How Fares The Land?

Deep-rooted patronage in politics is one of the major impediments to the growth of a meritocratic society due to its deleterious effects on democracy, rule of law, and incentive structures.
What are the other factors, besides patronage, responsible for perpetuation of extractive institutions in Pakistan? Putting it another way, what has hindered the evolution of inclusive institutions and society? Before proceeding further, let me briefly state the difference between inclusive and extractive political and economic institutions.
Extractive institutions, as discussed by Professor Daron Acemoglu and Professor James A Robinson in their book Why Nations Fail, are the rules of the game and political and economic arrangements that concentrate economic and political power in the hands of the thin minority and work for the benefit of the elite at the expense of the well-being of the majority.
Such institutions extract income from the masses and transfer resources to the elite who are able to do so due to their political control over them. Extractive political institutions and extractive economic institutions reinforce one another and have a type of synergetic relationship. On the other hand, inclusive institutions promote a society that ensures participation of the people at large in the economic and political life on the basis of equality of opportunity, equity and dignity.
Inclusive institutions disperse economic and political power in the society by providing a level playing field to the people. Non-discrimination, pluralism, non-violence, and equality of opportunity are the hallmarks of a society characterised by inclusive institutions, whereas corruption, weak rule of law, deep socio-economic inequities, and endemic poverty are generally associated with extractive institutions.
What has perpetuated extractive institutions in Pakistan? On the top is the highly inequitable land ownership structure. After Partition we failed to undertake meaningful land reforms in the country despite the much needed transition from feudal-agrarian relationships to the industrial state. Pakistan inherited an extremely skewed land ownership structure from the British. The landowners were a highly privileged class during the British Raj. They served the purpose of the colonial power mainly owing to two factors.
First, they collected land revenue for them. A close liaison can still be observed between the village headman and the patwari in rural areas for land revenue collection. Second, they provided royal services by keeping the local population under their control. Thus there existed a close nexus between the landlords and the district officers.
The partitioning of India was a major event disrupting the existing political and economic arrangements in the society but we missed it. Rather, over time the grip of extractive institutions tightened further.
The landed gentry clung to power as before. The nexus between the landlords and district bureaucracy remained undisturbed with the only difference that a ‘gora’ (white) deputy commissioner was replaced with a brown sahib. Military bureaucracy also became part of this nexus after some years of our independence but power remained concentrated in a few hands.
The logical corollary was that the elite that had political power due to extractive political institutions did not let go of the economic power and the political and economic powers reinforced each other in the society with the result that a vast majority of the people of Pakistan remained powerless due to exploitative institutions that have persisted from colonial times.
Non-introduction of land reforms or lacklustre efforts on this account can be explained in this context. The skewed distribution of land is thus the major factor for perpetuation of extractive institutions in Pakistan. It is the ownership of land which determines economic, political and social power especially in the rural areas.
Zekiye Eglar, an anthropologist by training, in her book titled A Punjabi village in Pakistan writes: “Exclusive ownership of land has given the zamindars (landlords), as a group, a position superior to that of the kammis (workers engaged in low-grade professions – often used in derogatory terms), and the land is the form of property for which the kammis have had the greatest longing.
“Among the zamindars themselves, the size of landholding is the basis on which the social prestige is measured. And a zamindar with large landholdings has more power, prestige, and influence, because he has more tenants and kammis who are attached to the land, work for him, and depend on him, than a zamindar having little land, and consequently, fewer tenants, or one who tills his own land”.
High inequality in land ownership is associated with adverse effects on the emergence of human capital promoting institutions such as public schooling. Oded Galor et al in the paper titled ‘Inequality in land ownership, the emergence of human capital and the great divergence’, suggest that the degree of concentration of land ownership across countries and regions is negatively related to education expenditure and attainment.
To support their stance, they give the example of the early two Americas. The per capita income of colonies in North and South America were comparable originally to the income of western Europe, meaning in terms of income they were as rich or poor as western Europe.
But they differed in the distribution of per capita land since in North America ie in the US and Canada the distribution was comparatively egalitarian whereas land and resources were concentrated in the hands of the elite in Latin American countries. Thus the paths of development in both regions diverged and the pattern of land distribution is perhaps one of the explanations for the wide divergence. What are the channels for such divergence?
According to the authors, variation in the type of human capital is one of the channels for divergent paths which in turn can be explained by the unequal land distribution. The highly unequal distribution of land and resources hinders the formation of an inclusive society due to low investment in education.
The relationship between the level of land ownership concentration and education is also true when a comparison is drawn among the South American countries. For example Engerman and Sokoloff in their paper titled ‘Factor endowment, inequality, and paths of development among New world Economies’ point out that Argentina, Chile and Uruguay, where inequality in land ownership was less severe, have comparatively invested more in public education.
Oded Galor et al have brought out another interesting point on the relationship between land ownership and education. They have pointed out that land reforms were undertaken simultaneously with education reforms in Japan, Korea, Russia and Taiwan. They have offered two plausible interpretations for such a phenomenon.
First, land reforms reduce the economic incentives for blocking education reforms as reduced landholdings etc do not require agricultural labour to work on the land. Second, shift of power from the landed aristocracy due to implementation of land and education reforms vindicates the point that the landed aristocracy impedes reforms. Perhaps, the industrial elite favour education reforms because they need skilled and literate labour.
Do the empirics relating to the concentration of land and education not apply to our case? I think they do. It is not mere coincidence that in areas where inequality in terms of land is high, illiteracy is also high. Rural Sindh, southern Punjab and Balochistan are areas where the land holdings of waderas, sardars, and feudals are comparatively big and at the same time education levels are low compared to the national average.
Will it be possible to transform the prevailing institutions into inclusive institutions without undertaking meaningful land reforms in the country? It looks as if we are again standing at a critical juncture of history. People were, perhaps, never so impatient for change thanks to the ‘youth bulge’ as well as the heightened awareness created by the media. It is time for this impatience to be channelised towards fundamental reforms in our economic and political institutions to make them more inclusive.