LAND TENURE: AN INTRODUCTION

LAND TENURE: AN INTRODUCTION
by
Sumner J. La Croix
Working Paper No. 02-13
May 2002
Land Tenure: An Introduction
By
Sumner J. La Croix
Department of Economics, University of Hawaii
East-West Center
Working Paper No. 02-13
May 2002
Abstract
Land tenure refers to the bundle of rights and responsibilities under which land is held,
used, transferred, and succeeded. This essay surveys land tenure arrangements
throughout the world since the Roman Empire. Particular attention is paid to how six
forms of land tenure emerge, function, and change. The six forms of land tenure
analyzed are (1) owner cultivation of small, private lands; (2) squatting on public or
private lands; (3) large estates or latifundia; (4) feudal tenures with bound and unbound
labor; (5) communal tenures; and (6) smallholder leasing from private landowners.
Land tenure refers to the bundle of rights and responsibilities under which land is
held, used, transferred, and succeeded. The meaning of the term varies with context. It is
used to refer to land tenure prescribed by statutory or common law; to customary land
tenure; and to observed land tenure practices in a particular historical context. Land
tenure arrangements vary enormously across urban and rural areas primarily because of
the use of land for agriculture in rural areas and for residential and business use in urban
areas. Economic historians have focused on analyzing tenure systems on agricultural
lands, as until the twentieth century the majority of people in most societies earned their
livelihood by cultivating the land; accumulated wealth by improving the land; and
transferred wealth to the next generation by bequeathing the land.
Land tenure can be categorized along three essential dimensions: (1) the presence
or absence of formal land title, defined as registration of ownership rights with a
government authority; (2) the extent of landowner and landholder rights to contract
voluntarily for use of the land; and (3) the spectrum of private-communal property rights
to the land. At one end of the spectrum is the independent farmer owning land with
freehold (or fee-simple) title. Freehold title is perpetual; inheritable to a successor
designated at will; freely alienable; often registered with a central authority that has
undertaken a survey of the land (sometimes called a cadastral survey); and characterized
by fixed annual obligations. At the other end of the spectrum, bound laborers work on
parcels of land temporarily assigned to them by authorities in a communal land system.
Changes in land tenure are induced by a wide variety of factors including relative
prices of inputs and outputs; transaction costs; government policies; preferences of
farmers and landlords; and technology. To illustrate how forms of land tenure emerge,
function, and change, six forms of land tenure are analyzed below.
1. Owner Cultivation of Small, Private Lands. Owner cultivation of small
private land parcels was a major form of land tenure in the Roman Republic, as soldiers
were granted small parcels from lands taken from conquered peoples. Despite its early
emergence, owner operation of small farms is relatively recent, emerging in Europe and
Asia as feudal institutions were dismantled; in North America from the beginning of
colonial settlement; in Japan after land reforms were implemented in the late nineteenth
century and after World War II; in Taiwan in the early 1950s; in the former British
colonies of India, Canada, Australia, South Africa, and New Zealand in the nineteenth
and twentieth centuries; and in South America in the second half of the twentieth century.
Owner-cultivated farms have been praised as an ideal arrangement to foster and
encourage democratic institutions and for the incentives offered to small farmers to
properly manage their lands and to adapt to changing circumstances. Wage laborers on
farms often set a goal of moving up the “agricultural ladder”—from wage laborers to
share tenants to owner operators.
Family-managed farms may, however, not always be the most efficient forms of
agricultural organization. Families may have inadequate managerial skills to manage the
farm; may not have sufficient family labor; and may not reap full economies of scale on
their small land parcel, among other things.
2. Squatting on Public or Private Lands. Some citizens of the Roman Republic
received grants from the government to occupy conquered lands, while others—
squatters—occupied and farmed these public lands without first obtaining a formal lease
or land grant. Squatting is observed on privately owned lands and in run-down sections
of urban areas in developed countries, on public lands near or at the frontier of
settlement, and in the urban areas of poor developing countries. It was prevalent
throughout the Americas from the beginning of European colonization through the
nineteenth century and is still a major form of land tenure in South and Central America,
particularly in Costa Rica, Brazil, and Columbia. Sheep and cattle herders in the Cape
Colony in the eighteenth century and in Australia from the 1820s to 1840s squatted on
frontier lands at and beyond official boundaries.
The impact of squatting on economic development has been much debated.
Squatting has been criticized as encouraging disorderly settlement; bringing settlers to
regions without churches, schools, or proper infrastructure; and encouraging violence
between competing claimants to lands. It has also been praised as facilitating
development by superseding overly restrictive government land policies of settlement at
the frontier. In urban areas in many developing countries, squatting on public and private
lands has emerged as a response to large-scale immigration and growth of populations
living in poverty. It has been criticized as impeding growth in these same urban areas by
forsaking the use of land for collateral; by restricting transfers of parcels; and reducing
the value of land in intergenerational wealth transfers.
