CHAPTER 6
THE UNDERDEVELOPMENT PLAYBOOK
modern society depends on prosperity, and land power can be an incredible accelerator of growth and enrichment. That’s just one of the reasons why in the centuries since the beginning of the Great Reshuffle land reallocation has become such a magnet for social planners. As we have seen, it can also create racial hierarchy, bolster traditional social relations in a society, deliver to a party’s political base, and produce resources or destroy them. But land reallocation done wrong also has another power—the power to chill development and retard growth for generations.
In the early 1920s, the recent Russian Revolution loomed large everywhere there was unrest, striking paranoia into the hearts of the powerful and throwing fuel on the fires of popular discontent. Mexico had only just undergone its own decade of revolutionary conflict and change, which stretched from 1910 to 1920 but still left many political questions unanswered. Fired by its own revolutionary changes and the Russian example, Mexican society entered the 1920s roiling with popular demands that land be snatched from wealthy landowners and delivered to the poor. For their part, most landowners continued to retain considerable power and influence. Political instability had become endemic, and conspiracies and assassinations proliferated, while leaders struggled to deliver economic prosperity. This toxic cocktail made politicians contemplate a surprising—and unfortunately, self-defeating—set of reforms.
The governor of the northern Mexican state of Chihuahua, Ignacio Enríquez, faced this dilemma as it played out on the local level. He had allied himself with powerful large landowners in his state. But Mexico’s president, Álvaro Obregón, and his interior secretary, Plutarco Calles, pressured Enríquez to appease local groups of landless peasants by expropriating several sprawling private estates and granting the land communally to them.
Enríquez dragged his feet, then came up with an alternative. He would settle peasants on public lands and sell off select pieces of large private estates to peasants and other interested buyers who could then work the land as autonomous producers.1 He argued that this policy would reactivate the local rural economy, catalyze land markets, attract investment, and spur modernization. Conveniently for him, it would also allow him to retain powerful landowners as local investors and avoid vesting too much autonomy in landless peasants by granting them land in common.
But President Obregón denied Enríquez’s proposal. He viewed his political coalition as too fragile and the revolutionary moment as too volatile to indulge Enríquez’s deviation in favor of the landlords. He also believed that turning the landless peasants into landholders would not just win their support, but put them under his control.2 Interior Secretary Calles was even more forthright. He told Enríquez in a conversation that creating communal farming villages for the peasants would be “the best method of controlling these people by merely telling them: If you want land you have to support the government; if you are not with the government, you won’t get land.”3
A savvy political operator, Calles managed to leverage the promise of land power to win the presidency in 1924. Once he took office, the machinery of land reallocation kicked into gear across the country. For the next seven decades, Mexico’s authoritarian ruling political party, the Institutional Revolutionary Party (known as the PRI), stripped large landowners of their property and social position in much of the countryside and redistributed privately held land in a communal fashion to villages called ejidos, which were worked by the land beneficiaries.4 It was the Western Hemisphere’s largest episode of collective land reform.
Before long, however, the critical error of Mexican land redistribution became unmistakable: the PRI had prioritized political power over economics. After some initial success, the agricultural sector lurched. Land beneficiaries reeled in the face of a dizzying array of restrictions on their land. They could not sell or rent it, could not mortgage it, could not idle it for long periods, and did not even have property titles. Banks would not loan to them. Many could not get the machinery or even the seeds they needed to farm. The land markets seized up.
If this outcome was not what Mexico’s leadership had desired, it was nevertheless a predictable consequence of the system they had designed. Peasants clamored for support for their struggling farming villages, and the PRI delivered it to them, but in exchange the party demanded political fealty and crafted a system that left the ejidatarios (the land beneficiaries who worked the ejidos) helpless to productively use the land they had been granted. The PRI won the political control it so dearly desired, helping to underpin what Nobel laureate Mario Vargas Llosa famously dubbed “the perfect dictatorship.” But it came at a steep cost: Mexico’s collective reform scarred the economy deeply and left a legacy of economic dependence, emigration, and corruption that the country still struggles with today.
As for the former governor of Chihuahua who had resisted the ejidos, Ignacio Enríquez, he moved into public opposition of the government after leaving his post in the mid-1920s and sharply criticized the government’s collective land reform. He argued that the government had “turned the agrarian problem into a weapon in the hands of political candidates”: “Politicians prefer to preserve a state of agitation and uncertainty among ejidatarios, with respect to the possession of their parcels, in order to make them submissive to the government and to use them as weapons in their electoral battles.”5 This troubling formula long outlived Enríquez.
For all of the problems that land reallocation can bring, it is often taken for granted that it is a reliable way of achieving economic growth. Many development economists regard land reallocation as a silver bullet in the arsenal of development. Stagnation can set in when large landholders rest on their laurels and resist change. Meanwhile, the landless have strong incentives to make the most of any land they are granted. Putting a ready workforce together with fertile tracts of land can both grow the economic pie and divide it more evenly than plantation farming or a contract farming system run by absentee landlords. Places such as Taiwan, South Korea, Japan, and the Indian states of West Bengal and Kerala have followed this path to success.
