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Land Tenure and Rural Development

John M Bryden, John McEwen Lecture 1996

Contents

Preamble

It is indeed a pleasure and a privilege to be invited to give the third John McEwen Memorial Lecture in the presence of such a well-informed and experienced audience.

The last time I was in this building was as a child when my maternal grandfather (T B Marshall) was County Clerk here. As it happens my great grandfather (David Marshall) was also County Clerk, but he worked in the old building down by the Tay. In fact I have other links with Perth County in so far as both my paternal grandfather and my uncle were County Councillors for Perth, and tenant farmers in Scone.

My farmer uncle (Andrew) knew John McEwen, who visited the family farm at Scone on a number of occasions. I did not know John so well, but I did have a conversation with him in the mid-1970’s when working on the book on Agrarian Change in the Scottish Highlands with George Houston (1976). I had in fact done some parallel work to John McEwen’s on Millman’s maps, updated as far as I was able to at the time, although it was not so detailed or painstaking as John’s. My uncle did not agree with John’s proposals for land nationalisation, which were consistent with left wing thinking of the period in being statist. I sometimes wonder whether the reason for staunch Unionist tenants was that having so recently escaped from feudal relations (my family had been tenants of the Mansfield’s for well over a hundred years), with the help of the 1947 Agricultural Act, they saw the active State as a kind of re-imposition of feudal relations, another elite group who would require a new kind of cap-doffing. Just as Marvel Amuses feared that the Welfare State would create new and oppressive class differentiation between givers and receivers (Amuses, 1967). At any rate, unlike John, my uncle had faith in the market (albeit regulated one) and opposed things like nationalisation. As I recollect, most of his fellow tenants felt the same way.

Whatever the explanation may be for a tenantry who were against nationalisation, by the 1970’s it was evident that there was a deepening crisis of the State in Britain. Even the left could not hold up powerful State monopolies as paragons of virtuous behaviour, and criticism of the State came as much from the left of the ideological spectrum (for example, Habermas, 1976) as from the right (Hayek, 1957; 1976; 1988). Nor could the left, even with a substantial majority in the House of Commons, raise the political interest in land reform. They even had some difficulty with the Highlands and Islands Development Board’s (HIDB) modest (1978/9) proposals for dealing with extreme cases. Ownership of land by abstract but powerful entities like the State was felt by many as just as likely to create new forms of oppression as to remove the old ones.

Now we face a new situation. The crisis of the State is even deeper, and rural areas, on the whole, have survived if not unscathed. Thatcherism was not insensitive to the age-old contradiction between exponents of the market philosophy and the Tory grandees, relics of a feudal past. And the bastions of State ownership, the Forestry Commission and the Secretary of State for Scotland, have been forced to adapt to changing social demands. As Jim Hunter argued in the second John McEwen lecture, the Tories turned out to be more active in practical land reform than Labour. Rural Development and Rural Policy have also appeared significantly on the political agenda during the past decade, as evidenced by the recent White Papers for England, Scotland and Wales, and before that the inclusion of a rural development priority in the European structural funds (Objective 5b), the publishing of the European Commission's paper on the Future of Rural Areas in 1988, and the explicit mention of the importance of rural development in terms of the cohesion objectives of the Treaty of European Union (the Maastricht Treaty) in 1992.

Given the changes in political philosophy and theories of development, which have taken place since the high point of Statism, on both the left and right of the political spectrum, I believe that if we are to make more progress with land reform we have to tackle the question – why does it matter for rural (or indeed urban) development? It is not sufficient to appeal to abstract notions of distributive justice or the evils of history alone. Merely declaring that This Land is Our Land (Shoard, 1987) evidently does not make it so! We need to assess what we mean by rural development in today’s and tomorrow’s world, what challenges face rural people and areas, and in what respects land ownership and tenure hinder or prevent rural development from taking place. This is the subject of this third John McEwen lecture.

Introduction

Neither Bryan MacGregor nor Jim Hunter addressed the links between land tenure and rural development directly. In the first John McEwen lecture Bryan looked at the links between land tenure, motivations and land use outcomes. Although this inevitably touches on its significance for economic development, it tends to focus largely on static questions – rather than the dynamic issues which are so important to the development paths of different areas over time. Bryan opened the box, by correctly arguing that "Change can be facilitated or prevented by the power structures in society", and by stressing land tenure as a mechanism for achieving the wider goals of society, but he perhaps left some unanswered questions about the contents!

In the second John McEwen lecture, Jim Hunter takes the arguments somewhat for granted and produces a land reform proposal built on the idea of more community rather than State ownership. Jim argued that greater local control of the land resource is a necessary condition for rural development, arguing that the abolition of feudalism should be the ‘central aim’ and starting point for land reform. His justification was variously drawn from Byran (change is needed because society is changing), Willie Ross (land is the basic natural resource..) and the historical treatment of crofters by landlords, and because despite the fact that agriculture is now much less important, land ‘remains a very powerful symbol’

In this third John McEwen lecture, I want to build on the excellent foundations laid by Bryan and Jim in the first two lectures. In particular I want to explore some of the issues arising concerning the symbolic importance of land and the social and economic changes taking place in rural areas, in order to assess the links between the land, its ownership and use, and rural development.

The lecture has three main points of focus, which I will discuss in order. First, I want to ask what social and economic changes have been taking place, which might affect our view of land tenure questions. As part of this, I have a discourse on the questions relating to the origin and nature of rent and unearned increments to land values, which seem to me to be critical in the Scottish case. Second, I develop the argument by asking what rural development is today, and assessing the changes which have taken place in the context of rural development since the Second World War, stressing rural diversification, public goods, and the emergence of new relations between holders of property rights. Third, I return to contemporary issues of land tenure and rural development, arguing that the effects of our land tenure system for rural development are of growing, rather than diminishing importance, and ending with a few outline suggestions for reform. I try to bring this rather complex argument together in the conclusions.