3. Large Estates or Latifundia. In the second century BC, wealthy Roman
families received leases of newly conquered lands and were able to consolidate lands of
some farmers serving in the army into ranches and large farms known as latifundia.
Centered around a central villa, these lands were typically worked by slaves from
conquered territories or by tenants at will. With the establishment of the Pax Romana in
the first century AD, supplies of slaves from conquered territories declined, and latifundia
managers responded by dividing the latifundia into smaller parcels and leasing them to
small holders (coloni). In other instances, small landowners would commend themselves
and their land to latifundia in exchange for protection against central government
exactions and invading tribes.
Similar land holding arrangements have emerged in other societies in which
governments have leased or granted large tracts of land to wealthy families or small
holders at the frontier have commended their lands to a patron. In South America, the
Spanish Crown granted lands and the rights to the labor of their indigenous people to a
small number of families in the sixteenth and seventeenth centuries. Some economists
have argued that land laws in South America were heavily influenced by this initial
allocation of lands and were structured to enhance the position of the large property
owners to the detriment of small independent farmers. As landowners in South America
gradually lost their rights to indigenous labor in the seventeenth century, they secured a
new supply of labor by requiring peasants to provide labor services in order to gain
access to land. Large estates with patron-client labor arrangements—latifundia—
persisted throughout much of Latin America until the mid-twentieth century.
4. Feudal Tenures With Bound and Unbound Labor. With the fall of the
Western Roman Empire in the fifth century A.D. and the consequent decline in law and
order came the rise of the manorial system in Europe. The system had many variations
across time and place, thus the following description is a stylized account. A king
owning all lands kept some lands (demesne) and granted others to lay and ecclesiastic
lords in exchange for military service and loyalty. Some lords assigned their lands to
followers in exchange for services and loyalty, a process known as subinfeudation.
Peasants commended themselves to a lord in exchange for protection, provision of
justice, and a plot of land, in the process becoming bound to the land. These peasants
(serfs) held land subject to servitudes of work and produce as well as approval of
marriage, inheritance, and migration. Production was partially organized by the village,
with individuals typically cooperating on plowing the land and allowing communal
grazing on stubble left after harvest. During the growing and harvest seasons, each serf
tended individual parcels, which were often scattered in small strips throughout the
manor lands. Serfs were obligated to work on the lord’s demesne for a fixed number of
days.
In the manorial system, individual rights to rent, transfer, succeed, and use land
were limited due to communal property rights over the land. Attenuated individual
property rights required that the manorial system adopt elaborate rules to structure
production and distribution of agricultural output. These rules prevented participants
from shirking or claiming a disproportionately large share of output.
The growth of markets and population in Western Europe between the eleventh
and thirteenth centuries induced changes in the feudal system. Labor dues were
commuted into money payments; the demesne was leased for money rents; tenant lands
became increasingly alienable. The Statute Qula Emptores (1290) formally abolished the
feudal system in England, although many of its habits and institutions would linger on for
centuries. While the Black Death crisis of the fourteenth century made labor more scarce
and led to attempts to re-impose feudal obligations on tenants, the dismantling of
traditional land tenures continued in Western Europe, as exemplified by the English
enclosure movements of the sixteenth and eighteenth centuries. Lands enclosures were
the results of a legal process that converted the common rights of villagers on specified
waste, arable, and meadow lands to private titles and consolidated existing private
holdings in land.
Feudalism’s decline in Western Europe was mirrored by its rise in Eastern
Europe, as relatively free laborers became bound to the land during the fifteenth and
sixteenth centuries. Feudalism would not decline in Eastern Europe until the eighteenth
and nineteenth centuries. Serfdom was partially reformed in Russia in 1861 —the
workers remained bound to the commune—and was finally ended by the Stolypin
Reforms of 1906-1911 which freed Russian laborers from bondage to the commune,
established private titles, and consolidated peasant holdings. In Japan, bound labor was
still predominant in the early Tokugawa period, and tenancy only emerged in the
eighteenth and nineteenth centuries. In the 1870s, the Meiji government abolished feudal
tenures and established private property in land in conjunction with its reform of
agricultural taxation.
5. Communal Tenures. Communal land tenures have been prevalent in the
Pacific Islands and Africa; were the norm in North America, South America, and parts of
Asia until the European conquests; and are still used today in many indigenous
communities. Details of communal tenures differ across societies, so the following is a
stylized description of communal tenure in a Pacific Island village. There is a common
area that is used for future land development and can be used with certain limits for
gathering by villagers. Families carry out cultivation on scattered plots, with plots being
redistributed by chiefs or village elders as family size and land fertility change. For lands
requiring extensive improvement, tenure of particular households and their heirs may be
longer. Rights to continued use of village land by a household persist as long as the
household continues to cultivate its assigned lands.