But the realities of redistributing land are complex, and land reallocation is far more likely to stall economic development than to speed it up. Few of us think very often about the fact that owning land rests on a bureaucracy devoted to keeping track of who owns which tract, and a set of laws and courts and state agents devoted to protecting ownership rights to the land. Land power isn’t just an idea—it is political, and if a society’s protection of property rights is weak, or if its leaders hope to use it to reward their supporters and punish dissent, and thereby bolster their control over society, land ownership rights can be trumped by politics. We’ve seen how settler reforms can entrench racial hierarchy, gendered land reforms can entrench sexism, and extractive and unplanned land use can entrench environmental destruction. Land reallocation systems built around political carrots and sticks can be just as malignant, dooming a country to stagnation.
The tragic outcomes of the political reshuffling of land power are on clear display in the experiences of land reallocation in Mexico as well as in Venezuela, and dozens of other countries, such as China, Russia, and Zimbabwe, have fallen victim to similar problems. As we will see, the desire to maintain and consolidate political power drove governments in Mexico and Venezuela to reallocate land in economically distortionary ways and to withhold property rights from land beneficiaries so that they were easier to manipulate politically. We will also see that while Italy’s land reallocation was far less disastrous than Mexico’s or Venezuela’s, it nevertheless illustrates how politics and mismanagement can tie up new landholders in long-term loans and a politicized bureaucracy. The way reallocation played out in Italy created a stagnant rural underclass and fueled a bloated political patronage machine as the Italian and broader European economies transformed and became more competitive.
Land power in the hands of politicians can create growth or restrain it. The economic power of land and its importance to millions means that choices over its allocation and management can set countries on generations-long development trajectories. All too often it is used to entrench political power rather than to unleash economic dynamism across society.
MEXICO SPRINGS A DEVELOPMENT TRAP
Mexico at the dawn of the twentieth century was a poor country plagued by stark inequality. From a colonial era defined by the dispossession of indigenous communities, it had inherited a lopsided distribution of land that favored the descendants of a small number of colonial administrators and Spanish colonists. These elites amassed large estates and the power to levy taxes and extract labor from indigenous communities that lived within their appropriated territory. The long dictatorship of Porfirio Díaz that spanned the turn of the twentieth century allowed elites to grab even more land.6 Díaz kick-started a drive toward economic expansion through resource extraction, infrastructure development, and agro-exports, but the upshot was intensified land concentration, forced labor, and worsening subjugation of the indigenous groups that remained.
On the eve of the Mexican Revolution in 1910, over 75 percent of the population lived in rural areas.7 Less than 11,000 owners of large estates, known as haciendas, controlled nearly 60 percent of the national territory and the lion’s share of the fertile and irrigated land. A single landowner controlled an estate as large as the country of Costa Rica. Half the rural population worked as resident laborers on these large estates and smaller landholdings as debt peons who had access to a small plot of land but owed the landowner the bulk of their labor in exchange. Many more were landless. And rural populations at the fringes of the hacienda economy eked out a living at the agricultural periphery on fragmented lands of poor quality.8
This was tinder for revolution. A series of regional rebellions broke out as Díaz was forced from office in 1911, and a charismatic peasant revolutionary named Emiliano Zapata took up arms in southern Mexico. Zapata amassed a formidable following and played a foundational role in shaping the outcome of the Mexican Revolution. His demand was both simple and revolutionary: return the land to the people.
Assassinated in 1919, Zapata would not live to see the consequences of his appeal, but the centerpiece of land reallocation was Article 27 of Mexico’s 1917 constitution.9 It granted the government the authority to expropriate and reallocate large private landholdings from their owners to communities that had little or no land access. It would become the engine of a reshuffle that would level wealth and radically reallocate the country’s land into the 1990s.
But in the early days, land reallocation proceeded in fits and starts. There was considerable political instability and regionalized factional fighting, as well as a debate over the form that land allocation would take, as illustrated by the debate between Ignacio Enríquez on the one hand and Presidents Obregón and Calles on the other. Matters coalesced toward the end of the 1920s alongside the formation of Mexico’s dominant party, the PRI.
The government settled on a collective reform that granted large private landholdings to villages as a whole in the communal arrangement known as the ejido. Ejidos originated in a prerevolution model of indigenous rural communities rooted in self-government, local autonomy, and inalienable access to land.10 This return to a familiar form was appealing to landless people sick of having their land taken away by the powerful. Many peasants believed that collective landholding in the ejido style would act as a safeguard against a possible return to land dispossession.
PRI leaders supported this model while also modifying it to their political advantage.11 The traditional mode of ejido land distribution had entailed individual distribution within collectives. The PRI removed the individual claim to ownership, making the grants wholly collective in nature. They vested the government rather than communities with the responsibility of protecting ejido rights.12 Finally, the PRI created a formidable and hierarchical bureaucratic structure to link ejidos and their members to the party.
In the new ejido system, groups of peasants had to petition for land grants from the government. When they were successful, they acquired the land collectively as villages and could use and work it individually or collectively as the village decided. But their individual rights to land were extremely limited. They did not receive title to their land or full property rights as landowners. Peasants were not permitted to leave their plots idle for more than two consecutive years, and they were not allowed to rent individualized plots. Neither villages nor individual peasants could sell the land or use it as collateral to access commercial loans.
