A Note on Chayanov and ‘The Theory of. Peasant Economy’. R. E. F. Smith* has asked us to insert the following note, in the interests of accuracy. In several. tendency of economic thought in the study of the Russian peasantry. By the s . The theory of peasant economy constructed by Chayanov and his school. Alexander Vasilevich Chayanov, the Russian agricultural economist published the essay ‘On the Theory of Non-Capitalist Economic Systems’.

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He wrote around 60 books and essays during his lifetime. This blog post, it must be noted, is not an exhaustive survey theorj the essay and the book. One of the characteristic features of the capitalist system is the presence of wage labour. So, how does such a theoretical framework understand peasant economies, where wage labour is non-existent? Since labour is entirely provided by the peasant family, there exists no labour market and therefore no concept of wage labour.

Moreover, the peasant family undertakes agricultural production and engages in simple manufacturing with the family labour and the surplus or net product arising from production cannot be resolved into wages and profits. Chayanvo notions of profitability present in a family run enterprise, according to Chayanov, is very different from a capitalist enterprise.

Chayanov terms the returns from the enterprise as the net product. The required consumption of each family member is set by custom and habit.

This can change, perhaps in the very long-run, chayanoc the birth rate of the family is greater than its death rate.

The net product is arrived at by deducting the necessary consumption of the family and necessary consumption of the capital equipment from the gross product. The increase in labour intensity has definite physical limits; according to Chayanov, the family as a farm unit will increase labour intensity drudgery until the point when the net product is sufficient to meet the consumption needs of the workers and their dependants children, parents and grandparents.

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After laying out the basic relationships prevalent in a peasant farm, Chayanov concludes the essay by listing the various economic systems p. The extreme forms are capitalism and communism.

In between, he introduces the family economy, slave economy and the feudal system comprising landlord economy and peasant economy.

Chayanow wishes for multiple economic theories catering to the needs of different economic-systems, as his last sentence in the essay shows:. When the peasant as worker-entrepreneur is unable to make sufficient earnings owing to a bad evonomy, increased input cost or some other factorhe temporarily abandons his undertaking and becomes a wage-labour in order to avoid being unemployed p.

A peasant farm, to reiterate, does not make use of hired labourers. The peasant farm is an organization that makes use of family labour and receives a single labour income. And, the trade-off between physical effort and material results already noted in the previous section is re-emphasised p.

His objective is not, in modern terms, macroeconomics.

Alexander Chayanov

In conclusion, as Chayanov states:. Thus, any labor economu has a natural limit to its output, determined by the proportions between intensity of annual family labor and degree of satisfaction of its demands. One of the problems of such a principle is the exclusion of the relationship between labour intensity and consumption needs of the labourers.

For instance, when income increases, there might arise a heightened demand to consume more of luxury products.

The consumption needs certainly have a lower limit or a floor, pasant it is not bounded from above. In other words, labour intensity and consumption needs are interrelated factors. One final observation before we move to conclusions.

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In part, and by large, the combination is based on the technical relations between inputs and outputs. First, Chayanov is dissatisfied with economic theory studying capitalist systems alone.

Reflections on Chayanov’s The Theory of Peasant Economy | Undergraduate Economist

But, neoclassical microeconomics can perhaps explain certain features of the peasant farm, especially the trade-off between drudgery and well-being the backward bending labour supply curve is a good example. Also, the search for the optimal farm size can also be conducted by certain microeconomic procedures.

One does not need to accept the marginal productivity theory of distribution which is a central feature of microeconomics. But in his credit, Chayanov undertakes a very detailed analysis of the farm households which provides content to the maximization problem.

Alexander Chayanov – Wikipedia

Also, the tabular and visual representation of the data is remarkable. Finally, the co-existence of different economic organizations like capitalist and peasant farms is characteristic of economies like India. Often, they are called a dual economy. Self-employment, as opposed to wage employment is a significant feature ;easant the Indian labour force; so is informal versus formal employment. Understanding their innate dynamics as well as their interrelationships is of much use.

They require theroy combination of good theory, data collection methods, statistical analysis and an understanding of the socio-economic history of the particular locality.

Last modified: June 22, 2020