Historians have often interpreted communal land systems as efficient responses to
social and economic environments with significant environmental risks, high information
costs, and poorly developed input, output, and insurance markets. Their flexibility has
frequently enabled adaptations to changing demographic, ecological, and social
conditions. In the nineteenth and twentieth centuries, economists have, however,
sometimes viewed communal land systems as impeding the growth of a modern market
economy.
Communal land systems were established by central governments in China and
Russia in the twentieth century after communist revolutions. After the 1917 Russian
revolution, the Soviet government under Lenin abolished private property rights in land
but in the early 1920s promulgated a pragmatic system of agricultural production (“New
Economic Policy”) that retained many features of smallholder-owner production.
Beginning in the late 1920s, Stalin began forced collectivization of peasant landholdings
and established central government ownership of farmlands and control of agricultural
production.
A similar process took place in China after the 1949 communist revolution when
lands were initially redistributed to tenants. By the late 1950s, peasant farmers had lost
their lands and were forced into collective farming institutions (communes) controlled by
the central government. In 1978 the Chinese government initiated land reforms
providing households with individual parcels of village land. The “Household
Responsibility System” allowed farmers to choose crops, methods of production, hours of
work, and capital and labor inputs. Villages frequently reallocated these lands among
households, thereby restricting their use as collateral. Agricultural output and
productivity rose significantly in the decade after its introduction.
6. Smallholder Leasing from Private Landowners. Contracts between owners
of agricultural lands and farm labor have varied enormously across time and place.
Different market structures in labor, capital, resources, and land markets; government
regulations; and geographic constraints have often produced a variety of smallholder
leasing arrangements that co-exist alongside one another. Economic historians have paid
close attention to three contractual provisions exhibiting wide variation over time and
across locations: land owner’s role in farm management, type of land rent, and contract
duration. Small land owners often choose to manage their lands themselves, using family
and wage labor in production. In other instances, small and large landowners have better
opportunities on other lands or in other occupations, and they lease some lands to tenant
farmers. Only a few crops exhibit substantial economies of scale in production, leaving
large landowners with incentives to lease parcels of land to small holders. Some leases
allow tenants to manage the farm themselves, while others provide limited roles for
landowners in farm management. They make crop choices, arrange for credit, and
procure various inputs such as fertilizers, pesticides, and farm animals, leaving tenants to
manage day-to-day production and monitor farm labor.
Tenancy often co-exists with self-managed farms. In the United States, numerous
farmers were tenants even when new land was available at the frontier. U.S. census data
show that mobility up the “agricultural ladder,” was common, with workers often starting
as landless laborers, becoming a tenant farmer, and finally becoming an owner-occupier.
Such mobility was lacking in India throughout the twentieth century as social sanctions
often stopped lower castes from owning or leasing land. In the Tamil Nadu province of
India, sharecropping predominated in 1916; was partially replaced by fixed rent tenancy
in 1937 as landlords moved to cities; and declined further with land-to-the-tiller land
reform in 1959.
Controversy reigns over the incentive and efficiency effects of different types of
smallholder leasing. In his comparison of agriculture in France and England in the late
eighteenth century, Alan Young argued that sharecropping was responsible for the
relatively poor state of French agriculture. Alfred Marshall argued that sharecropping
implicitly imposed a tax on the labor input of tenant farmers and would reduce farm
productivity unless landlords carefully monitored tenant inputs. Some economists have
argued that sharecropping exists due to the willingness of risk-averse sharecroppers to
pay a premium to reduce their income variability. Some empirical studies of share
tenancy in India in the 1950s and 1960s show that output is lower under sharecropping.
Other economists have argued that sharecropping reduces incentives for tenants to
overuse (“mine”) valuable land and provides vital incentives for landlords to provide
managerial services. Empirical studies of African-American sharecroppers in the postbellum
U.S. South and of farmers in the U.S. midwest during the 1970s lend support to
efficiency theories.
Does the type of land tenure affect the adoption of new technologies? Only a few
studies exist, and they generally show that new technologies are adopted at about the
same rate by sharecroppers and other types of tenants. For example, studies of the
adoption of new rice varieties in the 1960s and 1970s generally show that sharecroppers
adopted the new technologies at about the same rate as other landholders. Technological
change has, however, often induced changes in the choice of land tenure. For example,
the introduction of the tractor after 1910 and the mechanical cotton picker after World
War II were major factors in reducing the incidence of share cropping throughout the
U.S. South during the twentieth century.
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