The land power remained in the hands of the PRI, which spent most of the twentieth century seizing land from large landowners without compensation and granting it to Mexico’s peasants in this fashion. The reform swallowed up huge swaths of the countryside. It eventually touched nearly half of the country’s entire land area and most of its agricultural land.13
Land held as ejidos in Mexico. (Courtesy of the author.)
in its first few decades, the reform dramatically reduced land inequality.14 In the end, however, the political utility of Mexico’s collective reform came to outweigh its economic benefits. Although the PRI had a founding vision grounded in social justice that emerged from the revolution, its control over land and peasants through land allocation became a central tool for sustaining its political networks, ensuring stability, and churning out votes in sham elections.15
Land reallocation rose during election years and was greater in places where the threat of rural unrest was most elevated.16 The government purposely withheld property rights from the beneficiaries, and even further distorted them, once it realized that this strategy had the politically useful effect of generating greater leverage over land beneficiaries.17 Land beneficiaries learned that they had to toe the party line to gain assistance. If they resisted, they had to forgo benefits and face a life riddled with the troubles that stemmed from weak property rights and heavy-handed government bureaucracy.
The economic consequences of this distorted system followed a predictable pattern. Poor peasants who took control of land quickly set to farming it with a focus on immediate production. Because the land seized from large landholders had often been neglected, these bursts of productivity manifested in localized waves of short-term economic growth. These efforts drove improvements in economic equality for a brief period after the revolution.18 But Mexico’s development trajectory eventually came to sag under the weight of its politicized version of collective land reform. Problems and stagnation among the growing masses of longtime beneficiaries came to outweigh the fleeting gains of new waves of beneficiaries. The deep inefficiencies and distortions inherent in the system spilled over to the broader economy and brought a return to inequality.
The PRI’s decision to imbue the ejidos with weak property rights was central to the reform’s economic failure. Stifling restrictions on land sales, leasing, and mortgaging smothered rural land markets. Banks would not touch ejidos, starving them of access to private credit. Peasants had nowhere to turn but the government for subsidies and credits for seeds, insurance, fertilizer, and other basic necessities for farming. The government proliferated federal agencies to grant agricultural credits, purchase harvests, distribute fertilizer, and settle land use conflicts and boundary disputes.19 But the price of all of this was political control. Agencies could threaten to deny communities the basic necessities for farming if they failed to support the party at election times.
Decreasing state investment over time compounded peasant dependence on the government and production inefficiency.20 Declining access to credit meant that most ejidos were unable to afford new farming technologies as they became available.21 The lack of investment caused productivity to stagnate and the broader economy to underperform.
Ejidos also suffered from a tragedy of the commons. Uncertainty over property rights and poverty fueled people to overuse commonly held community resources and underinvest in community infrastructure. Overgrazing, deforestation, and soil degradation were widespread, placing stress on core resources.22 The overexploitation of land within ejidos deepened as rural populations grew, driving down yields.
The government tried to breathe new life into agriculture by handing out subsidized fertilizers and pesticides, including a tsunami of the toxic chemical fertilizer DDT. This decision had some of its intended consequences for production in the short term. But it widely polluted watersheds, degraded soils, and unleashed a wave of health hazards, from outright poisoning among farming families to physical and mental developmental problems in babies.23
Peasant communities bridled under the thumb of government control and property restrictions as well as their damaging consequences. As populations grew and the first generation born into the newly formed ejidos came of age, there was a great deal of conflict within households, between households, and against ejido bosses who had been bought off by the PRI, generating a push for changing the system to improve land access and secure greater protections.24 Some peasants organized to demand greater legal security to their landholdings.25 Several business interest groups similarly advocated for clearer and more secure property rights for ejidos and their members.26 Many more peasants sought to skirt property rights restrictions and turned to informally renting or selling their plots despite the risks.27
Meanwhile, cognizant of the economic problems they were creating among ejidos and seeking to limit the damage, the government ring-fenced certain private farms by creating a parallel, secure property rights track in the countryside. It began issuing private landowners formal guarantees against expropriation so that agricultural production as a whole would not crater. Private farms enjoyed increasing access to credit and greater productivity, while ejidos foundered.28
The government also invested heavily in industrialization through business subsidies, tariffs, and urban infrastructure as it deprioritized the countryside.29 Growth in industry and private-sector agriculture helped to fuel robust overall economic growth on a national scale from the 1940s through the 1970s. This growth period became known as the Mexican economic miracle.
But as Mexico’s collective reform advanced throughout the twentieth century, inefficiencies in agriculture spilled over into the broader economy. Facing marginal profits and precarious land security, many land beneficiary families could not afford for younger generations to leave the farm. This stunted migration into urban areas at a time when cities provided the most attractive opportunities for upward mobility.30 Meanwhile, some families took a risk and encouraged grown children to emigrate, at least while the head of household held on to rights within the ejido.31
By the 1960s, economic inequality between urban and rural areas had spiked to levels not seen since before the Mexican Revolution.32 The collective reform had become an Achilles’ heel for the broader economy. Mexican states where land reform had gone furthest suffered lower rates of economic growth over the course of decades.33
The death spiral of Mexican agriculture came into sharp focus as a series of debt and financial crises sparked external intervention in the 1980s and 1990s. Mexico became a repeat customer of the International Monetary Fund (IMF) and the World Bank. In exchange, these international agencies demanded structural economic reforms. Mexico also entered into negotiations for the North American Free Trade Agreement (NAFTA) in the early 1990s, which brought pressure for economic liberalization and raised the specter of agricultural competition with a flood of food imports from the United States and Canada.
