A V Chayanov’s Theory of Peasant Economy

 

A V Chayanov’s Theory of Peasant Economy

Gaurang Sahay

Probably the most sophisticated and best documented studies of the theory and problems of peasant economy in the half century from 1880 to 1930 were written by Russians. The masterpiece of this set of studies appears to be Peasant Farm Organisation by A. V. Chayanov which was published in Moscow in 1925. At the time Chayanov wrote it he held the leading chair of agricultural economics in an institution nearby Moscow. An earlier and shorter version of the book was a paper The Theory of Peasant Economy by Chayanov which was published in 2023 in Berlin.

As a cultivated man, Chayanov was not only interested in diverse realms of economics or social science or Western philosophy, but was also involved in art, literature, and history. Under various pseudonyms, he wrote plays and novels in which are reflected his open and tolerant mind. Though Chayanov held a prestigious academic position even after the Bolshevik revolution in Russia , his views and works were not liked by the Soviet system. Therefore, he was arrested and put behind the bar in 1930 by the Stalinist regime. He never came out of prison.

Though Chavanov was a prolific writer. His 60 books and brochures and a number of articles represent the culmination of a thought on agrarian economy. After his arrest, Chayanov’s name and works slipped into obscurity in everywhere including Europe and America. He was rarely cited even in his native country and were not translated in English or any European language. Only in Japan a couple of his major works translated by Professor Isobe in japanese language. No body, in fact, in academia was aware of Chayanov works till Daniel Thorner, Basile Kerblay, and R.E.F. Smith published A. V. Chayanov on the Theory of Peasant Economy which contains an essay by Thorner, ‘Chayanov's Concept of Peasant Economy,’ a biographical essay, and English translations of two of Chayanov's important works: a paper, ‘On the Theory of Non-Capitalist Economic Systems,’ and a book, Peasant Farm Organization. The editors included a bibliography of Chayanov's works and Kerblay's chronicle of Chayanov's life from his appointment to an agricultural institute near Moscow in 1913 at the age of twenty-five, through his work with the "organization and production" school of Russian agricultural economics, to his arrest in 1930 by Stalin's agents.

Since the translation of his main works into English in 1966 there has been an upsurge of interest in Chayanov's ideas. Sahlins has discussed them in two influential publications (1971, 1972), and numerous anthropologists (e.g., Minge-Kalman 1977, Durrenberger 1980, Lewis 1981, Stier 1982) and other social scientists (e.g., Harrison 1975, Hunt 1979, Patnaik 1979) have tested the theory in different locales. These writers, however, have differed greatly in their interpretations and tests of Chayanov's ideas.

Chayanov's theory of peasant economy is based on detailed studies of Russian farms carried out by Chayanov and others from 1870 to 1920. Chayanov contended that 90% or more of the farms in Russia at that time used only unpaid family labor and thought his model stood for the most typical farm in what was one of the largest peasant countries in the world.

While Chayanov had access to perhaps the most massive collection of data on any peasant economy, he had only crude analytic tools. Correlation analysis was just being developed, and he used it only sparingly in "Peasant Farm Organization." There were no computers or sophisticated statistical techniques available, but he was able to illustrate many relationships by adroit manipulation of tables.

In the introduction to "Peasant Farm Organization," Chayanov lists a set of anomalies which arise from the Marxist and neoclassical analyses of peasant economy, and proposes instead a different analytical scheme. Chayanov's purpose was threefold: to develop a theory that would correctly predict household economic action; to develop an account that would correctly describe rural household economic action; and to use these insights for policy formation.

Chayanov's thesis on the peasant economy consists of five major data based theoretical statements.

Peasant farms are family labour farm

Investigation showed that the bulk of peasant farms were strictly (extended) family operations. In Chayanov's terminology, the "family labor farm," which employed no, or very occasionally, non-family labor, was the typical form of peasant enterprise. He argues that standard economics relies on a set of categories and relations such as capital, wages, interest, and rent which mutually determine one another, and if one of the elements of this set is absent, the analytic system predicated on it is not appropriate. From the observation that Russian peasants typically did not employ wage workers, he concludes that standard economic theory does not apply, that it is not possible to describe peasant farmers as being engaged in business (Chayanov 1966).

