(introduction...)

From the pages of economic texts and the documents of government planners the familiar theme often emanates that inequalities in income distribution are economically efficient. We are led to believe that the concentration of wealth in the hands of a few leads to higher savings and investment, which ultimately benefits society as a whole. But a look at the realities of rural Bangladesh has already revealed that the surplus the elite extracts from the peasants is not invested productively. The squandering of wealth which could potentially finance development is only one side of the inefficiency of inequality in Bangladesh. The other side is the chronic underutilization of existing resources: land, labor and water.

Bigger isn't Better

In Bangladesh the concentration of land in the hands of a few large farmers is a major cause of low agricultural productivity. Several studies indicate that in Bangladesh, as in many countries, small farms have per acre yields equal to or higher than those of large farms. As one report noted: "This may be considered remarkable in view of the heavy discrimination against marginal farmers as far as distribution of modern inputs is concerned."¹ Even though they reap the advantages of subsidized fertilizer, irrigation and credit, Bangladesh's large farmers still don't produce more than their smaller neighbors!

The reasons for this discrepancy are not hard to fathom. The large landowners tend to cultivate their lands less intensively than small owners. The small landowning peasant, who tills the soil with his own hands, knows that his work determines how much he and his family will have to eat. He invests more labor in his agriculture, and strives to use every bit of land and every drop of water to its utmost. The large landowner's incentive is not so great, and the incentive of the sharecroppers and wage laborers who actually work his land is often minimal.

The sharecropper knows that half the fruits of his labor will go to the landowner, so he saves his extra effort for the little land he owns himself. He has little incentive to invest in agricultural inputs, not only because the landowner will reap half the benefits, but also because he knows that next year he may not be around to enjoy the returns to his investment. According to the AID land survey, more than 70 percent of all sharecroppers have cultivated their tenant lands for a period of three years or less. This leads the authors to conclude, "It may be reasonably assumed that with such a high turnover in tenant-operated areas that tenants might be less than enthusiastic concerning the need to invest in improvements in such land-including the use of fertilizers having residual impact in succeeding years."² The landowner also displays a marked reluctance to invest in improvements, for he has easier ways to make money. The AID study found that less than one percent of landowners supplied any inputs to their tenants.³

If the large landowner cultivates with hired labor, he may be more likely to invest in inputs, but once again yields are likely to be lower than if the same land were owned and tilled by a smaller farmer. Hired laborers have even less incentive to produce than sharecroppers: they worry about their wage, not about the landowner's yields. And since the landowner must pay for their labor, he uses it sparingly. Moreover, large landowners are often poor farm managers. They usually disdain the dirty work of farming, preferring instead to devote their entrepreneurial talents to such refined activities as trade and moneylending.The villagers of Katni described the incompetence of one big landlord: "Nafis understands nothing about farming. He seldom even goes to the fields. His workers cheat him all the time, and laugh at him behind his back."

Since small farmers cultivate their land more intensively, they also tend to make more efficient use of credit and agricultural inputs-when they can get them. But most of these resources flow to the large landowners, by virtue of their political power. Commenting on the Bangladesh government's latest rural credit scheme, the World Bank notes: "As usual for such programs, the small farmers demonstrated a better repayment record but did not get a large share of the credit outlays."⁴

While in Katni, we had the chance to see the government's agricultural extension service in action. One day the village children ran to tell us that a "foreigner" had come to see us. It turned out to be the local agricultural extension agent. With his immaculate clothing and upper-class accent, the children were sure he was not a Bengali. The agent's job was to give technical advice to farmers, but he was a stranger to the poor and middle peasants of Katni. We learned that his main role was simply apportioning subsidized fertilizer among the local landlords. These realities are what the AID study calls "institutional impediments" to the dissemination of new agricultural technology.

In Japan and Taiwan, the groundwork for a highly productive agriculture was a far-reaching land reform, which put control of food-producing resources into the hands of small farmers. In the absence of such a land reform, to imagine that one could redirect credit, inputs and agricultural extension services to the small farmers of Bangladesh is wishful thinking. Moreover, even if by some stroke of political magic one could reorient development programs in favor of the poor and middle peasants, this would still leave out the large and growing numbers of landless.

Underemployment of Labor

The chronic underemployment of Bangladesh's- landless and poor peasants represents a terrible waste of the country's greatest resource: the labor of its people. The demand for agricultural labor is highly seasonal-in the peak periods of harvesting, weeding the spring rice and transplanting the rainy season rice, most of the poor can find work. But between these periods they are often unemployed, with no income at all. Taking these seasonal fluctuations into account, a United Nations study set the unemployment rate in rural Bangladesh at a staggering 42 percent.⁵ For many, this figure translates into chronic hunger and even starvation (The Death of A Landless Laborer, p. 36).

Massive underemployment means that millions of people cannot afford to buy basic consumer goods. This lack of what economists call "effective demand" is in itself a cause of economic stagnation. Industry cannot grow without a market, but families who can hardly afford to eat are not about to become consumers of even basic items such as footwear and soap. Indeed, their lack of buying power may act as a brake on food production too. Discussing the prospect of rising unemployment, a cable from AID's Dacca mission states, "These findings in turn cast doubt upon the feasibility of current foodgrain production strategies, implying as they do a general reduction in the level of demand."⁶

The rural poor of Bangladesh represent a huge, untapped work force for labor-intensive agricultural and industrial projects. Mobilized for development, they could be transformed from a drain on the nation's economy into a powerful asset. Yet despite the fact that labor-intensive rural works projects are frequently endorsed as a key to development in Bangladesh, efforts to implement such projects run aground on hard political realities; the government has other priorities. As the AID cable notes: "The government's Rural Works Program is widely reported to have been in a state of deterioration in recent years owing to a variety of management difficulties. "⁷

For their part, the rural poor have no incentive to undertake such projects as long as they are deprived of the land which would be improved by their labor. Even if more rural works projects were instituted, the extent to which the landless would benefit is open to question. As an AID study points out:

Such projects (e.g., the building of a farm to market road) provide income to rural workers for a specified period, but do nothing generally to change the fundamental economic conditions that produced unemployment in the first place. At the same time, such projects tend to provide long-term benefits to landholders who, in this example, use the road to gain access to local markets.⁸ In the same vein, the World Bank warns that the scope for reducing unemployment and poverty through rural works projects "would be offset by the inequitable distribution of secondary benefits of the program."⁹ As one experienced Bank official told us, "It's hard to see much we can really do for the landless." Hard, that is, under the present inequitable social order.