What changes have taken place in society, which are bringing about demanding changes in land tenure?

Since the Middle Ages, hunting, agriculture and forestry have been the dominant focus of both property rights (legal rights of ownership and occupation) and property relations (social, economic and political relations between holders of property rights). Food and shelter were two basic necessities of survival. A hierarchy was needed to ensure these necessities and to raise armies, which could control and expand territory.

In traditional society, that hierarchy was contained within the clan, which was a kin-based system, not based on hereditary principles. Land was held in perpetuity (or until defeated in battle) by the clan and not by the temporary chief. Under Brehon law, the ancient law of the Celts, for example, individual property rights in land simply did not exist – if anything was rented by the chief to clan members it was cows (Maine, 1890).

Later, in Europe, this was replaced by an aristocracy, based on hereditary principles, and a social structure mostly imposed through the Roman feudal system. This system was not merely a land tenure system, but a complete system of governance (Bloch, 1940). Property rights were granted to individuals (often-old chiefs or their conquerors in battle who owed allegiance to the Monarch), but the Monarch was the ultimate feudal superior.

Challenged first by peasant revolts in most of Europe against oppressive burdens imposed by feudal overlords, by merchants demanding freer movement of goods without tolls and other burdens imposed by the feudal regimes, and ultimately by the industrial revolution, new systems of governance gradually emerged. However, until this century, even those claiming to be democratic, with so called representative forms, extended the franchise only to landowners and males. Even today in Britain, hereditary peers, usually landowners and including most of the great landowners in Britain, have an automatic right to sit in the second chamber of Government, the House of Lords. Somehow, in the transitions from feudalism to capitalism, landowners in Britain in practice acquired the residual power in the land, which had formerly been retained by the Monarch, or as Jim Hunter and Andy Wightman both argue, the Crown.

Scotland is exceptional in the European context in several important respects. First of all, as a Nation within a Nation, it has its own system of land law. Second, its property laws are still feudal in the legal sense. Third we have the most concentrated pattern of land ownership in Western Europe with 57 percent of the land in private hands being owned by one hundredth of one percent of the population.

I have raised this issue because I believe we need to see the ownership, occupation and use of land in a broader context, namely their relation to the political, social and economic context of the period. If feudalism in its broadest sense, as discussed by Marc Bloch for example is dead, then that does not mean the structures, which it created do not remain important. I have instanced two issues already, that of relationship between political power and land ownership, and the fact that residual power in land in practice rests with landowners rather than the Crown. What we need to ask ourselves is why and how these structures and issues matter in the present and likely future context, and specifically the context of rural development.

Land as a resource, land rent, land values

Land is different from other resources in several important respects. One of these is that it is fixed in supply. Adam Smith pointed out the consequence of this for rent, which is the price paid for the use of land, namely that:

" The rent of land …… is naturally a monopoly price." [Smith, 1776. Book 1: p131]

Smith’s discussion of rent also shows his appreciation of the fact that only a small part of this ‘monopoly price’ is based on the landlords’ investment in the land, but mainly relates to the unimproved value and even to resources, which have nothing to do with the land but which demand use of land, or access through it, to be exploited. In other words rent is affected not only by direct demand for the land but also various kinds of derived demand.

Also important is Smith’s discussion of how rent enters into the cost of production of commodities. According to Smith, land enters into production costs in a different way from capital and labour, a point later reinforced by David Ricardo (1817: p102):

" High or low wages and profit are the causes of high or low price; high or low rent is the effect of it." Smith, 1776. Book 1: p132]

The opening up of new markets for the ‘produce of land’ thus increases rent:

" The Union opened up the market of England to the highland cattle. Their ordinary price is at present about three times greater than at the beginning of the century, and the rents of any highland estates have been tripled and quadrupled in the same time." [Smith, 1776. Book 1: p135]

In fact the attributes of land on which rent arises are continually widening over time, and new attributes which are directly or indirectly ‘rentable’ have in this century become progressively dematerialised. By ‘dematerialised’, I mean that they are, in relative terms, less and less attributable to the physical and chemical properties of the soil (to which, ironically, so much research expenditure has been devoted), and more and more to public perceptions of its environmental or visual properties, its cultural associations, and the regulatory space applicable on different sites and in relation to different holders property rights. This is because of the enormous increase in public demand for access to the countryside for recreation and enjoyment, the marked increase in personal mobility amongst the population, the re-population of many rural areas by people seeking the various attributes which they believe rural areas offer.

In addition, rents have been created by the enormous extension of regulations of one kind or another in then post War period in particular, including British and later European Agricultural Policy. Thus, planning regulations have produced a massive price premium for land on which the State grants planning permission, and this, in Smith’s terms, can be considered as monopoly rent. Milk quotas, introduced by the (European) State but made transferable by the British State, created capital assets for those entitled to hold them, and which can again be considered as monopoly rent, in practice divided over time between tenants and landowners where these are separate persons. In the case of agricultural subsidies, a key reason for the increase in real land prices after 1973 was the capitalisation of Common Agriculture Policy (CAP) guaranteed prices into land prices. The Wildlife and Countryside Act also produced some massive rents, this time for not developing land at all.