The ration of consumers to workers determines the intensity of family labour application and total volume of production

The intensity of family labor application (i.e., working days per year per family member) was found to be directly related to the ratio of consumers to workers in the family (measured in adult male equivalents). According to Chayanov, the number of consumers (C) and workers (W) in a peasant household strongly affects its total volume of production (P). The number of consumers influences the minimal output that a household must produce, while the consumer-worker ratio influences the amount each household produces beyond a socially defined "consumption standard." Chayanov noted (1966, 105-6) that this socially defined "consumption standard" varies from community to community but was not explicit about what determines the consumption standard in any particular community. It seems reasonable to assume, however, that in most peasant communities, the "consumption standard" is somewhat higher than the standard of living of the poorest inhabitants.

The Equuilibrium of family demand satisfaction and drudgery of labour determines further the intensity of family labour application

The degree to which peasant workers exert themselves is further determined by the equilibrium of family demand satisfaction and drudgery of labor (Chayanov 1966). The notion of equilibrium of family demand satisfaction and drudgery of labor is the crux of Chayanov's system, and one of his major contributions. The idea is that each additional unit of product is progessively less valued, while each additional unit of labor is progressively more burdensome and loathed. Chayanov states the relationship thus:

. . .the subjective evaluation of the values obtained by this marginal labor will depend on the extent of its marginal utility for the farm family. But since marginal utility falls with growth of the total sum of values that become available to the subject running the farm, there comes a moment at a certain level of rising labor income when the drudgery of the marginal labor expenditure will equal the subjective evaluation of the marginal utility of the sum obtained by this labor.

The output of the work on the labor farm will remain at this point of natural equilibrium, since any further increase in labor expenditure will be subjectively disadvantageous. Thus, any labor farm has a natural limit to its output, determined by the proportions between intensity of annual family labor and degree of satisfaction of its demands (1966:81-82).

Chayanov illustrates the concept with graphs of two curves: one, declining marginal utility for further goods; the other, increasing marginal disutility of additional labor.

The intersection of the two curves defines the equilibrium point.

Peasants will increase labor inputs if they believe they will gain more outputs which can be devoted to investment or consumption, but not past the point where the increase is outweighed by increasing drudgery (Thorner 1966).

Furthermore, the conditions of production, market situation, and location of the farm relative to markets all interact to determine judgments of drudgery or productivity of labour

The conditions of production, market situation, and location of the farm relative to markets all interact to determine judgments of drudgery or productivity of labor. Family size and composition interact with other sources of demand to determine the evaluations of needs (Chayanov 1966). If labor productivity increases and drudgery decreases, there is more product per unit of labor. The more consumers each worker must support, the more significant is each unit of income for consumption (Chayanov 1966). Chayanov examined the variables that affect the positions of the utility and drudgery curves which he hypothesized as motivations for intensity of labor inputs. Anything that affects one of these curves also affects the location of the equilibrium point and therefore the degree of labor intensity.

Assuming that technology and agricultural methods, soil fertility, and other factors such as irrigation works are equal, Chayanov supposes that the assessment of drudgery will be equal for all workers, since their productivity will be equal. Then one major factor that will influence the curve of marginal utility is the ratio of consumers to workers, i.e., the number of consumer units each worker must support.

Chayanov (1966: 108-109) does not expect peasants to continue farming if they can achieve better equilibrium points at higher levels of consumption by not farming.

Economic differentiation among the peasantry, particularly by farm size, was more a measure of relative family size and composition than of differential economic success and positions

Economic differentiation among the peasantry, particularly by farm size, was more a measure of relative family size and composition than of differential economic success, that is, farm size tended to follow a cycle concurrent with the peasant family life cycle, increasing as family members matured into workers and declining as the family aged and disintegrated with the formation of new families. Economic stratification due to these causes was called by Chayanov a case of "demographic differentiation," and he distinguished it from differentiation attributed by Marxists and neoclassicists alike to a persistent and cumulative process of petty capitalist accumulation.

The evidence indicated that the family labour farm could survive, and in some cases prevail, in competition with commercial farm enterprises.

In Chayanov's view these dimensions of peasant economy were inconsistent with the hypothesis that peasants manage their farms so as to maximize profits as rational petty capitalists. He thought that he had found the theoretical key to the peculiarities of peasant economic activity in the fact that the family labor farm did not contract wage payments with its own members. Instead, the family as a whole was a residual claimant to the farm's proceeds. Since wages were indeterminant, he argued, so too, must be profits and economic rent (where the family worked its own land). On the premise that the family could not maximize what it could not measure, Chayanov reasoned that the absence of these capitalist categories precluded profit as the motivation and guide to peasant economic behavior.

