Tuesday, 16 February 2016

Spanish Land Reform in the 1930s: Economic Necessity or Political Opportunism?

Spanish land reform, involving the break-up of the large southern estates, was a central question in Spanish politics during the first decades of the twentieth century. However, the historical debate on this issue has been hampered by the absence of information on access to land. A new EHES working paper is the first that provides quantitative evidence to explain long-run changes in the numbers and regional distribution of landless peasants. 

This new evidence points in the direction that, like in many other European countries, many landless peasants got access to land thanks to the changes in relative prices and the forces of structural change. However, this dramatic change was less intense in Southwestern provinces than in the rest of the country.

Juan Carmona, Assosicate professor in
Economic History, Carlos III Madrid
Land reform is a very important issue in Development Economics and is subject to substantial debate. The basic idea of this growing literature is that large estates with hired labour should be replaced by small or middle-sized farms which are more efficient and socially equitable. However, major disagreement persists on how to conduct this modification of land ownership. On the one hand, many academics and policymakers support a land reform policy based on direct government confiscations and land re-distribution arguing that the free operations of land and tenancy markets in developing countries are not efficient. In a sharp contrast, others prefer ‘market-oriented reforms’ expecting that a well-functioning land market will generate a ‘spontaneous’ redistribution of land from inefficient to efficient producers (Deininger, 2003). This kind of market-based land redistribution took place in Europe during the last decades of the nineteenth and first of the twentieth centuries when large estates declined as well as the share of hired workers in the active farm population (Van Zanden 1991).

James Simpson, professor in
Economic History, Madrid
The Spanish historical experience is very illuminating for the current and the historical debate because attempts were made to implement both types of reforms. Spain underwent a classical market-oriented land reform during the last decades of the eighteenth century and the first half of the nineteenth century with the so-called Liberal land reforms (Carmona and Rosés, 2012). For many contemporary observers, this reform did not solve the main problems of the Spanish countryside (Carrión, 1932).

Joan Rosés, professor in Economic
History at LSE
Consequently, from the early decades of the twentieth century, there were political demands for a new reform to redistribute land from large landowners to poor, landless peasants, which culminated in legislation during the Second Republic (Malefakis, 1970). Practically half of the country was under this land redistribution policy albeit its effective implementation failed. However, the economic rationale for carrying out this controversial Republican land reform have not discussed in the literature. In particular the question of why market forces, which had been supposedly effective in breaking up large estates in other western European economies but not in Spain, has been totally ignored.

The European historical experience teaches us that the main determinant for the surge of small-medium farms was the increase in the ratio between wages and land prices. Before the Liberal reforms, institutional constraints allowed only a part of the total available land to be traded, and hence, land supply was quasi-fixed and inelastic. In this situation, any demand shift would result in large upsurges in land rents and decreasing land access. Because Liberal reforms expanded significantly the amount of land that could be bought and sold (the cultivated area increased from 11.4 million hectares in 1800 to 16 million in 1860), the shift in land demand of mid-nineteenth century only resulted in slightly land prices increases. From 1890 in 1931, the cultivated land grew again from 16 to 22 million hectares but land demand shifted downwards due to several concomitant factors including increasing foreign competition in agrarian markets, rural out-migration, and the action of the Engel’s law. Accordingly, the relative price of land decreased substantially as the following graph shows.

Acces to land: Average family and male days of work necessary for buying the mean plot, 1908-1931
(unweighted provinvcial average)
Like in other European countries, Spain experienced a substantial change in the composition of its agrarian workforce between 1860 and 1930. The number of landless workers halved from about two million to less than one million, while the numbers of farm tenants and owners increased from 1.6 to 2.2 million people. Accordingly, the relative amount of landless peasants declined from 56 to 30 percent of the agrarian workforce. The fact is that more than half of the provinces under the land reform act had also experienced a substantial reduction in the ranks of landless workers. It should be noted that there are two main ways that this fall in landless workers could take place: (1) hired labour moved up the farm ladder to become tenants or owner-occupiers (genuine land reallocation), or (2) they left the countryside in search of employment in cities or abroad. The following graph presents new evidence on this issue during the two decades before the Second Republic (1910-1930).

The evolution of the number of landless peasants and their determinants 1910-1930 (percentage change)

This evidence not only confirms dramatic changes in the composition of Spain’s agrarian workforce but also underlines substantial regional differences, particularly among these provinces to be affected by the Republican land reform act and the rest of the country. Broadly speaking, all land reform provinces had lower levels of labour reallocation from the countryside to the cities due to their higher costs of migration and that their urban labour demand was comparatively limited. The situation was even worse in Western Andalusia (Cadiz, Cordova, Huelva and Seville) and Estremadura (Badajoz, Caceres and Salamanca), where scarce farm labour migration was also accompanied by low levels of genuine land reallocation.

What could explain this workers’ limited access to land in South-Western Spain? It is difficult to argue that this was caused by institutional failure since these regions were integrated into the Spanish land market and had the same laws that were in force in the rest of Spain. To make the situation more puzzling, the nearest region, Western Andalusia, had a substantial market relocation of land from landowners to peasants. Therefore, we are more inclined to think that natural resource endowments constrained land access. The absence of irrigation, the very seasonal character of labour demand, and the use of new labour-saving machinery made these regions more suitable for larger estates than for small-medium family farms.

This blog post was written by:
Juan Carmona (Department of Social Sciences of Universidad Carlos III de Madrid),
Joan R Rosés (Department of Economic History, London School of Economics)
James Simpson (Department of Social Sciences of Universidad Carlos III de Madrid).

The working paper can be downloaded here: http://www.ehes.org/EHES_90.pdf

Carmona, J, and J.R.Rosés, 2012. ‘Land markets and agrarian backwardness (Spain, 1904-1934)’, European Review of Economic History, vol. 16(1), pages 74-96.
Carrión, P., 1932. Los latifundios en España: su importancia, origen, consecuencias y soluciones. Madrid: Gráficas Reunidas.
Deininger, K., 2003. ‘Land Markets in Developing and Transition Economies: Impact of Liberalization and Implications for Future Reform’. American Journal of Agricultural Economics 85(5), 1217-1222.
Malefakis, E., 1970. Agrarian Reform and Peasant Revolution in Spain. New Haven: Yale University Press.
Van Zanden, J,L. 1991. ‘The First Green Revolution. The Growth of Production and Productivity in European Agriculture’. Economic History Review 44 (1): 215–239.