different districts in five states. Her argument was similar to that of Rao saying that different modes of production could co-exist in the transitional stage. In this situation of intermingling Rudra’s negative finding does not say anything about the beginning of the process of capitalism in agriculture. It only confirmed that capitalistic mode of production is currently absent.

It was proposed by Patnaik that instead of finding out correlations between pairs of variables considered in Rudra’s study the focus should be on finding whether the value for a particular farm land was higher than the average in case of each of the variables or not. But Rudra later refuted this also. She proposed two more criteria to understand the development of capitalism in Indian agriculture; ratio of modern capital equipment and wage payment and ratio between output and wage payment. She also critiqued Rudra on the basis of demarcation of class according to Marxist theory. Rudra was of the opinion that there should be discontinuity between the three classes of peasants; viz. poor peasants, middle class farmers and capitalist farmers. But Patnaik pointed out that it’s rare to find such discontinuities in reality. According to her the data points are more likely to be continuous because of the overlapping of features of one class with another. The existence of the three classes however will be clear.

In 1972, PareshChattopadhyay critiqued the arguments of Sen, V M Dandekar and C H HanumanthaRao. Dandekar had argued that because of overpopulation and surplus labour force in agriculture wage rate of labour is bound to fall. It may also go below the market wage rate. Hence, family based farming would be more profitable as compared to farms using capitalistic mode of production. Rao also supported this argument. He also supported the landlord-tenant system and totally dismissed the principal-agent problem that may exist in the system. He suggested that a long term contract involving input sharing mechanisms or a tenure policy would make the system efficient.

According to Chattopadhyay, in Marxist literature peasant agriculture based on family labour can be further categorized as natural economy and commodity economy. The condition wherein farmers with small land holdings almost consume the entire produce is natural economy. They do not sell their produce to make a living. Even though in such a mode of production there is minimal exploitation it cannot be seen as a permanent solution. In the commodity economy set up farmers sells its produce in the market and is able to make a profit. This cannot still be called as capitalistic as this profit is used for meeting living needs and not invested back in the business. Also the price may not be equal to the marginal cost of labour and there are chances that price in this case would be less than that in capitalistic production. A consumer surplus instead of producer would be created in this case. Thus in spite of higher productivity the profit is not significant. Exploitation of labour happens in this manner under such a set up.

Chattopadhyay also critiques the study done by Rudra arguing that there was fallacy in the process of identification of capitalist farmers as well. He says that it’s the production relation that determines whether a production system is capitalist in nature or not and not the instruments used in production. Even in situations wherein there is no involvement of modern equipment the production relation can be capitalist. In a similar manner, the land relation under capitalist farming need not necessarily be only owner cultivation which was suggested as a necessary condition by Rudra. Tenant cultivation (capitalist is a tenant) is also permissible if the use of wage-labour is done. Such a set-up is a classic case of capitalist ground rent as discussed by Marx.

Then in responding to arguments of UtsaPatnaik made while critiquing Rudra, Chattopadhyay goes back to Marx’s theory of capitalist accumulation. He counters the reason given by Patnaik for the non-capitalist nature of Indian agriculture pre-independence by saying that the increase in proletariat alongwith capitalist development is inevitable. Patnaik argued that before independence the nature of Indian agriculture was not capitalistic because the surplus of the agriculture sector was not absorbed by a parallel industrial sector. He argued that in the end of the nineteenth century there was an increase in the commodity character in agriculture. He also substantiates his point by putting forward statistics towards the end of the British rule when around 35 percent of the agricultural produce was sold in the market and production in the non-food grain category showed an increasing trend in the first quarter of the twentieth century.

Patnaik brought in Andre Gunder Frank when she was replying to Chattopadhyay’s arguments. She found the alternative proposed by P C regarding generalized commodity production as an indication of capitalist mode of production similar to AndraGunder Frank type position. He (Andre Gunder) too argued that all countries dominated by imperialism entered into a network of world capitalist exchange relationships. Therefore all these countries were capitalist. It is an argument worth rejecting if the process of accumulation and reproduction is confined to individual farms. It made no sense to reject the presence of capitalism just because surplus of the Indian agriculture sector was going to the bourgeoisie in Britain. Patnaik said she found the basic premise on which such statements are made to be incorrect. He questioned Patnaik by saying that would individual farms not be capitalistic if the surplus is siphoned off to a foreign country?

While discussing Punjab, Ashok Rudra states that the emergent trends in agriculture are converging towards capitalist mode of production. He suggests five main feature of capitalist production. “The capitalist 1) tends to cultivate his land himself rather than to give it out on lease; 2) tends to use hired labour in a much greater proportion than family labour; 3) tends to use farm machinery; 4) delivers to market an important share of his produce; and 5) so organizes the production as to yield a high rate of return on his investments” (Rudra: 1970). Alavi defines capitalists as those who undertake “cultivation mainly with the use of hired labour and investment of capital i.e. they rely on wage labour for at least 50 per cent of their requirements and they produce essentially for profit and the bulk of their output is destined for the market (Alavi, 2014: 1240).

Post 1970s, the Indian agrarian economy has undergone fundamental shifts in the economic and social relationships between different classes; the rural and the urban, agriculture and industry, and within agriculture itself. Along with this there has been a shift in the political philosophy also, it has shifted from a national state-led development policy towards a neoliberal form of economic regulation and has become integrated into the global economy (Lerche et al., 2013: 338). Integration into the global economy necessitates encapsulation of the domestic agrarian system into the folds of capitalism, be it feudal system or semi-feudal system. Indian agrarian policies and institutional interventions were built to enable the necessary market surplus for the capitalist sector which ensure some basic viability for the farmer and productivity growth for the sector (Murthy, 2013: 23).

