Home > 2016 > Land Acquisition and Accumulation of Finance Capital

Mainstream, VOL LIV No 49 New Delhi November 26, 2016

Land Acquisition and Accumulation of Finance Capital

Monday 28 November 2016

by Soma Marla

Land is essential for establishing industries and other developmental projects. It is presumed in classical economic thought that the acquired land by dispossession of farmers often serves as a major source for accumulation of primary capital in the hands of industrialists. The present land- grabs of neoliberal India can be viewed as an attempt by the state to redistribute the means of production (from the marginal poor peasantry to corporate and feudal landed classes) giving an impetus to the society’s shift to capitalism. It should be noted that neither are the dispossessed rural poor becoming factory workers as presumed nor is the “gifted” land being used as capital for establishing industry. Otherwise it is simply being turned into a commodity for speculation. Despite the bait of fair compensation offered by the state and clever legislations, the unwilling rural poor are often seen resisting the attempts of the regimes in power. This trend clearly indicates the sharpening of the struggle between labour and capital.

In the post-independence period, till the beginning of neoliberal reforms during the past four decades the state had acquired land from farmers to establish irrigation or infrastructural projects or industries overwhelmingly in the public sector. Land acquisitions were part of the Nehruvian developmental strategy and keeping the nation’s developmental needs in mind the rural poor, though reluctantly, parted with their land. The government also acquired land for establishing various industrial parks and SEZs while allotting land for private industry. However, today the character of land acquisition and dispossession has clearly changed, land being acquired no more for projects under the public sector but for various national private corporates and foreign multinational corporations for industries and real estate businesses. What is interesting is the pro-active role played by the state to acquire land (using the law and many a time brute force) to evict the resisting poor as a facilitator to the capitalists. Earlier, industrialists used to negotiate and purchase land directly from farmers. Recent events of Nandigram, Singur, POsco, Kakarpally in Srikakulam et al. are clear examples of strong determination of the regimes in power to serve their class interests at any cost.

The change of the Indian state into facilitator to the private capitalist class or even turning into a ”land broker” is a necessary condition of the present neoliberal economy. It should not be confused as a necessary condition for industriali-sation and further transformation from feudalism to capitalism as part of the historical necessity. Banerjee (2007), Chakravorty (2013) see the current land-grabs as a historical necessity for “develop-ment” as part of the passage through accumu-lation of primitive capital for industry. Thompson (1966) even argues that land-grabs and “class robbery” are necessary and natural in the course of industrialisation citing examples from eviction of farmers from their lands in the sixteenth and seventeenth century England.

In this paper I would like to show how current land-grabs are not a historical necessity but a simple divorce of a petty producer from the means of production may not make him an industrial worker nor contribute to accumulation of primitive capital in the present neoliberal times in India.

Primitive accumulation is defined by its function as a historical necessity in the development of capitalism. It is those historical processes that establish capitalist social relations. Karl Marx’s analysis of capital accumulation clearly differen-tiates the two processes taking place under developing capitalism and a maturing capitalism.

In his words, ‘’a process that gave rise to a capitalist mode of production in which ‘conquest, enslavement, robbery, murder, in short, force’, played the greatest part”, and in a mature capitalist system that, once developed, can dispense with extra economic coercion and rely on “silent compulsion of economic relations”. (Marx, 1973) Marx’s doctrine is proving to be relevant to the current land-grabs in the present context of transfer of means of production (land), providing starting capital into the hands of capitalists. But as a continuation of Marx’s thesis and advancing it to advanced developed capitalism in the context of the present Indian neoliberal times certainly there are some exceptions.

Firstly, today the evicted and dispossessed rural poor are not necessarily becoming urban factory workers. The industry is highly automated and employs only a few workers and that too skilled. These rural immigrants, unable to graduate to factory workers, are finding meagre employ-ment in services or construction industry as temporary casual labour.