Thus the price of butcher’s meat, which so exercised Adam Smith, is less and less a determining factor in the overall rent of land, and when we think of rent as being the price for the use of the land we must think of this use as including both material and non-material uses expressed through both direct and derived demand. In addition, Smith, Ricardo, von Thunen and many others were exercised by location as a factor in rent, it being evident that land in or near towns generated more rent than that far away from them. The significance of location has however been transformed by the development of transportation over the past century and a bit, and recent rapid developments in information and communications technologies. It is also affected by regulations and differential entitlements to policy payments (such as compensatory allowances under the Less Favoured Areas Directive, or Environmentally Sensitive Areas payments). These changes, which do not result from capital invested by landlords, yield additional rent in rural areas both by reducing the significance of distance from markets, through the effects of subsidies, and by widening the uses to which landed property and its surrounds can be put.

Smith argued that all economic development will raise rents:

" …every improvement in the circumstances of the society tends either directly or indirectly to raise the real rent of land, to increase the real wealth of the landlord, his power of purchasing the labour, or the produce of the labour of other people." [Smith, 1776. Book 1: p228]

Ultimately, in Adam Smith’s theory of development the share of rent in the national product would increase at the expense of wages and profits, and in the very long run diminishing returns to investments in land for food production, combined with growing population, implied that no further economic development would be possible. Nevertheless, Smith distinguishes between the short-term interests of landowners, which tend to prevail, and the medium and long-term interests which they are incapable of recognising. Thus he argues that the interest of landlords is "strictly and inseparably connected with the general interests of society", although indolence which "is the natural effect of the ease and security of their situation, renders them too often, not only ignorant, but incapable of that application of mind which is necessary in order to forsee and understand the consequence of any public regulation" (Smith, 1776: p230). On the other hand, lineal succession enforced through primogeniture and entails, especially in Scotland, reinforced by the common European fact that landowners were at the same time the legislators, meant that regulations, based on short term calculation, obstructed improvement "and thereby hurt in the long-run the real interest of the landlord" (Smith, 1776. Book 1: p349).

Smith was in favour of taxes on ground rent of built property and on rental value of agricultural land, as these could be organised, under certain conditions, to fulfil his four general canons of taxation, namely (Wealth of Nations. Book 2: pp307-309):

In addition, since "Both ground-rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own" (Smith, 1776. Book 2: pp325 -6), provided that they do not discourage "any sort of industry" they "are… perhaps, the species of revenue which can best bear to have a peculiar tax imposed upon them".

At the time Smith was writing, there was indeed a land tax in Great Britain, but since it was based on a historic and unrevised valuation, although Smith held that it conformed to three of his maxims, it did not conform to the first. Nevertheless, he made proposals to resolve this problem. Interestingly enough, even given this state of affairs, land tax produced about 20 percent of public revenues, or around £2 million (Smith, 1776. Book 2: p304).

Smith, and later Ricardo, therefore provided an enduring logical foundation for the taxing of land rent and especially that part of it, which Ricardo later referred to as arising from ‘the original and indestructible powers of the soil’ or what Smith called ‘unimproved land’. Much the same argument was also made by John Stuart Mill (1848), who, according to Bateman, made the strongest case for land taxation, based on the idea that landlords received an ‘unearned increment’ from general economic progress and which should be appropriated by the State (Bateman, 1989). However, as we have seen, this idea had already been raised by Smith.

This idea of an unearned increment was advanced further by Henry George (1883), who also argued that rent should be confiscated, and that this could be the sole or ‘single’ tax allowing all others to be abolished.

Just s taxes on rent would fall on landowners, and not enter into the cost of production of commodities, subsidies on the produce of land would also ultimately benefit landowners. This was recognised by Astor and Rowntree in 1939. In the post-war period, the need to increase food production dominated rural land policy, and led, as we know, massive increases in agricultural support. Even now, when the priorities have changed to controlling surpluses and encouraging environmentally friendly practices, the main instruments are subsidies and quotas, both of which create additional rents, which benefit landowners. Moreover, planning legislation has effectively nationalised development rights, but left the associated rents or unearned increments arising more or less untouched after various attempts at partial taxation of these, mainly in the post-war period following the Uthwatt Committee report.

Far from taxing land rent, then the State has subsidised it in numerous ways. Although it is evident that this is an inevitable consequence (probably unintended) of the priority given to increasing domestic food supplies, it is hard to see what the argument for it could be.

Some preferred nationalisation of the land to taxation. Neither Smith nor Mill thought this a good idea, mainly on the grounds that it would be inefficient. Mill considered that the problem was not really about the principle of private property, but because property laws had "made property of things that never ought to be property, and absolute property where only a qualified property ought to exist" (Mill, Principle of Political Economy, 1848: cited in Bateman, 1989: pp275-6). I have inferred Smith’s view on this matter from his argument that the productivity of crown landswould be improved by a factor of four if they were privately owned (Smith, 1776. Book 2: pp304-5). Henry George did not think it was necessary in the event that rents were appropriated by the State (George, 1883. Cited in Bateman 1989: p279). Astor and Rowntree, however, supported nationalisation of agricultural land on the grounds that unless it was so, all agricultural subsidies would end up in landowners pockets. Bateman argues that the strongly political nature of land nationalisation proposals may now be inappropriate. He argues that the ‘residual power’ of land should be nationalised, meaning that "all rights belong to the state except those specifically excluded (rather than the other way round)" (Bateman, 1989: pp288).

This question of ‘residual power’ seems to me to be important, and directly relevant to the points made by Jim Hunter and Robin Callander about the distinctive property laws of Scotland. In particular, the issue of ultimate feudal superiority, and its locus in the State as representing the people. I will return to it again later.

