Competition and Market Participation

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A competitive, capitalist system is the backbone of American economic policy. It is viewed as the most effective way to inspire further development and innovation, which in turn benefits consumers and the greater society.

However, common misconceptions of smallholders describe them as altruistic, but fragile egalitarian societies who are under threat of becoming relegated to impoverished wage laborers under such a system.  On the other hand, promoting self-sufficient smallholder agriculture is viewed as anti-capitalist and ultimately futile.  The unquestioned interpretation of economies of scale within agricultural systems presumes that productivity and lower costs is “a function of farm size, and the smallholder was therefore held to be inefficient and expensive” (Netting, 326). However, with little start-up capital requirements and cheap or free inputs in the form of composting, manuring, and recycling of other farm by-products, smallholder enterprises can achieve relatively high returns on their land. Therefore, once subsistence demands are fulfilled, surpluses can be sold on the market and smallholders are often willing and able to increase production in order to participate in a market economy. Their strategies and diversified operations in both crop, livestock, and off-farm and on-farm production enables them to flexibly adapt to price fluctuations, work opportunities, and market demands that would otherwise endanger more rigid forms of enterprises. In addition, smallholder farmers are known to weigh the cost and benefits of specific practices and determine which is the most productive course to take. For instance, the Kofyar of Africa intensified their agricultural production in return for money to purchase products that couldn’t be made or produced on the farm, such as motorcycles and clothing.

That is not to say that smallholder farm enterprises enjoy equality and can not fail. They are, in fact, “engaged in a ceaseless struggle to reach a better fit between their limited land, labor, and capital resources” and different households may display a competitive advantage over others. This dynamic, however, occurs within smallholder communities regardless of the presence of a capitalist market system. Nevertheless, the characteristic scarcity of land resources means that smallholders enthusiastically integrate into market economies when given the opportunity to engage in profitable wage labor in order to improve their smallholding enterprise. Therefore, competition for access to limited resources and diversification of production both on and off the family farm are practices that are already well-adapted to a market economy. Rather than being outmoded traditionalists or profit-seeking maximizers, smallholders’ prudent, conscientious management skills are oriented towards resilience and survival. That being said, complete self-sufficiency is more often than not an unrealizable fantasy that runs counter to risk-averse smallholder, households.

The American Context:

Review of Relevant Literature: