Liberalization against Democracy: The Local Politics of Economic Reform in Tunisia

5. Structural Adjustment and the Small Peasantry

❖ 5 ❖ STRUCTURAL ADJUSTMENT AND THE SMALL PEASANTRY Neo-liberal reforms sponsored by the World Bank and the IMF can have various effects on the political and social structure of the receiving nation. The impact of these reforms can perhaps best be discerned at the sector or even community level. As the last chapter demonstrated, these reforms may serve to entrench a status quo unfavorable to the poor, they may make the situation considerably worse, or they may undermine that situation and help the poor become more important participants in the new market arrangements the reforms seek to create. Conventional structural adjustment theory locates the greatest equity gains from economic reform in the countryside. This chapter uses the cases of Tunisia and other developing countries to challenge this view. Several factors contribute to growing inequalities within rural areas during agricultural economic liberalization. Land policies frequently increase the disparity of asset distribution. Broader agricultural policies fail to suf¤ciently integrate the landless and land-poor into export-led growth. Economic and political power ¤gure strongly in the resolution of con®icts created by new tenure and other market arrangements. National government of¤cials and local bureaucrats implementing neo-liberal reforms may place political considerations and rentseeking opportunities ahead of economic ef¤ciency and equity. Women are often disadvantaged in structural adjustment programs. Truly representative farmers’ organizations and other parts of civil society rarely participate in the process of determining economic reform policy, which transforms the lives of rural dwellers. Taken together, in many countries, these factors culminate in market economic changes that favor rural elites, increase rural asset disparities, and make no serious efforts to alleviate rural poverty. The World Bank is well aware of these potential pitfalls in neo-liberal market reforms, and it produces studies to address them. However, there is a gap between rhetoric and practice in World Bank policy that permits the institution to ¤nancially support states determined to (re-)concentrate rural economic and political power. Equity and Structural Adjustment Theoretically, neo-liberal reforms improve the material circumstances of most rural dwellers. Broad material improvements in the countryside should occur because the reforms increase the value of tradeables relative to nontradeables , and in developing countries the agricultural sector is generally the principal producer of tradeables: The analytical core of conventional adjustment theory turns on the combination of expenditure reduction and expenditure switching resulting from a real devaluation. In the latter case . . . the price of tradeables rises relative to that of nontradeables. . . . The expenditure switching process clearly attracts considerable signi¤cance for the agricultural sector. . . . This is because in most developing countries, agriculture is the principal source of tradeables output. Furthermore, when, as in many sub-Saharan countries, agricultural tradeables producers have been discriminated against through pricing, marketing and taxation rules, adjustment policies have generally sought to reverse such discriminatory practices. (Commander 1989, xii) Other contributors to the literature on the social costs of structural adjustment more directly suggest that all groups in the agricultural sector should bene¤t from the reforms. “Government changes in producer prices for agricultural goods lead to demands for labor and improved wages. Thus, urban bias is reversed, and small and large landowners bene¤t”(Nelson 1992, 227). “Better prices for farmers and improved agrarian services [due to structural adjustment ] alleviate poverty in rural areas where it is the most widespread” (Herbst 1993, 147). Herbst sees little moral or policy reason to explore the impact of structural adjustment on various income groups in rural areas: In fact, almost everyone in Ghana, and almost all other African countries, is poor on an objective basis. Therefore, the fact that adjustment programs may not directly bene¤t the absolute poorest should have far less policy and moral implications than if there were a bias in a rich country. If adjustment programs help a signi¤cant number of people in Africa, then inevitably a large number of the poor will be helped. (1993, 147) 113 ❖ Structural Adjustment and the Small Peasantry ❖ The optimistic assessment of academics—structural adjustment decreases rural inequality and improves the circumstances of the rural poor—is echoed by World Bank of¤cials in reports on Tunisian agricultural sector adjustment: (a) the rural poor, particularly in rainfed areas, will pro¤t from increased agricultural producer prices as well as from increases in agricultural production for import substitution and exports; (b) the urban poor will pro¤t from the increase in the minimum wage...