What I have tried to establish so far boils down to three main points. First of all, that there is rather weighty intellectual support from Adam Smith up to the recent past for treating land tenure issues as central to the question of overall economic development. Second, that this intellectual support applies to related arguments for the taxation of rents including ‘unearned increments’ associated with land. Third, that there is no such thing as absolute private property, but rather an interdependence between public and private interests, rights and actions. The key issue then is not about whether land should be nationalised, or private property rights be sacrosanct. Rather it is about what kind of institutional and fiscal arrangements can manage this interdependence, and ensure that the benefits of public actions accrue in a just way. This is a legitimate issue of public policy, which has nothing to do with the abolition of private property rights. We may however observe that the political process in Scotland and Britain has not so far produced either significant land tenure reform or taxation of those unearned increments to land value. Before returning to these issues, however, I want to ground the discussion more precisely in the related questions about what rural development means in today’s and tomorrow’s Scotland, and why land tenure and the distribution of unearned increments to land value matter for it.

What is rural development today?

Let me first look at these words, ‘rural’ and ‘development’.

The geographer Keith Hoggart recently argued that we should ‘do away with rural’. What he meant was that rural as a category or type of space is no longer useful for people, such as researchers, trying to conceptualise space and theorise about why different kinds of space matter for processes of economic and social change. It obscures the undoubted fact that the ways in which rural space influences processes of social and economic changes (causal forces) are neither uniform nor distinctive. Much of my own work indeed lies in exploring the diversity of rural areas at European level and its consequences for policy and action.

Yet at the same time as researchers are getting away from the concept of rural, it is undoubtedly true that policy makers and organisations are using it ever more frequently. In the popular currency of words, the exchange rate has favoured ‘rural’. Thus we have had in the past year the first ever ‘Rural White Papers’ in Scotland, England and Wales; the word rural appeared for the first time in a European treaty in 1992; the Directorate General for Agriculture in Brussels, D-G6, became the Directorate General for Agriculture and Rural Development in the late 1980’s. I have frequently observed that, in the late 1970’s the Arkleton Trust, founded to study new approaches to rural development, had great difficulty in raising interest in the issue in the European Economic Community countries – and people who came to seminars wanted to talk mainly about agriculture. Rural development was seen as something, which happened in the Third World, not here. The same was almost true of ‘development’ on its own – we thought ourselves to be developed and everyone else ‘underdeveloped’. Even today, despite the changes in words, the rural development debate is dominated by discussion of agriculture on the one hand and declining rural population on the other. And this despite the fact that with few exceptions in Europe, rural areas are neither economically or socially dominated by agriculture, nor since the 1970’s, experiencing a general population decline.

Some of the reasons for the increasing interest in rurality are:

Nevertheless, the contradictions highlighted by Hoggart remain – the rural is not a homogenous entity, and many of the forces causing change in rural areas come from outside rural areas and are not specifically rural. In practical terms, there is no coherent definition of rural areas in the European Union, which can delineate them on a map. Rather there is an idea, or rather several different ideas, about what rural is, and a group of interests who are competing politically around those ideas or representations. The various ideas about ‘rural’ have changed significantly in the post-war period, away from ideas that rural was equated with agriculture, towards a notion of rural as differentiated space providing for a wide range of social needs, with diverse sources of employment and income, and subject to many of the same pressures as urban areas – a more integrated spatial concept.

Having opened the box on changing ideas of rurality, I want now to look at that word ‘development’. Here too I suggest that ideas have changed, and are changing. Formerly, we thought of development as a kind of single-track road towards a single goal – to be developed, as opposed to under-development. Although different places and peoples had different starting points, the end was the same. A key component in this idea is that of economic growth, from which it is supposed that not only material needs can be met in increasing abundance, but social goals of justice, equity, social cohesion, education, democracy, and good environment can be attained as by-products. Thus, in the end, economic growth was the goal of economic development.

This view has been challenged by several changes, notably:

The word development comes from the Latin roots dis – and viluppare, which means, "to unfold, unwrap, rip free" or even "disentangle" (OED: Compact d pp280-1). Typically, in Latin texts, this would refer to what happened to a scroll. I prefer to think of development, then, as a process of reaching human potentials in all spheres and freeing society from structures, which prevent these potentials from being attained. Fundamentally, this is at least as much about democracy and participation as it is about economic growth. In a sense, rural development differs from other kinds of development only in so far as it takes place in areas, which we describe as ‘rural’.

Changes in the context of rural development

Since World War II in particular, the significance of agriculture and forestry as employers of rural people and creators of rural incomes has declined enormously. At the same time, in general, rural population and employment have both increased. The sources of this increased employment are many and various, but include fish farming, manufacturing, tourism, recreation, activities servicing incoming retired people, environmental activities, and public sector and other services. Recently, some rural areas have succeeded in gaining net new employment based on provision of information-based services and linked to the information and communications technology revolution.

Not all localities have been successful in countering losses in primary sector employment and population – some Scottish islands and remote areas continue to lose population. Moreover, even within rural locales, it is the urban areas and their surrounds, which have tended to grow at the expense of the rural hinterland. To some extent, public policy, and in particular planning and land use policy, has connived at this. Thus, following the, Scott report of 1942, there has been a general presumption against ‘development’ on agricultural land in the UK in the post war period.

One explanation both for the growth of new activities in rural areas and for new conflicts concerning property rights is the emergence of a set of new ‘consumption’ demands as a result of increased personal mobility, increased incomes, and amongst some groups at least, increased leisure, as well as changing lifestyles, which give more emphasis to the environment, health and recreation, the search for community, etc. Unlike food and timber, it is often necessary for the consumer to come to, or live in the rural areas to enjoy these products or attributes. The act of consuming also requires access to land for housing, camping, walking climbing, skiing, mountain biking, and a host of other such activities. Nevertheless, these attributes can also be sold or commercialised in brand labels, area-labels for local products, thereby giving them local identity, which at one and the same time gives them a niche in the market and protects them from competition.