One critical reform entailed extending and strengthening rural property rights. As the PRI scrambled to patch up glaring economic problems and stoke growth, it ended its collective reform and worked with the World Bank on a plan to finally grant land beneficiaries property rights to their land. The vast majority of ejidos took them up on the offer by the mid-2000s. The government did not ask ejidos to break up, though it gave them that option. Most ejidos elected layered property rights that gave members separate titles to common resources, individually farmed land, and houses. Ejido members also won rights to sell land within ejidos and lease land within ejidos or to outside members.
Decades of mismanagement in agriculture could not be reversed overnight. Mexico is still grappling with the economic distortions of its collective reform. But there are signs that reforms to the core problems, including inadequate property rights, have started to pay off. Agricultural productivity has increased and poverty has declined considerably among rural families. Many of them inherited reform land and continue to live within ejidos.34 But just as Mexico was winding down its program of land reallocation that prioritized political obedience over individual welfare, Venezuela was ramping up its own version.
VENEZUELA’S CRASH LANDING
On December 10, 2001, at the historic battlefield of Santa Inés in the sweltering southern Venezuelan state of Barinas, President Hugo Chávez convened a crowd of government functionaries and farmers. The date was laden with symbolism. On that same day in 1859, the famous general and advocate for peasant rights Ezequiel Zamora had triumphed over the powerful conservative landed oligarchy in a battle at Santa Inés. Chávez had returned to the battlefield to symbolically take up Zamora’s mantle in celebration of the newly passed Law of Land and Agrarian Development, which promised to reallocate large and underproductive private landholdings to the poor.
In characteristic fashion, Chávez’s rhetoric soared: “The revolution goes to the counterattack, against the reaction of the oligarchy that threatens, conspires, and undermines it,” he declared. “From Santa Inés de Barinas and shouting ‘Long Live Zamora!,’ beginning today, I declare the revolutionary Law of Land and Agrarian Development to be in effect.”35
In stark contrast to the pomp and celebration in Barinas, the rest of the country had ground to a halt. Venezuela’s largest business association had joined with a major workers’ union, several political parties, and a mass of everyday people to stage rallies, massive street marches, and strikes across Venezuela. The timing was not coincidental. The general strike was a response to a sweeping package of laws passed by presidential decree weeks earlier, with Chávez’s Land Law as one of its central and most controversial elements.36
Protesters sought to repeal the new laws. Many wanted Chávez sacked. The business sector and media ramped up pressure on Chávez in the subsequent months with unrelenting criticism and an ongoing series of demonstrations and strikes. A raucous and unruly set of demonstrations and counterdemonstrations culminated in a coup in April 2002. The military turned on Chávez and ferried him to a Caribbean island off the coast of Venezuela. They installed the strike leader and head of the national business association as president.
But Chávez had the last laugh. Machinations among the presidential guard returned him to the national palace just two days later, and his supporters flooded the streets to give him a hero’s welcome back. Now aware of what his recalcitrant opposition was capable of, Chávez played political hardball in the following years. When the Supreme Tribunal of Justice, Venezuela’s supreme court, struck down core elements of the Land Law in November 2002, Chávez packed the court with his allies and passed an amended version of the law.
Much like the land reallocation policies of Mexico decades earlier, the Venezuelan law proved to be a political boon for Chávez and his handpicked successor, Nicolás Maduro. It served as a partisan weapon to dispense patronage to government allies and punish political opponents. The government used the law to harass and cut down prominent political challengers by seizing their assets, to deny benefits to opposition voters, and to churn out supportive votes by selectively doling out land.
Yet much in line with Mexico’s experience, the economy paid a steep price for land reallocation in Venezuela that prioritized political incentives above all else. Venezuela’s Land Law destroyed property rights. Investment in land and agricultural production dropped, plunging the country into a devastating hunger crisis as the broader economy sharply contracted in the 2010s. The country has now traced one of the biggest economic collapses during peacetime in recorded history.
from a purely economic perspective, Venezuela at the turn of the twenty-first century stands out as a somewhat unusual country to opt for a massive program of land reallocation. The Great Reshuffle had already come to Venezuela, with a round of land reallocation spanning from 1960 through the 1980s. Some 20 million acres of land had changed hands. Three-fourths of this was state-owned land doled out as a settler-style reform, and the remainder was privately owned land granted to rural workers and farmers through a tiller-style reform.37 By the early 1990s, 85 percent of the country’s population lived in urban areas. Oil production made up around half of the government’s revenue and the lion’s share of the nation’s export revenue.38 It was hardly a country teeming with oppressed or restive landless workers, like Russia in the 1910s, Mexico in the 1920s, or China in the 1940s.