Unlike capitalist enterprise, the peasant family worked for a living, not for profit. In other words, peasants are in no way involved in business. To quote Chayanov:

. . .We take the motivation of the peasant's economic activity not as that of an entrepreneur who as a result of investment of his capital receives the difference between gross income and production overheads, but rather as the motivation of the worker on a peculiar piece-rate system which allows him alone to determine the time and intensity of his work. The whole originality of our theory of peasant farm organization is, in essence, included in this modest prerequisite, since all other conclusions and constructions follow in strict logic from this premise and bind all the empirical material into a fairly harmonious system (1966:42).

Chayanov's theory of the peasant economy is simply the formal expression of this conception in what are essentially neoclassical terms: equilibrium of the family labor farm is depicted as the outcome of a subjective balancing of a marginal increment in family consumption against a marginal change in the "drudgery" of family labor application. The degree of "self-exploitation" of family labor was determined, therefore, not by capitalist criteria but by a hedonic calculus.

To consider peasants businessmen and workers is to create a fictional dualism which Chayanov was not willing to accept (1966:42). This follows from the notion that the interests of the employer and the wage worker are so antithetical that they cannot be combined in one person.

It might be argued that Chayanov was only dealing with one part of the large Russian peasantry, that which used no hired labor, and that this confines his analysis to this class of peasants. Chayanov clearly intends his ideas to characterize peasantries in India, China, and "most non-European and many European states" (1966: 1). Thorner obviously has the same idea when he mentions Brazil, Mexico, Turkey, Nigeria, India, and Indonesia (1966); Chayanov intended no geographic limitation.

To recapitulate briefly,

• Peasant household economies use no wages and therefore none of the categories of standard economic theory of capitalist economy apply.

• The annual product minus outlays is the labor product, or net product, which is indivisible into categories of standard economic theory.

• The number of workers, consumers, and other demands on value created (e.g., payments on machinery, interest on loans, repayment of loans, rents, etc.) jointly determine the location of the curve of marginal utility.

• The kinds of tools, natural conditions such as soil fertility, improvements to land, price of products, distance to markets, possibilities of off-farm work, and scheduling conflicts all jointly determine productivity of labor, which in turn determines the position of the curve of drudgery.

• The locations of these two curves relative to each other determine the point of equilibrium at which labor ceases, which in turn determines the volume of the net product or labor product.

Some of the problems of interpreting of Chayanov's work may be consequences of unfortunate terminology. "Exploitation," for instance, has several meanings, as Roseberry (1976) points out, but the technical meaning of the term is simply "value appropriated from someone who produced it by someone who did not." In any of its senses, it is just as contradictory to speak of "self-exploitation" as it is to assert the fiction that peasants are at the same time landowners renting land to themselves, and capitalists hiring their own labor for imputed wages; by self-exploitation, Chayanov simply means level of effort (Chayanov 1966).

The potential of Chayanov's analysis has hardly begun to be developed. He formulated a crude analysis of Russian peasant economics several decades ago, and recent uses of his ideas have been used by scholars like Godelier (1972) and Sahlins (1971). If we take Chayanov's paradigm seriously and develop it from the point where he left it when he was arrested, we can address a series of evolutionary, prehistoric, historic, ethnographic, and economic questions from the perspective of a unified theory.

In Soviet Russia of the 1920s, Chayanov's theory presented a direct challenge to and an unmistakable contradiction of the accepted Marxist conception of the peasantry, and it raised a doctrinal dispute with immediate policy consequences. If, as Chayanov alleged, the mass of peasant farms were not incipient capitalist enterprises, then the peasant economy could not be fitted into Marx's general evolutionary scheme as an antecedent stage of capitalist development. On the contrary, Chayanov's theory lent support to the worst kind of heretical doctrine: that the peasantry might have both social justification and the economic capability to coexist with socialism as it had done with capitalism. If so, the peasantry formed an economic category in and of itself. That Soviet Marxists found Chayanov's theory of the peasant economy static, apologetic, and subjective is no surprise.