Other interdependencies are omni-present, but often less obvious, and affected by changes in society at large. Land is a catchment for water supplies, for wind power, a potential source of pollutants for water supplies and the atmosphere, a potential means of removing impurities from the air or from water, of bio-diversity and hence raw materials for genetic engineering, and so on. We are ever more conscious of such inter-dependencies, and the presence of a wide range of related public ‘goods’ and ‘bads’.

Newby (1979) argued that society has changed around agriculture, impinging on what used to be the industry’s unchallenged domination of the countryside for the purpose of production. This change, he suggested, has at least three driving forces, all related to consumption: first, the rising environmental movement; second, increasing interest in recreation in the countryside; and third, a great residential shift out from the cities to small towns and villages.

Thus whereas the countryside was once viewed as the exclusive domain of agriculture – and specifically, productivist agriculture – it is now subject to consumption demands of people other than farmers Marsden et al 1993). In addition, the interests of the general public in land and its use are increasing, and the related boundaries and inter –relationships between public and private goods are becoming daily more important.

In the USA, Galston (1992) has argued that the shift from production to consumption is related to comparative advantage:

" The kinds of natural characteristics regarded as "amenity values" by retirees, vacationers, and certain businesses have emerged as the chief new source of rural comparative advantage. (We may speculate that this relative advantage has been widened by declining amenities in many urban areas.) Rural places with substantial locational assets have commanded the lion’s share of non-metro population and employment gains". [Galston, 1992: p207]

Marsden et al (1993) draw attention to the intersection of production and consumption interests in rural land, and further, to the role of the state in mediating these interests. Public policies – or "modes of regulation" (Lipietz, 1987, cited in Marsden et al) – work to institutionalise conflicts between competing production and consumption interests and generate a balance between the two.

We can hardly be unaware of the numerous measures adopted in the UK (and by the European Community and other Member States) to reward farmers and landowners for the preservation of valued landscapes and habitats, as well as to improve public access to them. Such land-based schemes reward property owners, compensating them for any costs they are required to incur, including but not limited to the loss of exchange value for commodities they might otherwise have produced. Hence, the State has acted to satisfy society’s consumption demands related to environment whilst at the same time benefiting (some) existing holders of property rights. (The politics surrounding passage of the 1981 Wildlife and Countryside Act is cited as an example of how competing interests are resolved). There is an additional paradox in so far as the level of compensation required is related to the level of support given in agriculture, leading to double compensation.

Commoditization of rurality

Marsden et al (1993, p27) term the extension of markets to resources and activities where they have not existed before "commoditization" and describe it as turning use value into exchange value. While it can be argued that exchange value is at least partly based on use value, the authors differentiate between, for example, public goods and amenities which have consumption-orientated use value but no price, and privately-controlled and production-orientated exchange value.

The central point, for present purposes, is twofold. First, resources traditionally employed in agriculture, and especially land, now have new values stemming in large from the changing balance of interests between production and consumption. One straightforward example is that of old agricultural buildings which became useless (and lost their old exchange value) in terms of farming several decades ago but then took on new exchange value as demand for rural housing and business sites developed. Second, the State plays a critical role in determining which kinds of values are protected and promoted, and how the benefits are distributes. Depending on the social and political processes at work in any given rural locale, collective use values or private production values may take precedent. However, again, it is holders of residual property rights, in practice largely large-scale private landowners in the Scottish case, who are principal beneficiaries from these social and economic changes and the related extension of markets. Equally, it is clear that these new exchange values arise from society at large and not from investments or other activities of landowners.

Representation of rurality and political power

How successful various groups are in achieving their interests (whether orientated towards consumption or production) depends largely on how they "represent" themselves to the rest of society, and how well they manage to align themselves with dominant ideologies. That is to say, all interest groups must compete in the political sphere, convincing those who make the rules that their particular interests should be recognised. They do this by representing themselves through argument, rhetoric, and persuasion more or less successfully. Clearly, this is a social and normative process that is not always based on objective fact.

Shucksmith (1994) described "capturing rurality" as the process in which particular actors manage to represent their interests in rural places as consistent with the dominant ideology:

"…the examples of conflicts between economic development, residential development, agriculture and preservation may be seen as different interests competing over definitions of rurality in order to achieve their preferred outcomes – each interest using words, ideas, concepts and images which reflect these preferences". [Shucksmith, 1994: p130]

As Marsden et al noted, interest groups compete with each other for dominance through their representatives. Which are dominant depends not only on their control of resources – material, cultural, and symbolic – but also on their connections to political decision-makers. In Scotland, it must be stressed, the links between landowners, the army, the law, industry and commerce, and political life are exceptionally strong, and I have already noted that over half of the one hundred largest landowners have a right to sit in the House of Lords. Thus we may note, during most of the post-war period, the dominance of the view of ‘traditional agriculture’ as productivist agriculture. We can also note, over the longer period, the ability of landowners in effect to extend property rights into sport, and even access through their successful representation of their role as guardians of the rural heritage and environment. Finally, we may observe the failure to gain back for society those ‘unearned increments’ to land values which are associated with the changes I have outlined, and hence the de facto acceptance by society that these unearned increments in some sense ‘belong’ to landowners.

The role of public goods

A central question arising from these ideas therefore concerns the role of a rather broad basket of ‘public goods’ in rural development processes today, and what groups are able to benefit from such public goods. Whilst the most obvious element in this basket concerns landscape and the environment, it also includes rural culture and heritage, and collective or civic activity both as a ‘good’ in itself, and as a necessary means of maintaining, creating or enhancing other kinds of public good (Putnam,1993). Mcdowell, building on the work of James Fallows (1989), argues that collective action is fostered by two attributes, namely whether there is a large enough radius of trust, which he equates with a ‘sense of community’, and whether people feel they control their own destiny (McDowell,1990). Assessing a nation-wide research programme in ‘local self-development strategies’, he concludes that "with the exception of a very few communities that are trying to put together the vitality necessary to take control of their own destinies, most are not doing much". He observes that those involved "have been attending to issues of the wealth of communities, and we ought to be attending to issues on of commonwealth". In other words, and this is the key point, we have paid too much attention to the growth of individual enterprises and too little to the development of public goods on which the development of enterprises and communities both depend.

