dr. ambedkar's insights on agriculture: social economy over political economy

some not entirely random thoughts from his paper 'Small holdings in India and their remedies' published in the Journal of the Indian Economic Society, Vol. I.1918..written nearly a hundred years ago, just an year after the russian revolution. but many of these insights still don't seem to have occurred to most of our brahminized left or right..dr ambedkar wrote this when he was 27, but the humanist social foundations of his economic thinking are unmistakably there.. so much distress and such great tragedies could have been avoided! this should have become common sense of the ruling classes in india long ago, but composed as they're mostly of the erstwhile and even largely contemporary 'idle labour', its creamy layer, that he refers to in this paper it is logical that they didn't/don't comprehend his wisdom. so here are a few pickings from the paper that i most agree with (some portions were emphasized by me):
  
size of holdings does not matter:

To a farmer a holding is too small or too large for the other factors of production at his disposal necessary for carrying on the cultivation of his holding as an economic enterprise. Mere size of land is empty of all economic connotation. Consequently, it cannot possibly be the language of economic science to say that a large holding is economic while a smallholding is uneconomic. It is the right or wrong proportion of other factors of production to a unit of land that renders the latter economic or uneconomic. Thus a small farm may be economic as well as a large farm; for, economic or uneconomic does not depend upon the size of land but upon the due proportion among all the factors including land. 

faulty political economy leads to idle labour:

Those who look on small holdings as the fundamental evil naturally advocate their enlargement. This, however, is a faulty political economy and as Thomas Arnold once said "a faulty political economy is the fruitful parent of crime". Apart from the fact that merely to enlarge the holding is not to make it economic, this project of artificial enlargement is fraught with many social ills. The future in the shape of an army of landless and dispossessed men that it is bound to give rise to is neither cheerful from the individual, nor agreeable from the national, point of view. But even if we enlarged the existing holdings and procured enough capital and capital goods to make them economic, we will not only be not advocating the proper remedy but will end in aggravating the evils by adding to our stock of idle labour; for capitalistic agriculture will not need as many hands as are now required by our present day methods of cultivation.

bad social economy at the base of economic ills:

Consequently the remedy for the ills of agriculture in India does not lie primarily in the matter of enlarging holdings but in the matter of increasing capital and capital goods. That capital arises from saving and that saving is possible where there is surplus is a commonplace of political economy. 

Does our agriculture—the main stay of our population—-give us any surplus ? We agree with the answer which is unanimously in the negative. We also approve of the remedies that are advocated for turning the deficit economy into a surplus economy, namely by enlarging and consolidating the holdings. What we demur to is the method of realizing this object. For we most strongly hold that the evil of small holdings in India is not fundamental but is derived from the parent evil of the mal-adjustment in her social economy. 

Consequently if we wish to effect a permanent cure we must go to the parent malady.
But before doing that we will show how we suffer by a bad social economy. It has become a tried statement that India is largely an agricultural country. But what is scarcely known is that notwithstanding the vastness of land under tillage, so little land is cultivated in proportion to her population.

pressure on agricultural land is caused by lack of other occupations:

Notwithstanding what others have said, this enormous pressure is the chief cause of the subdivision of land. It is the failure to grasp the working of this pressure on land that makes the law of inheritance such a great grievance. To say that the law of inheritance causes sub-division of land is to give a false view by inverting the real situation. The mere existence of the law cannot be complained of as a grievance. The grievance consists in the fact that it is invoked. But why is it invoked even when it is injurious? Simply because it is profitable. There is nothing strange in this. When farming is the only occupation, to get a small piece of land is better than to have none. Thus the grievance lies in the circumstances which put a premium on these small pieces of land. The premium, is no doubt, due to the large population depending solely on agriculture to eke out its living. Naturally a population that has little else lo prefer to agriculture will try lo invoke every possible cause to get a piece of land however small. It is not therefore the law of inheritance that is the evil, but it is the high pressure on land which brings it into operation. People cultivate the small piece not because their standard of living is low as Prof. Jevons seems to think [f.25] but because it is the only profitable thing for them to do at present. If they had something more profitable to do they would never prefer the small piece. It is therefore easy to understand how the universal prevalence of the small farms or petit culture is due to this enormous pressure on land.

capital exists, but labour lives:

