By Own Correspondent
Across the world, leaders withhold property rights to cement their control even as they impoverish their own people.
Development economists typically tell a compelling story about land reform: Countries can supercharge their development by leveling inequality and radically reallocating assets. In east Asia, nations that followed this simple formula transformed themselves into economic powerhouses.
So why haven’t more countries adopted this well-established blueprint? The governments that have the will and capacity to adopt major land reforms are typically authoritarian. Most authoritarian governments seek first and foremost to entrench their power.
These governments would rather control their rural populations than see them thrive and become autonomous. For authoritarians, land reform is a convenient tool to destroy rival elites in the countryside while entangling rural workers in the tentacles of authoritarian influence.
What distinguishes these two approaches isn’t the reallocation of the land. In both cases, governments redistribute property to broad swaths of their people.
Authoritarian regimes, though, unless they face pressure from foreign powers or seek to stave off some existential threat, hand out property without also distributing secure property rights, forcing land beneficiaries into a relationship of perpetual dependence. Land reform, it turns out, isn’t just a path to prosperity, it can also be the means by which authoritarian regimes cement their control even as they impoverish their own people.
Land reform has been one of the most transformational public policies of the past two centuries. South Korea provides a classic example of its benefits. Until World War II, the country was impoverished and feudal.
The Korean War wreaked havoc on its economy. South Korea then sought to eliminate Japanese colonial influence and shore up its self-sufficiency through radical land reform. The government expropriated all landholdings larger than three hectares, then granted land to poor tenant farmers — many of whom tended small rice paddies — and supported them with favorable agriculture policies.
For the first time in Korean history, these farmers sent their children to school instead of to the fields. Within a generation, the country became urban and well educated, home to a booming economy.
Similar transformations followed land reform in Japan and Taiwan. Joe Studwell’s 2014 book, How Asia Works, nails the formula: Cultivate a small farming sector, use the surplus to build export-oriented manufacturing, and nurture these sectors through financial institutions held on a tight leash by the government.
Until recently, land was the single most valuable asset in societies around the globe. People who owned land could harvest its natural resources, such as precious metals, timber, and wild animals.
They could also use it to grow crops and raise domesticated animals. And it had enormous symbolic power. Kings, chiefs, and elected political leaders from Versailles to Monticello used their estates to signal status and project authority.
Property ownership was used in many societies to determine who could have a say in politics, either through voting or holding office.
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At the dawn of the 19th century, as a consequence of feudalism, tribalism, and colonization, land ownership in most of the world was highly unequal.
In many countries, the wealthiest 5% of landowners owned 80 to 90% of the land. The bulk of rural inhabitants eked out a living working for large landowners, typically through servitude, or rented their land from large landowners at extortionate rates.
The only substantial groups that had avoided this fate were some indigenous populations and a small number of town dwellers dedicated to trade or a craft.
Over the following two centuries, land ownership drastically changed. First, population growth put unprecedented demand on access to land. Human beings spread out across continents, tilled over prairies, and felled forests.
Growing settler populations displaced indigenous populations at a massive scale and appropriated their lands. In many places, land became scarce.
Societies began land redistribution in response. In the 20th century, more than one-third of the world’s countries seized the holdings of large landowners and redistributed them to the landless or land poor.
One-and-a-half billion people directly benefited from such programmes, which continue to impact billions more.
Not every nation ended up like South Korea. Authoritarian leaders in nations such as Russia, China, Mexico, Cuba, and Zimbabwe used land reform programmes to destroy their domestic enemies—large landowners—and shore up rural political support. The same story played out in Eastern Europe, behind the Iron Curtain, and in South America in the latter half of the 20th century.
The roots of contemporary underdevelopment and authoritarianism in many of these countries can be traced back to the political allocation of property and property rights that followed land reform.
The authoritarians who destroyed large landowner classes also sought to embed their own authority in the countryside. By withholding property rights, they forced land beneficiaries to turn repeatedly to the state for agricultural loans, credits, and basic security.
The research in my new book, Property Without Rights, shows that in comparison with countries that conducted land reform while delivering land beneficiaries robust property rights, countries that withheld property rights faced a host of pathologies. Urbanisation took place more slowly, rural inhabitants became trapped in the countryside with no opportunity for upward mobility, and the rural-urban divide grew. But at the same time, the leaders of these countries gained real benefits. They were better equipped to forestall social protests and better able to use the countryside as a political counterweight to cities. Many incumbent politicians proved only too willing to accept disastrous economic outcomes for their people and growing inequality in the service of fulfilling their political goals.
This brutal calculus is playing out today in Venezuela, now a country of property without rights, explaining both its dramatic economic implosion and the resiliency of authoritarian leader, Nicolás Maduro.
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Former President Hugo Chávez set Venezuela on the path to politicizing rural-property rights with a new land reform law in 2005. The law redefined the requirements for property ownership and set restrictions on property registration and use that few people could comply with in practice—leaving their property vulnerable to government caprice. The law also enabled any citizen to denounce landowners for being out of compliance with its provisions. That rendered most rural inhabitants subject to coercion and manipulation — the tools of authoritarian power.
What followed in the countryside was a free-for-all. The government used the law’s uncertainty to seize land from its political enemies, such as Chávez’s foe Manuel Rosales. And when it granted land to new beneficiaries, it put them on state-run farms or gave them provisional land titles that require constant government monitoring. The precariousness of property rights has given the government a tight grip on the countryside, which it uses to churn out votes that counterbalance urban discontent.
Why didn’t the Asian Tigers — South Korea, Japan, and Taiwan — mismanage and manipulate land reform the way most governments do? Those countries faced existential threats from China and North Korea, so their land reforms sought to rapidly stabilise the countryside and forestall communist appeals to peasants by elevating their economic and social conditions. Land reform was underpinned by growing and focused state power, and nudged along by US advisers.
In those countries, land reform produced an economic miracle, transforming their societies and loosening the grip of once-authoritarian regimes. Whether that miracle can be replicated elsewhere depends on whether governments in agricultural countries can harness state power to level inequalities in land ownership without succumbing to the tantalising temptation to withhold property rights and entrench their own power.
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