Putnam’s study of the reasons for persistent disparities in both economic performance and civic behaviour and attitudes between North and South Italy makes an important contribution to this debate. Referring to the historically persistent differences in civic engagement in south and north Italy, Putnam’s research shows that "spontaneous co-operation is facilitated by social capital". By ‘social capital’, he means "features of social organisation, such as trust, norms, and networks, that can improve the efficiency of society by facilitating co-ordinated actions" (Putnam, 1993: p167). Putnam suggests that the creation of social capital will be inhibited by strongly vertical or centralised structures of authority and dependence, familism and clientelism, and favoured by horizontal and decentralised forms of democratic and social engagement. His main conclusion is that "Although we are accustomed to thinking of the state and the market as alternative mechanisms for solving social problems, this history suggests that both states and markets function more effectively in civic settings" (Putnam, 1993: p181). Clearly, feudal structures and concentration of landed property are likely, on this analysis, to inhibit the creation of social capital.

Important social changes have therefore taken place concerning the function of land in rural development in the post-war period. The initial focus on land as a source of food and timber has partly given way to a new focus on land as a source of public goods which support new market demands, and as a key resource in meeting both market and non-market demands. The competitiveness of rural places is increasingly determined by the success with which the new demands are met which, in turn, depends on the establishment of new kinds of private and public enterprise emerging and taking hold, and appropriate collective action (with respect to the various public goods) which can improve the functioning of both state policies, systems of governance, and markets.

With respect to the emergence of new kinds of enterprise, I will argue later that the structures of our present land ownership and tenure system constrain such development through the siphoning off of development values on the one hand and through the monopoly power of a small number of landowners on the other.

With respect to collective action, we can note that this is not something which can be expected to be automatic, but which depends on the historical accumulation of ‘social capital’. This can be recognised in the existence of mutual trust, functioning norms of participation and reciprocity, and networks of civic engagement. I want to stress that social capital formation is likely to be inhibited under conditions of concentrated land ownership and feudal structures.

The need for rural diversification

The decline in the relative importance of agriculture in both the rural economy and rural society has focused attention on the need for diversification. In the European and Scottish context, this has largely meant an increase in the relative importance of manufacturing, tourism, and recreation. Recently, considerable attention has be paid to the role of information and communications technology in ‘reducing distance’ and creating a new category of footloose enterprises based on the growth of the ‘information economy’. All these elements are to be found, for example, in the rural White Papers, and in the strategies of enterprise agencies such as Highlands and Islands Enterprise, or Objective 1 and 5b programmes under the European Structural Funds. Given that both the rise in the information economy and the effective reduction of distance mean new threats and opportunities for rural areas, and given that the retention, creation and mobility of enterprises and persons in rural areas is now much more determined by the perceived and real advantages of one kind of rural space over both urban areas and other kinds of rural space, the success of these efforts to diversify rural areas must depend in large part on the creation, retention, and enhancement of these perceived and real advantages.

So what kinds of advantage are these, whether they be real or perceived? First and foremost cost differentials remain important. Drawing on recent interviews with a range of new kinds of enterprise in rural Scotland, as well as evidence on the mobility, these relate mainly to costs of housing, working space, and labour. Second, and of growing significance, a broad range of variables relating to ‘quality of life’ are considered important. Thus, in recent work in Washington State of the USA, the three most important ‘push’ factors cited for rural in-migration decision were fear of crime, urban congestion, and high cost of living, whilst the three most important ‘pull’ factors were quality of the natural environment, outdoor recreation opportunities, and a desirable climate (Salant et al, 1996). These sorts of issues, together with notions of the desirability of rural culture and social cohesion are also important in the Scottish context.

Increasingly important too in the world of increasing global competition and the fragmentation of markets due to individualisation in the richer countries, is the ability to identify products – goods and services – with places which, in the public’s mind are associated with a healthy environment, a good lifestyle, a desirable culture, and personal ‘roots’ (as in the case of Diaspora markets for things Scottish). Most evident for services like tourism, where there are numerous ‘niche’ markets, but also for a range of other goods and services, these processes of commercialisation of the real and ephemeral or imagined advantages of places are increasingly important. Many LEADER projects both in Scotland and elsewhere in Europe have placed considerable emphasis on this as a comparative advantage for rural places, and have accordingly developed practical development projects.

Thus rural development, and the comparative advantages of different rural areas, now depends much more on such non-material attributes, and much less on the actual natural resource endowments.

Moreover, many of these attributes are, in the large sense, ‘public goods’, that is to say they are not directly marketed, but created by the whole of rural society.

When these attributes are created, enhanced and maintained by society they create opportunities for commercial activity, and hence, directly and indirectly, unearned increments to the value of land, and therefor additional land rent.

Critically, large-scale landowners, since they have control over a high proportion of land and buildings in rural areas, have a disproportionate power over the possibilities for enhancing rural attributes and realising the commercial advantages, which follow. If, as is the case in parts of upland Grampian for example, wealthy landowners decide to take farms in hand, allow buildings to become ruins, and opt for treeless landscape all in the interests of creating estates devoted to sporting, then this is against the interests of rural development. Similarly, landowners can prevent their tenants from diversifying activities into tourism and recreation through restrictive clauses in leases or punitive conditions. In addition, as is the case in parts of Skye, landowners can choose not to sell land for housing or buildings for alternative uses, or impose unreasonable conditions. Finally, feudal superiors can prevent alterations or additions to buildings. Therefore, and this leads directly to the next section, the relations between the landowners and the other different (and often new) interests in land becomes crucial for the rural development project as a whole.