Secondly, the acquired and possessed land is hardly being used for establishing manufacturing industries and mostly turned to a commodity in real estate business. Instead of becoming a basis for accumulation of primary capital, land is often turned into a commodity, either auctioned in the share market or pledged to banks to generate liquid financial capital. The same is the case with transfer of publicly owned assets like forests, mines and water bodies to private corporations which, in turn, are being used as a source for generation of finance capital. These characteristics are new and belong to neoliberal economic times and not necessarily to the times of the English countryside of the past, when farmers were
evicted from their lands forcefully without payment of any compensation either. In India capitalist social relations are already rooted. In production involving industrial inputs (such as fertilisers, seeds, diesel etc.) to sale of produce, small farmers depend on the mercy of the markets. A significant surplus produced in rural India is already being transferred to the metropolitan capital. In this context the observations of Lenin (1988) that proletarianism of peasants and formation of agrarian capitalists need not take place through immediate eviction of the latter from land but possibly through gradual formation of capitalist social relations in agricultural production are noteworthy. A similar possible process has been more elobaratively explained by Kautsky (1998) and supported by others such as Adanan (1985), Byres (1991) et al. In the course of shift from feudalism to capitalism, for example, the farming community in India comprises 85 per cent of farmers holding small holdings (less than a hectare) and they are fast losing land and gradually over the years joining the ranks of rural and urban proletariat. The development of capitalism in India is complicated, painful and lengthy and the different route taken in this journey is consistent with the above hypothesis.

Harvey in his book, The New Imperialism (2003), argues that “accumulation by dispossession” has become a predominant mode of accumulation under neoliberalism and the traditional Marxist approach of capital accumulation should be complemented with greater attention to prolife-rating struggles against transfer of various public and privately owned assets to the capitalist class. This also includes privatisation of natural resources (such as forests, mines etc.), state owned industry, public institutions, services (such as public hospitals, pension funds etc.) to private corporations often free or at throwaway prices. Ultimately, the transfer of ownership to private corporations clearly lacks commodity production and wealth creation and is finally leading to the predations of finance capital. Harvey concludes that today’s dispossession of public assets is driven by advanced capitalism and helps in the formation of liquid finance capital but not necessarily to accumulate primitive capital and the process is in accordance with the global impulses of capital.

In response to state advocated land acquisition by means of various legislations such as those relating to land acquisition, minerals or forest rights or even recent proposals of the Niti Ayog (Panagariya, 2016) on changes to the Tenancy and Forest Rights Act, evicted farmers around the country are waging militant struggles. They are not expressing consent for various forms of compensation and the promise of rehabilitation measures offered to them by the state. As seen from the nationwide struggles organised early this year against the changes in the Land Acquisition Act or cases from Nandigram, Singur, POsco or Kakarpally farmers, it seems to be well understood that land-grab is not intended for ‘development’ but for real estate and other specu-lative private businesses.

Sensing the simmering discontent and mood of the farmers there is a need for waging a combined struggle with organised trade unions (in coope-ration with the Left and democratic forces) against unethical and forceful transfer of public assets to the corporate class.


1. Adanan Shapan (1985), ‘Classical and Contemporary Approaches to Agrarian Capitalism’, Econamic and Political Weekly, 20 (30), pp. 53-64.

2. Banerjee, Abhijit, Vinayak et al. (2007), ‘Beyond Nandigram: Industrialisation in West Bengal’, Econamic and Poloitical Weekly, 42 (17): 1487-189.

3. Byres, Terence J. (1991), “Agrarian Question and different forms of Capitalist Agrararian Transformation: An Essay with Reference to Asia” in Rural Development in Asia, John Breman and Sudipo Mundle (eds.), Delhi, Oxford University Press, pp. 3-76.

4. Chakravorty, Sanjay (2013), The Price of Land Acquisition, Conflict, Consequence, New Delhi, Oxford University Press.

5. Kautsky, Karl (1998), The Agrarian Question, London, Zwan Publications.

6. Lenin V.I. (1967), The Development of Capitalism in Russia, Moscow, Progress Publishers.

7. Marx, K. (1973), Grundrise, London, Penguin.

8. Niti Ayog—Report on Proposed Tenancy Reforms      (2016), Pangariya, A., http://niti.gov.in/content/land-leasing-big-win-win-reform-states

9. Thompson, E.P., (1966), The Making of English Working Class, New York, Vintage.

Dr Soma Marla is the Principal Scientist (Biotechnology), Indian Council for Agricultural Research, New Delhi. He can be contacted at e-mail: marlass_ag@yahoo.com