On land ownership and tenancy

The private owner's interest turns 'sand into gold' was the opinion held by one extreme, whereas according to the socialistic viewpoint, private ownership of the production factor land leads to exploitation and should be abolished. It would be possible to prove both arguments empirically.

In the course of time, a more detailed and less ideological analysis led to a more differentiated point of view. Property, including property in land, is a basic element of the economic order. Its clear definition, uniform for all men, is a basic requirement and usually regulated in the constitution.

It is necessary to differentiate between property and private property in land. This is one possibility that has been developing historically and culture specifically. It gives the owner security and provides a planning horizon and incentives and, thus, allows investment. In some societies, it is an important basis for credit to the farmers. In many cultures it has led to long-lasting and remarkable progress in agricultural development. In not a few cases, however, some of the owners became too successful and exploited others, resulting in dependency and poverty on the part of the masses.

The option of state or socialistic ownership of the land produced negative results, especially respecting production, and in particular due to 'human failure'. Its transformation in recent years has not been completed yet. So far it has brought about a certain opening of the market and its incentives, however incomplete. Several countries have hesitated to introduce private property in land. The process is still under debate and is made difficult by the fact that the dismantling of the collectives erodes the social security of all the people belonging to them. The same holds true with respect to the deteriorating communal organization of land rights in parts of Africa, and to a lesser degree in Asia and Latin America as well. In the regard, the increasing interference of the state leads to a weakening of the indigenous institutions and traditional regulation of land rights.

Important changes took place in the field of the ownership of usufruct rights. At the beginning, the prohibition of tenancy was considered in several countries to be the right answer to the lasting difficulties in regulating tenancy in a way which would grant justice to both partners. In other countries, policies in favour of the lessees worked in the direction of an abolition of tenancy. It proved impossible, however, to strictly enforce these laws because there are too many possibilities to circumvent them. Within the course of time, changing framework conditions had their impact and led to rethinking. On the one hand, many landlords dismissed their tenants after the 'green revolution' and used the potential to make money by cultivation on centralized farms. On the other hand, urbanization and the transition to multiple employment with continually decreasing farm sizes require easy possibilities allowing the temporary transfer of usufruct rights, i.e., tenancy. Some governments created new models such as the 'entrustment of land' which upon a closer look are just synonyms for the illegal tenancy. In Africa, there has been an emergence of tenancy relations with certain parallels.

This change was furthered by an incomplete but widespread change in the characteristics of the lessees. Today it is less the large landowner who rents out land, but rather increasingly the smallholder because he wants to give up farming. This means that it is more often a neighbour, a relative, or at least a person of a similar status. This change has by all means not done away with all of the problems involved in the lessee-tenant relation, but it has definitely had an impact on the forms and kind of tenancy and relationship.

The most recent impact on tenancy originated in Vietnam and some other transformation countries which maintained ownership of land in the hands of the state. In this case, land was leased to cultivators for at first 6 years, and later the usufruct rights were granted for 20 or 50 years, with an option for renewal, and were made inheritable and transferable. This provided a level of security and a horizon for planning and investment similar to that found in private ownership of land and functioned as a strong incentive respecting production. This system, which resembles the historic tradition in many countries of the world, is still rather new, but it should be watched carefully. It might prove to be a model for other countries.