New property relations

Property rights define the legal rights of different parties to land – the landowner, tenants, the State, the public. Property relations describe the social, economic and political relations between those parties. These relations are not solely or even mainly determined by ‘the market’, especially where property rights are highly concentrated. As Adam Smith and later Bryan MacGregor (1988) and others have noted, the motives for large-scale land ownership are not in general concerned with economic calculus. Since at least the 18^th Century, land ownership was both a source of status and of political power (until this century, determining the right to vote, for example) and both are often gained or enhanced through ‘sport’ (shooting, fishing) and entertaining on the grand scale which land ownership permits. For most, the calculation of profit, loss or rates of return are not predominant in decisions about large-scale land ownership, purchase or use. A corollary of this is that most large landowners are immune to State ‘incentives’, for example for tree planting, and take these up only for activities, which they would have undertaken for another reason. To reinforce this point, one can observe that thirty large landowners in Scotland, owning over 1.2 million acres between them, have assets of over £40 million each, and exceeding £9 billion in total (Wightman, 1996: p168).

More broadly, the relations of property determine status, even in our present society. Landowners can, albeit within limits, control what tenants and even purchasers of their land, are able to do with it. The tenant has a different status, defined by these relations: he or she is somehow, in concrete terms, less ‘free’ to act than the owner. A purchaser, and successors, may not be free to change the use of the land without the former landowner’s consent or agreement, and may not be free to sell to whom they wish. Again, this gives them a different status, and a different degree of freedom to act. Take the question of farm diversification, which many farmers have undertaken in order to improve incomes, spread risks, and make use of underused assets. A tenant, as I have argued above, may not be able to diversify into tourism or recreation without the landowners consent and agreement. In exchange for this agreement, the landowner may seek to impose new burdens on the tenant – higher rent, giving up rights to compensation for buildings and improvements after a short fixed period of say 10 or 15-years, etc. In other words, the landowner will impose a tax on income generated by the tenant’s initiative (which is often supported by State financial incentives). Not only does this reflect the different social status of the parties (superior – inferior), and different economic power and freedom to act, it also reduces the tenant’s incentive to diversify, since the returns are less than they would otherwise have been.

Above all then, property relations in our society are not ‘just’ market relations about payment for use rights, they are also social relations, defining class position, degrees of freedom to act, and influencing the incentives and disincentives facing economic actors. As Thomas Carroll observed in a comment on a paper by Philip Raup on Land Reform and Agricultural Development (Southworth &Johnston, 1967: p319):

"…. Land reforms in developing countries are important because of their indirect, often delayed effects via income and power distribution, in addition to the many direct effects on farmer incentives and motivations."

The three processes discussed earlier (new forms of consumption, commoditization, representation) are thus intimately related to the nature of property rights and property relations. Farmers who represent rural areas as places of food production, foresters who represent forests as sources of commercial timber, landowners who represent their domains as wilderness or as a space for hunting and shooting are not likely to encourage its use by tourists and recreationers. On the other hand, environmentalists representing forests as the homes of certain kinds of owl (as in spotted owl) are unlikely to favour their commercial exploitation for timber. Increasingly the relations between those who consider themselves to have property rights (private, public) are marked by conflict, arising form different representations of the function of rural areas in our society.

Although Scotland’s property laws are different from those elsewhere in the UK, they are similar in so far as they strongly support private property rights, or exclusive access to property, within certain constraints (e.g. planning regulations). Land property is a bundle of rights, which can be categorised in different ways – for example rights to transfer, use, and occupation; or rights relating to farming, forestry, sport, public access, nature reserves, etc. These rights can be ‘unbundled’ or divided among different owners.

How different components of property rights are promoted, represented, interpreted, and recognised ultimately determines how the countryside gets used and in whose interests. Hence, understanding property relations as "embodying social and economic relations, such as those of power, custom or kinship" (Marsden et al, 1993: p32) is critical to making sense of what is happening in the countryside.

Land tenure and rural development

I want to return to focus on the relationship between land tenure and rural development, starting with the question:

If economic value is created by society acting collectively, where does this value go to, why, and with what effect?

The value and price of real property is altered by collective acts – the building of a road, the granting of planning permission, the zoning of land, the subsidisation of agriculture or forestry, or environmental activities, etc. In general such acts increase the value of land, but they may occasionally also diminish it (for example by the creation of a municipal dump or nuclear waste facilities).

The value and price of real property is also altered by changing social demands, both market and non-market, direct or derived: for example, increased demand for food, timber, minerals, recreation, clean environment, cultural and built heritage, sense of ‘community’ or ‘roots’.

In this country, as in many others, this increment of value, if positive, accrues not to the Crown, not to the State, not to the demanders of new resources or activities, not to the tenant, but to the landowner as holder of residual power and the factor most fixed in supply, notably land. Moreover, in selected cases, decided politically, compensation is paid if a public act leads to a decrement of value rather than an increment. Again, usually, this compensation is paid to landowners.

Why should this be so? The most evident answer is because that is the law. But why is that the law? From the point of view of natural justice at least, it is not self evident that landowners should receive the value created by public acts, such as the provision of infrastructure, the granting of planning permission, or the award of production subsidies.