But that didn’t matter. The political backdrop was ripe for populist land reshuffling. A major economic crisis hammered the country in the late 1980s and early 1990s. Venezuela’s political party system crumbled after more than three decades of stability. The government weathered two coup attempts in 1992 alone, one of them spearheaded by a young and charismatic military officer by the name of Hugo Chávez. He landed in jail but walked free several years later. After winning the presidency in 1999 on an anti-corruption and anti-poverty populist platform, Chávez quickly began dismantling the country’s checks and balances. Chávez forged a new constitution, strengthened the presidency, and eliminated the upper house of the legislature.
Empowered by these institutional reforms, Chávez next set out to destroy his political rivals. These rivals included Venezuela’s media, the business sector, and large landowners. The first major salvo was the package of decree laws passed in late 2001 with the Law of Land and Agrarian Development as its cornerstone. In just a few years, the Land Law would transform the country into an economic basket case.
Early legal battles limited the initial implementation of the Land Law. Land grants came strictly from state-owned land in the first several years. The reform proceeded as a blend of a settler reform and a simple property rights reform that legalized existing informal land settlements on state-owned land.39
But as the government further consolidated its power, Chávez succeeded in pushing through an amended, more muscular version of the law in 2005. The government called it a “war to the death against large landowners.” Private landowners had nowhere to hide. The law redefined property rights across the country, demanding that landowners trace an uninterrupted lineage of land titles to their property back to 1848 in order to support a valid legal claim to their land and protect against government expropriation. Shoddy recordkeeping, illegal land grabs, and a commonplace historical practice of selling land without keeping track of the title relegated over 90 percent of landowners to informal or insecure status overnight.40
The law also mandated that property serve a vaguely defined social function. It flagged large and underproductive properties for potential expropriation regardless of whether landowners could meet the rigid new standards for proving the legality of their land titles.41
The implementation of the law could only be described as Kafkaesque. The government did not have complete land registers or any way to estimate adequate productivity, so they called on people to take enforcement into their own hands. The government empowered any Venezuelan citizen to apply to provisionally occupy private property that they suspected to be incompliant with the new law. This set off an epidemic of land squatting across the country.42
Flying blind, government bureaucrats came up with crude rules of thumb to try to make sense of the law’s provisions. In doing so, they generated perplexing catch-22s. For instance, they told cattle ranchers in southern plains states who had fewer than one head of cattle per hectare of land (about 2.5 acres) to increase the size of their herds, partition their land and sell parts of it, or face expropriation. The government then turned around and commenced expropriating ranches with more than one head of cattle per hectare on the grounds that these ranchers were mishandling natural land resources by depleting the soil through overgrazing. In another example, the government mandated that large corn producers sell their products at below production cost in order to keep popular corn-based food products cheap. Those that complied went broke; those that did not faced expropriation.43
The land that was reallocated was granted inconsistently. Bits and pieces of thousands of private properties were granted to individual tillers, typically on a provisional basis without circling back to confer clear and definitive land titles. At the same time, the government expropriated a host of large landowners, many of them political opponents, and converted their estates into collective or cooperative farms. Collective farms are typically run by local rural laborers in collaboration with the state. Cooperative farms are formed by groups of landless applicants who apply to access and work land as a cooperative. Millions of acres of formerly privately owned land have transferred hands through these varied channels.44
as in mexico, Venezuela’s blended reform was a political triumph even if it was an economic nightmare. The system created an environment of deliberate legal vulnerability, enabling the government to attack political opponents who spoke out and to scare others into submission. Perhaps the most high-profile case was the National Guard’s occupation and seizure of the property of Manuel Rosales, a former governor who stood as the chief opposition candidate to Chávez in the 2006 presidential election. Rosales was soon after hit with trumped-up corruption charges. He fled to Peru before eventually returning to Venezuela.
The reform also created an army of politically reliable land beneficiaries. Beneficiaries were screened and received land without solid property rights.45 The government used its largesse and the legal vulnerability of beneficiaries to mobilize support in increasingly unfair elections that kept first Chávez and then Maduro in power for decades.
This political win came at an exorbitant cost. Pervasive property rights insecurity and politicized land seizures drove widespread disinvestment in rural and urban areas alike. Many established farms and agribusinesses scaled back on their plans or entirely shut down. Beneficiaries were similarly wary of investment as a result of property insecurity. Agricultural production suffered major disruptions against these headwinds. Meanwhile, urban real estate developers and large property owners also faced increasing property rights insecurity as the government expropriated businesses and granted cover to urban squatters in residential and commercial real estate.
The government was able to paper over many of these problems in the 2000s as a massive oil boom filled state coffers and fueled a government spending spree. It spent heavily on subsidizing basic food staples and running or supporting farms that had been seized from private landowners. Spending on these and other policies lifted millions of people out of poverty and considerably reduced inequality. But the economic fundamentals were rotten. The economy cratered when sky-high oil prices went bust in the 2010s.46
Draconian exchange rate and import controls sparked hyperinflation and widespread food shortages, given that domestic agricultural production was woefully insufficient. Debt ballooned and creditors clamored to be repaid. The health-care system collapsed and hunger spread. By the late 2010s, one-third of the population was skipping meals daily, in many cases to help feed their children. The poverty rate spiked to above 80 percent, and economic output cratered by three-quarters.47 The decline drove over 7 million people to flee the country.48 For all practical purposes, the country dove into a tailspin, and it will take generations for it to recover.
