Introductory:The farmers suicides was an aspect which has compelled me to study the causuative legal and economic factors in an overall political and economic globalisation and came to the conclusion that the underlying rigidity attached legal and ecoomic rights of ownership,possession, and control and management of farmer as owner cum possessor as all- in- one- person is resposnsible for low productivity and price irresponsiveness leading to indebtedness and helplessness with no other remedies left open to him in the legal and economic system and that this all- in- one- farmer has to be tranformed to legal ownership rights as seperate from possession and management rights as has happened in industry. this led me to further conclude to devise a model for seperation of right to legal ownership of farmer from the possession and management of rights in land to free the farmer from immobility and to induce price responsiveness,to promote capitalist and corporate relationship in agriculture and its consequensual equi -distribution of developmental entitlements so as to unleash the advanced productive forces and producitivity on par with industry on global scale.
question no 1: The question arises as to how this all- in- one in farmer is responsible for low productivity,lack of price resposiveness leading to indebtedness and helpelssnes with no other avenues left open to in the legal and economic system?
and question no 2: how the seperation of owneship rights from possession and management of land will over come this state of affair and lead to advanced productiveforces in agriculture and productivity and its consequencial equ distribution of developmental entitlements.?
Aamsmith and division of labor:Adamsmith equated the division of labor as an index of level of develoment and productivity. division of labor implies specialisation of labor and employemnts. a specialistion of labor and employment implies product specialisation and abridgement of labor time per unit product and their by continual abridgment of overall labor and capital costs of production with technological developments. But he opined that this division of labor is not possible in agricuture and he has not entered in to any enquiry in to the alternative modes landed property relationships where this division of labor compatible even in agricultural landed property.
division of labor is incopmatible with the farmer as the exclusive owner of land as well as labor in his own field as an all in one which itself is subject to vagaries of uncertain natural seasons and there fore it was not possible to enhance its productivity to the level of industry and its pattern of production.
By the time of Adamsmith, the corporate companies with joint stock capital ,of its height in east india company and the banking and financial and other stock markets were already known and practised but it was the opinion that such corporate structure is not possible in agriculture due it's nature of property in land as an immovable nature and the nature of exclusive ownership of farmer which include the possession and managenet
some experiments on the lines of cooperative farming, joint land stock farms were made where collective/corporate ownership or or joint ownership or coperative parnership type owneship where people pooled the land capital and labor together and worked together to share the product and profits in defined manner.But they have proved to be inefficient and counter productive abondoned in many countries. what went wrong with these models?and how individual holding as a general form of agricultural farming has become the rule in an universal form. and how this general form is turning the obstacle to growth and development of farmer as well as the nations in the globalisation process.?.
Before we answer those questions, we have to analyse the process of production, its marketing,its different component parts and their legal rights,duties, and entitlements in agriculture and its difference with industry.
in agriculture as well as in industry, the combination of factors of production is a condition precedant. land/land owner/land lord, labor/owner of labor /laborer and capital/owner of capital/capitalist. for production of any commodity for sale in market. we assume that market monetary relationship is predominanat in agriculture in the sense the farmer will produce the goods for market and purchase the goods in market for his own consumption.
we know that the owner of land as well as owners of other two factors of production will normally try to maximise the productive power of their own factor and try to maximise their his own interest when he enters in sale or prchase contracts with other owners or or their agents.we call this in legal jargon the prudent man or reasonable man approach in contracting or avoiding any statutory or other liabilities as well as acquiring any statutory benefits or even in tort jurisprudence.
the ownership of land is to be subdivided in to ownership of land and ownership of rights in or over the land and its use. Ownership of rights in or over the land use is an inclusive definition where any right conferred or contracted may be added.and the sum total of all rights should add to value of ownership of land.or the total rights of owner of land.
Lease of land to tenanat is contracting of mere limited right to exclusive possession with enjoyment for specified time in exchange of negotiated price/rent offered and accepted by the owner of land or his agent. so lso the licencee of previlege conferrd or contracted to enjoy the right to possession for specified period for price/fee offered and accepted by the owner of land. mortagage is also a tranfer of limited right with or withour possession subject ot such terms and conditions as the parties may agree with on exchange of money or capital to the owner of land.similiar relationships of innumerable character may be created and entered by the owners of right to factors of production or marketing in the shape of parteis to contracts in exchanging the rights in the nature of monetary or tangible or intangible properties.