Water, Water Everywhere, But...

The present structure of landownership in Bangladesh results in the underutilization of another precious agricultural resource: water. Although Bangladesh has vast surface and ground water resources, only 12 percent of the country's cropland is currently irrigated. Irrigation would bring tremendous production increases in the dry winter season, would insure the regular spring and monsoon season crops against drought, and would allow earlier plantings which reduce the risk of flood damage. But today the uneven distribution and fragmentation of landholdings blocks the cooperative effort needed to harness Bangladesh's great water resources.

Although it would be a formidable engineering challenge, there is certainly great potential for taming Bangladesh's rivers through construction of dams, embankments and canals. These could provide not only irrigation but also much-needed flood control and drainage for millions of acres. Bangladesh has no shortage of manpower to undertake these tasks but, as we have seen, the mobilization of this labor is almost impossible under the present social order. Moreover, the fact that land is fragmented into many individual holdings poses great difficulties for any such scheme. For instance, who would decide whose precious plots would be sacrificed to the construction of canals and channels?

“The chronic underemployment of Bangladesh’s landless and poor peasants represents a terrible waste of the country’s greatest resource: the labor of its people.”

Indeed, fragmentation and unequal distribution of landholdings today undermine even modest efforts to provide irrigation with low-lift pumps and tubewells. For example, a deep tubewell can irrigate 60 acres of land. But even the biggest landlords seldom own so much in a single block-their holdings are scattered here and there. So to use such a well to its full capacity requires cooperalion, which is hard to come by as long as a few large landowners control irrigation resources for their own benefit. An AID cable points to "the well known fact that pump group cooperatives exist only on paper or are otherwise captured by the large landowners."¹⁰

The World Bank, which has financed several tubewell projects in Bangladesh, has found persistent "organizational problems arising in conveying the water to the farmers' fields." ¹¹ They are pouring an extra million dollars into one deep tubewell project to facilitate the digging of water channels. "You or I could go out there and dig those channels," one Bank official admitted. "The problem is not that the farmers don't know how to dig ditches, but that they don't want to." In rural Bangladesh political realities not only make large-scale irrigation works impossible-even the use of a single tubewell is problematic!

The Priorities of the Elite

There is another important dimension to the inefficiency of inequality in Bangladesh. The priorities of the government reflect the interests of a narrow elite rather than the needs of the poor majority. For instance, expenditures for "defense, justice and police" have risen from 20 percent of the revenue budget under Sheikh Mujib to 30 percent under the present regime Major-General Ziaur Rahman.¹² Government leaders meanwhile make innumerable pronouncements about the importance of attaining agricultural self-sufficiency. But although agriculture generates almost 60 percent of the Gross National Product (GNP) and employs over 80 percent of the labor force, its share of the government's development budget is scheduled to drop from 30 percent in 1976-78 to 25 percent in 1979-80.¹³ And the little money devoted to agriculture will mainly be used to subsidize the price of fertilizer.

Agriculture suffers not only from a lack of funds, but from a lack of commitment on the part of government officials. The World Bank notes pointedly; "Examples of the few countries which have been successful in rural development (e.g. China, Taiwan and Korea) show that government officials have diligently and persistently worked with local people."¹⁴ In Bangladesh, even the most optimistic foreign aid officials admit this diligence and persistence in rural development is hard to come by. The concept of public service is alien to most members of Bangladesh's elite, who look upon the poor majority with disdain. For them, villages are to be escaped, not to be served.

In fact, the main development which has taken place in Bangladesh in recent years is the development of the elite. Bangladesh's most pressing employment problem is providing work for the millions of landless rural people, but as the World Bank reports, "The only sector which has been booming in terms of employment is public administration."¹⁵ While real wages of landless laborers are plummeting, the government recently increased the salaries of civil servants by 20 to 25 percent.¹⁶

Although Bangladesh suffers from a shortage of skilled workers, ranging from doctors to mechanics, the government is now encouraging such workers to go abroad so they will send home foreign exchange. (One reason the government needs foreign exchange is to repay foreign aid loans.) At present more than 3000 Bangladeshis migrate to the Middle East each month.¹⁷ More of Bangladesh's senior nurses now work there than in their own country! The New York Times reports from Dacca that the mass exodus of skilled labor is "so serious that the Agency for International Development has all but stopped sending Bangladeshis to the United States for training, even though specialized skills are badly needed here to promote development."¹⁸ Exporting labor which is needed at home is like exporting food when people are hungry: resources go where the profits are highest, not where the needs are greatest.

Hunger in Bangladesh is neither natural nor inevitable. Its causes are deeply rooted, but they are man-made. The surplus siphoned from the peasants is squandered; land, labor and water are underutilized; and, at the national level, financial resources and skilled manpower are allocated for the benefit of a few rather than for the well-being of the majority Although we have painted a bleak picture, Bangladesh's future is by no means hopeless. Identifying the barriers to development is an important first step to formulating a positive alternative.