Venezuela revolutionized who holds the land but neglected everything else about the process in the meantime. Simply by creating a functional bureaucracy to carefully track land and assess need, it could have won political support, enhanced equality, and fueled economic growth in the process. But the inability to put petty political calculations aside is all too often the downfall of revolutions in who holds the land.
POSTWAR ITALY AND THE WOUNDS OF REFORM
Even countries that avoid the extremes that Mexico and Venezuela took can still end up in the development trap. The lure of political advantage has derailed the positive transformative potential of land power and ensnared economies all over the world.
In late October 1949, as Mexico was still in the midst of its radical land reallocation and Venezuela was in the throes of a stifling episode of military dictatorship, a group of some 14,000 peasants from villages in the southern Italian region of Calabria mobilized to settle scores with a local landowner. Whole villages of peasants, including men, women, and children, were on the march. Some carried Communist banners next to portraits of the patron saint of their village. Their target was the Berlingieri family in the town of Melissa.49
The peasants laid claim to land that was part of a Berlingieri estate called Fragalà, which had been set aside for the peasants’ use in an 1811 grant under Napoleonic legislation. But following a common playbook in the region, the Berlingieri family had gradually pushed the peasants off the land and taken it as their own. When local peasants briefly occupied Fragalà in 1946–1947, the Berlingieri family offered them a smaller piece of the property, but the peasants had refused to accept it. They were again pushed off the estate.
As the procession arrived at the disputed land, they staked it out, divided it into portions, and immediately set about plowing and sowing it. A set of local deputies affiliated with the ruling Christian Democracy (Democrazia Cristiana) party quickly traveled to Rome to summon police intervention. Local police and units from neighboring regions flooded into the area and began arresting peasants and union leaders, which only inflamed tensions. The movement grew. Rome then sent in the riot police, who spent the night at the home of the Berlingieri family when they first arrived. The next morning, the riot police tried to expel the peasants from Fragalà, but the peasants again resisted. The police fired into the crowd.
Salvatore Filosa, one of the peasants in the crowd, recalled the horror of the event: “The marshal fired a pistol shot, and as if was an agreed-upon signal, the police charged us with machine guns, hand grenades, and truncheons. The crowd fled in chaos and in a few seconds there was smoke everywhere. Most of the police fired from positions above us. Among the crowd there was confusion: some ran, others fell to the ground wounded, and others screamed.”50 Three people were killed and another fifteen were wounded. The police fled the scene back to the Berlingieris’ home without even providing aid to the wounded.
The police brutality at Melissa set off a shock wave in the country. It quickly became national news. And it fueled a wave of rural unrest across southern Italy that lasted into early 1950 and resulted in more peasant killings and arrests at the hands of the police. All the while, the Communist Party was working behind the scenes, assisting villagers in organizing more land occupations and demonstrations.
The ruling Christian Democrats had their backs against a wall. Although they counted many important northern and southern landowners among their supporters, growing social and political grievances in the countryside threatened national political stability and their own skins. The potential of the ongoing unrest to benefit their political archenemy, the Communists, posed the greatest threat of all. If the Communists managed to forge an alliance between rural and urban workers, they might seriously contest the Christian Democrats’ grip on power. The Christian Democrats were determined not to lose the fight.
The most obvious solution was to give the people some version of what they were asking for: land reallocation. In 1950, the Christian Democrats navigated resistance from within their own party and passed a momentous series of three land laws that would transform the Italian countryside and mark its economy for decades. The reform undercut the appeal of the Communists and helped the Christian Democrats continue to dominate Italy’s political landscape for nearly forty years.
But the reform’s economic legacy was far more mixed. While the country’s economy took off with urbanization and industrialization, the areas targeted for land reallocation slowly fell further and further behind. The peasants at Melissa got their land. But many of their children and grandchildren would not take part in Italy’s economic transformation. The outcome had similarities to what transpired in Mexico and Venezuela, but Italy’s particular political backdrop provided a twist.
italy between the two world wars had been a heavily agricultural and poor country much like its southern European counterparts of Spain and Portugal. The country had only unified in 1871 as Italy’s more economically advanced northern Piedmont region finished a decades-long campaign to gobble up rival northern provinces, the economically backward southern Kingdom of the Two Sicilies, and the papal states centered in Rome. Large portions of the south were plagued by malaria.
Slightly over half of the labor force worked in agriculture in the mid-1930s, and millions of rural workers toiled as wage laborers on large estates. This scenario predominated not only in southern Italy, where large estates dominated the economy, but also in pockets of central and even northern Italy. The fascist dictator Benito Mussolini had the support of large landowners and did little to alleviate the problem despite his efforts to open up more land for cultivation by draining swampland areas. The situation became untenable as population growth further strained rural poverty. Many workers emigrated to the United States, parts of Latin America, and elsewhere.