In all these transactions of parties, one common element all pervading is the concept of law, rule of law which recognises and enforces the contracts or other relationships through its machinery of law courts and other forums while the law permits,creates,and recognises and extinguishes the rights.
This brings us to analyse the common and distingushing aspects of law of property in land ,property in capital, property in labor.
We have noted that division labor is an index of development and producitivity and such division of labor is found to be incompatible with agricultural landed property and productions system with owner cum possessor cum manager cum worker of agricultural farms which is also higly dependent on natural seasons.
In industry, an employer purchase /hires the labor for money or other equivalant to produce the goods for market and in the market sells the produced goods for money to make a profit out of his enterprise.He always try to maximise the profit by minimising the costs of production taking the market price as given.If his average costs of production is more than the market price at which he sold the goods he will suffer loss and go out of business or become bankrupt under the insolvency act.If it is corporate body, the same holds good except that the liability of share holder being the limited by shares and burden of losses are spread to its creditors and other agencies including the state. so the bottom line for individual capitalist or corporate body in market competetion is the average cost price to be equal to price of commodity sold.
The management and control structure in industry or corporate bodies is based on the divorcement of ownership from management and control.The ownership of corporate body as a seperate entity with right to sue and be sued on its own name is different from ownership of shareholder.the control and management is is vested in general body of shareholders and board of directors and its executive agent the chaiman and managing director or other delegatees.The boards of directors and managing or executive directors may be drafted from expert professional managers of their own concerned fields including marketing and other branches.The managemt courses have become top class paid jobs in modern corporate world of businessess.This is a reflection of Adamsmiths' an expanding field of division labor and emloyment and abridgment of labor time
The ownership right over the land has not been divorced from right to possession,management, and control. He is the owner,possessor,manager,producer, marketer, and controller.He alone has the right to sue,to be sued in his own name.He has no advantage of limited liability. he has no education,capacity nor the necessary capital to employ paid expert directors or managers of production as well as marketing.Neither has the credit worthiness with banks to raise necessary capital to work on modern methods of production and management to minimise the costs of production so as to be able sell his product in the market with profit as a market strategy .The land ceiling laws, legal restrictions on the transfer and use of agricutural land as well as to raise the capital on the security of agricultural land from banks and financial institutions, are some instances of obstacles to convert agricultural land ownership rights to corporate ownership models and himself to gain the personal freedom of mobility from the bondage to land and its personal cultivation. The indian economy now dominantly being integrated to global markets and indian agricultural product price behavior is increasingly being subjected to global markets' supply demand fluctuations. The non responsive indian farmer to these fluctuations due to his farm sizes,traditional farms cultivation and management, accounting behaviour is at greater risk of losses than gains and consequential debt trap and loss of land and livelihood and security to his life and liberty in the social life.
He has no guarantee of limited liability like in industrial or corporate law. his liability for his entreprise is unlimited and in case of debts to lending banks or other private agencies, they can also get the farmer detained in civil prison for not dischaging his civil liability apart from putting the land to sale in open auction .He can not aquire more land than land ceiling law permits, he can not terminate the lease of land without legal permission from competent authorities and cannot refuse to pay the minimum agricutural labor rates in locality, has no power to borrow industrial or business loan on mortagaging his land.In the result, he is tied to land as the owner as well as possessor, manager and labor i.e all in one combined person which is incompatible to division of labor like in industry.
The mangement and control structure in farm management is not based on divorsement of ownership from management and control.It is incompatible with corporate structure and its rights, previleges, and liablities both under common law and statutory law. it is not based on business model or its accounting model which is a must in a market determined price based on free competetion with fredom to entry and exit farm cultivation business and minimise thecost production while maximising the profit out of business . In a traditional model now adopted in india,owner himself has to own, manage, control, with right to sue and be sued and suffer consequeces of own acts and omission as well as involuntry inexorable effects of acts and omissions of markets and governments. he has no resource to know the market or other relevant information or market statics nor the capacity to acuire such knowledge.
New model: There fore, the root cause of farmers continous defaults in mantaining his agricultural business is the incongruence of his farm model now adopted in india and most other countries including the china and there is need to change the agricutural policy to the new model of divorcing the right to ownership of land from right to possession and management of land as suggested by me or any other model akin to it to fall in line with globalisation of markets and market prices.(for more elaborte reasons plese see my article on land reforms -globalization.(www.aplegalservices.com)