Besides being landless, agrarian labour lacked any form of assets. In case such landless labourers needed money, they would not have anything besides their own labour to mortgage. Marriage, sickness, drought, death and certain other such contingencies coerced the labourers to enter into a vicious cycle of perpetual indebtedness. Capitalization and privatization worsen the relegation of agrarian labourers.

COLONIAL MODE OF PRODUCTION

India has a colonial history and its structures are still not free from ties of imperialism. HamzaAlaviinsists that the structure of Indian agriculture should be studied in its colonial context. He vehemently opposes the idea of the coexistence of modes of production. He proposes colonial mode of production as a unifying concept. According to him, the prevailing mode of production derives its origins and structure from colonization. Imperialism has its own set of demands and agrarian economy catered to this demand. The contemporary changes in Indian agrarian economy and the issues in the debate must be looked at in the context of the demands made by imperialism and the industrial development since Independence, and the successive policies that were instituted to realise the objectives for those purposes and the dilemmas and contradictions underlying such policies (Alavi, 1975: 161). Over a period of time, the pattern became so entrenched that we see its relics still present in agrarian economy. Daniel Thorner quotes Rudra’sviews and states that a single class and also a hybrid class; part feudal, part capitalist is seen in India (Thorner, 1982: 1995). Post- independence state institutions have purposely continued the existence of class based divisions. However, policies like Land Reforms and Integrated rural development Programme have contributed significantly towards transforming the agriculture sector. Thus, as the present changes in agriculture has a distinct colonial legacy; it can be better understood as a colonial mode of production (Adhikari, 2011: 8).

Cleaver largely agrees with Alaviin reiterating that the different local structures must be grasped within ‘imperial capital’ which “disarticulates the internal economy of the colony and integrates the internally disarticulated segments of the colonial economy externally into the metropolitan economy” (Cleaver, 1976: 8). Colonialism transforms the social relationships around which the mode of production is organized, its form may or may not change but its meaning surely changes. Semi- feudal relationships of agriculture and mode of production, as discussed by Bhaduri, may be semi- feudal in nature; but their meanings are different when seen in a colonial context. For that matter colonial history changes the meaning of social relationships of semi-feudalism and when this faces capitalist mode of production in the external world it is not similar to other semi- feudal system which do not have a colonial history. Semi- feudal relationship get absorbed in the larger context of expanding capitalism but their basic genesis is in colonization. For India, which has a colonial history; there is generalised commodity production as it is seen in capitalist mode of production. However, the expansion of this production is distinct from capitalist mode of expansion. One of the most prominent features of this type of capitalist yet not so capitalist expansion is the drainage of surplus. The surplus gets drained to the centre which is mostly the first world. Trade with other countries, which are on the same pedestal or have colonial history, is limited. Trade relations are primarily with ex-colonizers.

This is where the concept of “unfree labour” as discussed by UtsaPatnaik comes in. The presence of limited capitalist development is coupled with unfree labour. This unfree labour is an essential characteristic of colonization like bonded labour. The labour is free to move, but this freedom is more of an economic freedom rather than social freedom. Theoretically, the labour can go anywhere it wants to, but practically it has nowhere to go. The colonial powers ensured that property relations and taxations were designed in such a way that it restricted the movement of labour. The destruction of non-agricultural production like weaving and handicrafts along with technological innovation and mechanization in agriculture further accentuates the dilemma of labour. The problem has been accentuated by the Green Revolution which further displaced the sharecroppers and smallholders (Cleaver, 1976: 8).

CONCLUSION

According to some scholars, Indian agriculture exhibits limited capitalist development. Alavi suggests that the concept of the colonial mode of production and that of the post-colonial mode need to be explored in these other social contexts also, to lead us towards an adequate conceptualisation of the structure of the contemporary capitalist world (Alavi, 1975: 193). It is very difficult to narrow down to one mode of production as far as Indian agriculture is concerned. The system is so complex and convoluted that different regional systems exhibit varying modes of productions. Also, there can be seen presence of more than one mode of production simultaneously. As stated by Cleaver, there is a relation between local agrarian structures and the world capitalist system, the agrarian structures are within the capitalist system of production and are therefore part of it (Cleaver, 1976: 9).

There are certain contrasting features between pre-capitalist mode of production and capitalist mode of production. While during pre-capitalist era, production was essentially for personal use, capitalism requires production for market. Hence, production was essentially for use and not for exchange and thus, rent if any was in form of kind and not cash. Pre-capitalism, production was on a small scale, production was localized. Technology was prudently used and modified. The pace of technological innovation was low and mechanization was minimal. Coming to capitalist mode of production, reinvestment of profit in production to expand it is essential. Also, there is surplus appropriation. Surplus appropriation distinguishes the owner from the labour and thus establishes the social classes.

In India, the agrarian economy shows capitalist features. Prominent features of capitalist farmers include cultivation by self rather than giving on lease, a higher proportion of hired labour than family labour is used, use of farm machinery, market and profit orientation (Adhikari, 2011: 5). Few scholars like UtsaPatnaik argue that capitalist farmer class is emerging in India; while certain others argue against it. The entire debate is structured around four indicators: generalised commodity production, emergence of free wage labour, capital investment, and irrelevance of share- cropping, usury and tenancy (Adhikari, 2011: 6).