This toxic atmosphere exploded in the aftermath of World War II when soldiers returned home to find their meager lot unimproved. The countryside roiled with discontent. A wave of rural unrest and occupations of large estates shook the country from 1944 to 1947 and fueled the meteoric rise of the Italian Communist Party (Partito Comunista Italiano). The Communists won a growing following as they organized workers to occupy and farm large, often uncultivated estates.
After a brief lull, the massacre of peasants at Melissa in 1949 sparked a massive new wave of unrest. The Christian Democrats that governed the country had to respond. If they took no action, social and political grievances in the countryside could boil over and threaten national political stability. The Communists loomed particularly large as a political threat. The Christian Democrats were not the only ones worried. The United States and other Allied governments thought that large land ownership in Italy was a destabilizing force that had underpinned support for fascism and then served as a rallying cry for a snowballing workers’ movement.51
Their solution was a tiller reform. Politics played in its fashioning. If done right, the tiller reform could undercut the appeal of the Communists and bolster the Christian Democrats, restore stability, and even stem a potential flood of migrants to the industrializing north, where the Christian Democrats had their initial stronghold. And it could be part of the broader restructuring of the Italian economy. There was precedent in other tiller reforms, such as the Irish reform of more than a half century prior. And tiller reforms were in the air: the United States was simultaneously helping to advise and fund several major tiller reforms in East Asia.
A trio of land laws in 1950 targeted eight different geographic areas for reshuffling land ownership.52 These areas spanned the country and covered one-third of its territory but focused mainly on southern and central Italy. The aim was to expropriate large and underproductive estates and turn them over to rural workers while breaking them up into individual family plots. The laws exempted small, productive farms. Unlike in Mexico or Venezuela, in Italy the government gained a degree of buy-in from landowners, core to the Christian Democrat coalition, by compensating them for their land. They were allowed to retain up to one-third of their holdings if they used the land in accordance with government stipulations regarding production and labor laws.53
The Ministry of Agriculture generously funded the reform. It spent the equivalent of around $10 billion in today’s US dollars in a little over a decade, or around $100,000 per family.54 A government development fund known as the Cassa per il Mezzogiorno (Fund for the South) complemented this effort in order to accelerate economic and rural development in the region. The United States also supported the reform through Marshall Plan funds.55
Rural workers lined up to receive land. Over three-quarters of them were landless farmworkers or tenants, mostly from the same local towns where land was targeted for expropriation.56 Successful applicants to Italy’s tiller reform received either a small plot of land, about twelve to fifteen acres in size on average, ostensibly intended to be a self-sufficient farm, or a smaller plot intended to merely supplement income from other sources.57 The demand for land far outpaced its availability.
Regional reform boards quickly set to work on implementing the laws and reallocated most land within five years.58 They ultimately reallocated nearly 2 million acres of land to some 115,000 families. Slightly more than half of these families received just a tiny plot of land to supplement their income; less than half received enough land for a full farm.59
Given the opportunity to pick and choose among land applicants, the government reform boards became patronage juggernauts that worked to build a loyal political clientele for the Christian Democrats.60 The government also required beneficiaries to join a cooperative association to assist with tasks such as accessing credit and insurance and selling products. The tight control over the process gave the Christian Democrats the ability to wield powerful threats against crossing them and to use precious resources as rewards for supporters in order to pump their political support. Politics once again prevailed.
In contrast to Mexico’s collective reform and Venezuela’s blended reform, Italy’s land beneficiaries received clearly delineated, individual plots with land titles. But they did face some consequential property rights restrictions. Beneficiaries purchased plots with thirty-year government loans and could not sell them until they had paid off their debts. Nor could they clear the debt in advance. These features of the reform helped to stem a rising and worrisome tide of internal immigration to Italy’s northern industrial zones. And they kept land beneficiaries in limbo, tethered to the reform boards and the looming shadow of the Christian Democrats for decades.
The problems were predictable and stacked up over time. In part due to the Christian Democrats’ attempts to build ties with as many farmers as possible to increase their support and deflate unrest, land grants turned out to be too small in size to enable a single family to support itself. Spending on infrastructure and subsidized credit was uneven, and many of the poorest farmers received the least support. And the requirement to hold the land for thirty years tied people to the land. Though many viewed land and agriculture as a “safe bet” in an otherwise risky job market, agriculture simply was not very lucrative. The inability to change course made it harder for the land’s beneficiaries to participate in more dynamic parts of the economy. This problem continued into the next generation, as beneficiaries typically passed their land on to firstborn sons, while other family members had few other options than to leave.
Italy’s tiller reform dragged down local development even as the broader economy rapidly transformed in subsequent decades. The country has industrialized and urbanized in the time since its tiller reform, especially in the north, and it became far more prosperous as it became tethered to the European Union. But prosperity has been uneven. A series of economically stagnant and poorer rural areas have lagged behind the country as a whole. Many of these areas conspicuously map onto the areas associated with Italy’s land reshuffle.
The reform in Calabria and the area around Melissa is a microcosm of what went wrong. There the reform ended in economic failure. And it fell short of the expectations held by peasants like the ones who had marched on Melissa in 1949.
