SMALL is Beautiful (Economics as People Mattered) is a book published by a German-born British economist Ernst (E.F.) Schumacher in 1973. It sang hosanna to the small producers as it emphatically argued against the "bigger is better" thesis advocated by modern capitalism.
Among the proofs presented by Schumacher to support his argument was the example of the small farmers. He noted that small farms were more productive than large farms (called "latifundia" in Latin America or hacienda in our case) because of their labor-intensive nature using unpaid family labor and that the family's survival depended on raising productivity per hectare of land.
The Left all over the world rejoiced in the publication of Schumacher's work. They finally had a document to support the thesis first propounded by David Ricardo in his book On the Principles of Political Economy and Taxation (1817) and then by Alfred Marshall (father of modern economics) in his Principles of Economics (1890) that small family-owned farms were more efficient than large plantation farms. Armed with these scholarly works, the Left argued for the implementation of a genuine agrarian reform program all over the developing countries in the world.
Collectivization vs land distribution
But the original Leftist thinkers were actually no fan of land/agrarian reform. Marx against the Peasant; A Study on Social Dogmatism, a book written by David Mitrany (1958), noted that the icon of the Leftist movement, Karl Marx, disdained the peasantry. This springs from the fact that they are, in what Marx described, in a subsistence mode of production. The peasants just produce enough for their consumption.
If that is the case, then there will be no "surplus value" to be generated. If one is familiar with Marx's three volume magnum opus, The Capital, the production of "surplus value" is critical for him because it is the basis by which capitalism is built (which will pave the way to socialism) and by which wealth is created for nation-building. Peasants do not generate "surplus value, and hence, for him, their "mode of production" must be drastically reoriented.
Alexander Chayanov's book The Theory of Peasant Economy, written during the tumultuous years of the Russian Revolution, validated Marx's thesis. He noted that the peasants would produce only up to a certain point where the family's needs are met and thereafter, would have less incentive to produce more because of the "drudgery" of labor (i.e., labor-consumption balance principle). Thus, only limited surplus could be expected from the peasantry who constituted the vast majority of the working people in Russia then. As such, wealth generation needed for nation-building for Russia was severely constrained at a time when the socialism project was being slowly stifled by neighboring Western capitalist countries.
The Marxist-Chayanov theory was used by Josef Stalin to implement his brutal "collectivization" of lands campaign in Russia getting rid of the "kulaks" (landlords) to form large agricultural production units. The same project was pursued by Mao Zedong in China through the "commune" system during the heyday of the Chinese Communist Party in the mainland. Both experiments ended in failure.
The point to be stressed here is that a solution in a certain era might not be a solution in another era or more importantly, to our current time. Schumacher's thesis resonated well during his time because it was observed that the return to labor was highest during that period when land was still in abundant supply.
These factors are no longer true today. Lands for cultivation have become scarce and increasingly being depleted. The highest return now comes from investment in technology including information technology. Moreover, because of liberalized agricultural trading, competition has become keener and the transport of agricultural produce from one country to another has become much faster. In such a situation, the small, fragmented land will have a difficulty in surviving.
It will be challenging to introduce farm machinery and modern technology (such as the use of drones) if one is cultivating just a hectare of land. Adopting and ensuring the success of good agricultural practices (GAPs) will be an uphill battle if one farm implements it but the neighboring farm does not. Commanding a good price for the yield of a farmer tilling a hectare of land is almost an impossible task because of the control of traders over the value chain system.
Our neighboring countries have shown us the way. Thailand, Indonesia and, much earlier, Malaysia promoted land consolidation of small farms. Even socialist countries, like China and, recently, Vietnam, which our local Left used to worship as their development models, have embraced land consolidation. This enabled all these countries to utilize modern farm machineries and agricultural technologies to promote higher yield and ensure competitiveness of their farmers. In turn, it resulted in the sustained growth and development of their agricultural sector.
In contrast, the Leftist ideologues in our midst still bellyache on the need to pursue a "genuine agrarian reform" program despite distribution of more than half of our cultivable lands to their tillers. The result is fragmented and miniscule farm sizes, averaging now at around a hectare per cultivator.
The Left still insists that we need to pour more subsidies to our rice farmers despite the fact that already 70 percent of our agricultural spending is devoted to rice productivity-enhancement programs and in the process leaving a pittance of a sum to the development of other agricultural commodities. If pressed about this unequal budget problem, the usual retort is to reduce the budget of other government programs, particularly targeting our military expenditures and shift them to agriculture.
It seems that it is beyond their level of comprehension, clouded by adamantly hanging on to a Jurassic ideology, that the main goal of government support to our farmers is to raise their overall productivity in order to be more competitive in this era of globalized trading regime. Unfortunately, their advocacy focuses on an ever-increasing subsidy (i.e., dole outs) to our farmers like seeds, fertilizers, free irrigation and cash assistance whose positive effects only last during its consumption stage. After the cropping season is over and the dole outs consummated, noises will again be generated by these same groups for the next cropping season as a way of ensuring media projection but in no way ensure that our farmers become self-reliant.
Ironically, self-reliance is supposedly the claimed goal of these Left-leaning groups. But if that happens, they will make themselves and their groups redundant, which they cannot afford as they will lose relevance. It is for this reason why we see such groups turning themselves into family-based enterprises no different from political dynasties of certain families in the country.
And in the end, our small farmers remain uncompetitive and inefficient because of land and production fragmentation.