In spite of the vehement struggle that our agricultural population maintains in trying to engage itself productively as cultivators of a farm however small, it is true that judged by the standard of Sir James Caird a large portion of it is bound to remain idle. Idle labour and idle capital differ in a very important particular. Capital exists, but labour lives. That is to say capital when idle does not earn, but does not also consume much to keep itself. But labour, earning or not consumes in order to live. Idle labour is, therefore, a calamity; for if it cannot live by production as it should, it will live by predation as it must. This idle labour has been the canker of India gnawing at its vitals. Instead of contributing to our national dividend it is eating up what little there is of it. Thus the depression of our national dividend is another important effect of this idle labour. The income of a society as of an individual proceeds (1) from the efforts made, and (2) from possessions used. It may be safely asserted that the aggregate income of any individual or society must be derived either from the proceeds of the current labour or from productive possession already acquired. All that society can have today it must acquire today or must take out of its past product. Judging by this criterion a large portion of our society makes very little current effort ; nor does it have any very extensive possessions from which to derive its sustenance. No doubt then that our economic organization is conspicuous by want of capital. Capital is but crystallized surplus; and surplus depends upon the proceeds of effort. But where there is no effort there is no earning, no surplus, and no capital.

to cure agriculture. create work outside agriculture:

If we succeed in sponging off this labour in non-agricultural channels of production we will at one stroke lessen the pressure and destroy the premium that at present weighs heavily on land in India. Besides, this labour when productively employed will cease to live by predation as it does to-day, and will not only earn its keep but will give us surplus: and more surplus is more capital. In short, strange though it may seem, industrialization of India is the soundest remedy for the agricultural problems of India. The cumulative effects of industralization, namely, a lessening pressure and an increasing amount of capital and capital goods will forcibly create the economic necessity of enlarging the holding. Not only this, but industralization by destroying the premium on land will give rise to few occasions for its sub-division and fragmentation. Industrialization is a natural and powerful remedy and is to be preferred to such ill-conceived projects as we have considered above. By legislation we will get a sham economic holding at the cost of many social ills. But by industrialization a large economic holding will force itself upon us as a pure gain.

how agriculture improves by the reflex effects of industrialization:

We prefer to cure agriculture by the reflex effects of industrialization. Lest this might be deemed visionary we proceed to give evidence in support of our view. How agriculture improves by the reflex effects of industrialization has been studied in the United States in the year 1883. We shall quote in extenso the summary given by the London Times: 

"The statistician of the Agricultural Department of the United States has shown in a recent report that the value of farm lands decreases in exact proportion as the ratio of agriculture to other industries increases. That is, where all the labour is devoted to agriculture, the land is worth less than where only half of the people are farm labourers; and where only a quarter of them are so engaged the farms and their product are still more valuable. It is, in fact, proved by statistics that diversified industries are of the greatest value to a State, and that the presence of a manufactory near a farm increases the value of the farm and its crops. It is further established that, dividing the United States into four sections or classes, with reference to the ratio of agricultural workers to the whole population, and putting those States having less than 30 per cent, of agriculture and of agricultural labourers in the first class, all having over 30 and less than 50 in the second, those between 50 and 70 in the third, and those having 70 or more in the fourth, the value of farms is in inverse ratio to the agricultural population, and that where as in the purely agricultural section, the fourth class, the value of farms per acre is only $ 5.28, in the next class it is $ 13.03, in the third $ 22.21, and in manufacturing districts $ 40.91. This shows an enormous advantage for a mixed district. Yet not only is the land more valuable the production per acre is greater, and the wages paid to farm hands larger. Manufactures and varied industries thus not only benefit the manufacturers, but are of equal benefit and advantage to the fanners as well." 

This will show that ours is a proven remedy. It can be laid down without fear of challenge that industrialization will foster the enlargement of holdings and that it will be the most effective barrier against sub-division and fragmentation. Agreeing in this, it may be observed that industrialization will not be a sufficient remedy for consolidation. That it will require direct remedies may be true. But it is also true that industrialization, though it may not bring about consolidation, will facilitate consolidation. It is an incontrovertible truth that so long as there is the premium on land consolidation will not be easy, no matter on how equitable principles it is proposed to be carried out. Is it a small service if industrialization lessens the premium as it inevitably must ? Certainly not. Consideration of another aspect of consolidation as well points to the same conclusion: That industrialization must precede consolidation. It should never be forgotten that unless we have constructed an effective barrier against the future sub-division and fragmentation of a consolidated holding it is idle to lay out plans for consolidation. Such a barrier can only be found in industrialization ; for it alone can reduce the extreme pressure which, as we have shown, causes sub-division of land. Thus. if small and scattered holdings are the ills from which our agriculture is suffering to cure it of them is undeniably to industrialize.