The Calabria reform board reallocated about 15 percent of the land in its zone, mostly in interior areas where soils were poor and there was insufficient water for farming. Many influential local landowners evaded reform and helped to craft land policy. The backdrop of social unrest encouraged the board to spread land grants widely to reduce social tension.61 “Self-sufficient” farm plots averaged just over twelve acres in size, hardly enough to support a family given the poor quality of the land. The board spent considerable sums on housing and roads but far less on irrigation, especially in places that desperately needed it, including Melissa.
The reform board initially doled out generous credits to farmers, but then tightened credit in 1957–1958. By this time, the Christian Democrats had clearly established their ability to keep the Communists at bay. Beneficiaries foundered throughout the region. Even so, 90 percent of them retained their farms as of 1969.62 Beneficiaries stuck to the land and gained skills in independent farming as the broader Italian economy passed them by. Family members who fared better either emigrated or worked in the local building industry in Cosenza. Melissa was destined to be forgotten in the new Italy.
Calabria’s reform took place against its own locally specific backdrop of social conflict, powerful landowners, and a half-hearted reform board. But it is not an isolated case. The reform backfired even in more promising areas. A quintessential example is the Maremma region on Italy’s central western coast.63 Here, a more dedicated and thorough reform board reallocated considerable land without nearly as much social tension as in Calabria. But even in Maremma, areas that saw reallocation experienced less development in subsequent years than neighboring areas that did not, and even today they suffer from higher rates of poverty.64
Most of the beneficiaries in the Maremma region could only earn enough to survive rather than to thrive, owing to small farm sizes and the steep learning curve in independent farming.65 Because initial land beneficiaries had to repay their long-term loans before they would have full land ownership, the overwhelming majority remained where their land was located.66 Those who remain and work locally face fewer and lower-paying job opportunities than people who have been willing to work elsewhere and can access broader regional job markets with more diverse employment and educational opportunities. And with farms too small to be subdivided, the inability to inherit drains young talent and innovation from these locales, skewing demographics toward a higher ratio of older to younger generations than in areas just outside of the zone.67 These were among the slow-motion series of economic and demographic wounds inflicted by Italy’s reform that dragged down local development for generations. And much of it was due to the narrow political calculations of the reform’s architects.
As the Italian economy modernized and grew after World War II, land reallocation modified the local effects of development and the reaction to the major northern economic pull by adding significant drag. The poor economic performance of Maremma, Calabria, and other reform zones in Italy does not mean, however, that Italy as a whole would have been better off without its tiller reform. Many expropriated landowners used their compensation to invest in industrial expansion.68 And the reform spurred demand for building materials and agricultural machinery.69 Compared with Mexico or Venezuela, where land reallocation clearly came to undercut the economy as a whole, it is harder to know whether Italy’s reform contributed overall to national development. What is more certain is that it left behind precisely the areas it aimed to uplift.
As with Mexico and Venezuela, land power in the hands of politicians was where the Italian experiment went awry. The Christian Democrats constructed and used Italy’s tiller reform in considerable part to cement a political monopoly and bolster the existing political system. Indeed, as the party landscape shifted over decades in Italy, the Christian Democrats were able to lean more heavily on their ties in southern land reform zones to remain the country’s most powerful party into the 1990s. Land’s power to shape national politics and derail growth in this way is precisely why getting land reshuffles right is so important. Otherwise, a society will pay the consequences for decades.
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countries that want to use land for development today, or those trying to redress problems from prior programs, have to thread a difficult needle to master the political imperatives while not sacrificing the economy. The power in land provides an abundance of distracting political temptations during land reallocation. Leaders in Mexico, Venezuela, and Italy all fell prey to these temptations, though Italian leaders were sobered to a degree by rising concerns over communism and restricted by the uncompromising geopolitical environment in Europe in the aftermath of World War II. They managed to generate plenty of wiggle room for politics, but might have gone even further without any guardrails. Mexico and Venezuela paid an especially dear economic price for using land for cynical political gain.
Taming political distractions is not enough in itself to ensure that land reallocation works for development. Beneficiaries must be given enough land and consistent support for at least a decade until they are thriving on their own. In an increasingly populated world with shrinking frontiers and government turnover, that is no small feat. And countries have to work with markets and the current geopolitical environment rather than against it. That means paying attention to property rights and market incentives. Some countries are still learning this very basic lesson.
But there are more lessons to learn.
We’ve seen how land reallocation can encourage racial hierarchy, patriarchy, environmental degradation, and economic stagnation. These Four Horsemen of modern social maladies are all inextricably tied to land. But once you see, and can follow, the long history of land, power, and the making of society, you also begin to see that land itself can play a role in solutions. Land can be shared with women to improve gender equity. It can be distributed to marginalized communities that lost it or that were never given an opportunity to access it. Land can be registered and regulated by the state in ways that benefit its owners and society to a greater degree. It can be restored and rejuvenated in order to repair damaged ecosystems and capture more carbon. And it can serve as the symbolic referent for reparations where populations have been denied land access and will not reasonably return to owning and managing it at a large scale.
Just as land reshuffles can doom a society, they can also invert the problems inherited from the last reshuffle. In a world where appeals for reparations and revolutionary change are once again beginning to be heard, there are lessons that we can learn about how to respond in order to avoid the worst outcomes of mishandled land reallocation and instead create a more just and sustainable world.