How did landowners acquire the residual rights, which give rise to this situation? By the gradual accrual, without purchase, of rights. Original land charters in Scotland were given for agricultural use, and pertained largely to arable land. In the Highlands these original charters in effect amounted to the theft of common land from the clan (Innes, 1872). Separate charters were later given for forest and sport, for pannage, and for numerous other specific activities. It was not only the charters, granted up to about the middle of the millennium, but their subsequent interpretation by lawyers, often, as in the case of trout fishing rights, stretching the law far further than was originally intended, and usually in the landlords favour. More recently, and in response to increasing public use, landowners have sought to establish rights over access.

It was this shaky pyramid of feudal rights and superiorities, reinterpreted over the second half of the millennium with the advance of the market economy which replaced the barter economy, which gave landowners their position as holders of residual rights in land – from which they could benefit from the development values released directly and indirectly by the market economy, subsidies (such as HLCA’s -Hill Livestock Compensatory Agreement, Forestry, Rural development grants, SSSI – Sites of Special Scientific Interest ‘compensation’) and regulations.

What effect does this have?

The first and most obvious thing to say is that this situation massively compounds inequalities over time, because land is initially very unevenly distributed in Scotland, because nowadays the value of land with planning permission is generally several hundred percent above its agricultural value, and because subsidies attached to land have become so large in the post-war period.

What happens to these windfall gains when they are realised? Are they locally reinvested, used in luxurious consumption as Adam Smith and others believed, or saved and invested elsewhere in the country or abroad? Again, we can only speculate about this. However, we can also observe that, increasingly development land is acquired by third parties, who, because its scarcity is managed politically, have then to pass on the price to customers. This raises the price of housing and other kinds of development in rural and urban areas, and acts as a constraint on development thereby.

The second thing we can say is that the system gives a few landowners inordinate power in local and national economies. As Byran MacGregor pointed out "In many areas of rural Scotland, large landowners play a crucial role in local development: they are the rural planners" (MacGregor, 1993: p11). We have already highlighted the extremely concentrated pattern of land ownership in Scotland, and a glance at Andy Wightman’s recent work (1996) shows that most of the fragile parts of rural Scotland, such as Sutherland, Ross & Cromarty, Inverness-shire and Perthshire, are dominated by a very few landowners. In extreme cases where one landowner owns all or most of the land in a locality, his or her decisions will determine what planning applications are made and acted upon. More generally, landowners are able to exert disproportionate power in wider decision making arenas – planning authorities, lobbies, the House of Lords. At the best this creates a bias in the kind of development which takes place. In the more general case, it acts as a constraint on enterprise. In the worst cases – Eigg seems yet again to be in this category – it prevents anything at all from taking place, which can improve the lot of local people, or by which they themselves can improve their lot. But in all cases, it is the inequality of power, which creates the problem.

These two related kinds of effects of our present situation are clearly important. They do not impact on all rural areas equally. Although the personality and objectives of the landowner can of course make a given situation easier, or worse, they are first and foremost structural effects. In other words they are the results of our legal, fiscal and institutional system, all of which are created, maintained or sometimes even reformed, by collective social and political action. They are, presumably, one reason why so many countries have undertaken land reforms to limit the extent of single ownership, and others have sought to nationalise development rights and tax the increment values associated with them. Perhaps in this context also it is less than encouraging that Eastern European countries are apparently so often trying to replicate our land tenure systems!

There are, of course, other effects, such as those, which arise from feelings of powerlessness and lack of social cohesion (anomie, lack of enterprise, selective emigration, etc). These are of critical importance for ‘social capital’ and, more generally, for rural development. This point can be reinforced in the light of the Rural White Paper’s stress on the need to ‘empower’ rural communities, a goal, which will be frustrated in many cases by our archaic pattern of land ownership and tenure. Such effects are largely consequent upon the two I have highlighted.

A final point on this subject. These effects are of growing rather than diminishing significance. This is because of a tendency to ‘localise’ policies, which impact on rural development, and pass more responsibility to local people for their futures. Thus we have Local Enterprise Companies (LECs), and various kinds of rural partnership, currently being encouraged after the Rural White paper. Similar tendencies can be observed in other countries of Western Europe and North America. I have my own ideas about why this should be so (Bryden, 1994). My key point here is to argue that if more or less democratic and participatory structures at local levels are to be held accountable for future development, then their ability to influence the use of the land and access to it for all kinds of use (housing, small enterprises, recreation, tourism, etc) will critically determine the success of their activities. The notion of empowerment can only be realised under conditions, which are not generally present under our existing tenure system and concentrated land ownership.

What alternative types of land tenure can we envisage?

The general principles, which I draw from the foregoing are:

First of all, we need a more democratic and widespread ownership of land. The principal rural development arguments here are about the direct and indirect constraints arising from market and power implications of concentrated ownership in rural Scotland.

Secondly, we need to capture for society realised incremental rents arising from sources other than investment by landowners, including those arising from general economic and social changes, public investments, public subsidies and regulations. The main arguments here concern economic justice, fiscal efficiency, and the need to continually renew and improve the public goods, which are critical for development.

Third, we need to reverse the situation which has given to landowners the ‘residual power’ in land, and which enables them to capture many of these incremental rents for private benefit. Exactly who should have these residual rights is a matter for further debate – should it be the State (a Scottish Parliament?), Local Authorities, ‘Communities’ (where there are democratic forms of community ownership), or some combination of these?

How might these general principles be applied in practice in the Scottish situation? Again, this is a question, which goes beyond the scope of this paper, and probably needs a proper Committee or Commission to investigate it. Some brief initial thoughts are:

Conclusions

To conclude, there is a good rural development case for tackling land tenure issues, which does not rely on extreme political positions, general attacks on landowners and the historical origins of large estates, or constitute an attack on private property as such. That case relies on five central arguments.

These considerations give rise to three general principles concerning land reform:

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