Journol of Rural Studies, Vol. IO, No. I. pp. 15-25, 1994

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The Rise and Fall of Agricultural Policy Cycles: from Planned Economy to

Green Liberalism’

Reidar Almb Centre for Rural Research, University of Trondheim, Trondheim, Norway

Abstract - The article presents a country case study (Norway) of changing agricultural policy in the triangular field of forces formed by state regulation, the markets and the social welfare of the farming population. The article starts with an outline of a three-dimensional model of agricultural policies in developed capitalist countries. The policy is torn between three poles: state regulation, the liberalist market economy, and welfare support for the farmers. Each historical epoch has its own compromise between these three dimensions, called a policy cycle. When the cycle of agricultural policy changes, we may expect a change in the farmers’ survival strategies. The findings, however, show that there is more persistence than change, independent of policy cycle, and farmers adapt themselves to policy changes even before the actual changes are made, in anticipation of the future. As a consequence, farmers in Norway lowered their investments and used less fertilizer and pesticides even before the present policy of ‘green liberalism’ was implemented.

Introduction

In this article I will develop a model of policy analysis that may enable us to see how recent agricultural policies have been shaped by the inter- dependence between the interests of the state apparatus, market forces and the welfare of the farm population. We all ‘know’ from public debate that agricultural policies have given us too much food at too high a price. But how could this happen? And

are there any ways out of the deadlock? Are free

markets, as monetary economists insist, the best

solution? Do policy-makers have an infinite degree

of freedom? Or will the policy-makers be haunted by

inherent limitations in market and policy formation?

To begin with I want to point out that Norway presents a rather unique case for our analysis. With an average farm size of 11 hectares and average dairy herds of 12 cows, Norwegian agriculture stands

‘First presented at the 8th World Congress for Rural Sociology, The Pennsylvania State University, 11-16 August 1992. I should like to thank Ruth Gasson, Nancy Eik-Nes and Charlotte Wulff for valuable editorial com- ments on the first draft. ‘By superstate I mean supernational constructions for policy formation like the EEC and GATT.

out, even in a European structural context. Nor- wegian agricultural policy is also a deviant case, with its goal since 1975 of equal incomes for farmers and industrial workers. This goal never materialized, but it did give farmers substantial welfare gains (Almas, 1987). There are also growing internal conflicts within the Norwegian agricultural population and between rural and urban people concerning the size and distribution of subsidies (Almas, 1991). There may also be disagreement about the degree to which a small nation state may pursue a ‘national’ agri- cultural policy at the present level of globalization (Almas, 1989). However, if we want to develop a sustainable agriculture, we need anticipatory policies that will curb the present production machine. These are necessary for the declining agricultural population, the tax payer, and the environment (Haney and Almas, 1991).

But within what contextual constraints does the state develop such a policy? As my point of departure I would take the often repeated assertion from Marx that ‘Man makes history’, but not the circumstances under which he has to make it (Bottomore, 1983: 118). The degrees of freedom for state and super- state* action may be less than policy-makers think and policy implementers like.

15

16 Reidar AImAs

The triangle of agricultural policy

In order to show how the trends in agricultural policy have changed within a political period and within a single country, I will take Norway during the period from 1960 to 1990 as my country case. As an aid to the analysis of the contextual factors, I will use a political model: the triangle of agricultural policy. The mode1 has been inspired by models previously developed by Polanyi (1957), Wallerstein (1979, 1989) and Otterstad (1991). In ‘Trade and Markets in Early Empires’, Polanyi introduces the typology of three production systems: the reciprocal system, the redistributive system and the free market system. According to Polanyi, these three systems are working at the same time, but with different institutional strengths in primitive (reciprocal), archaic (redistributive) and market social systems (Polanyi, 1968).

model as a framework for analysing policies. Market, state regulation and social welfare are, then, the three main dimensions in this analytical model. The idea is now to explore how Norwegian agricultural policy pivots along three axes: the free market (‘liberalist’) dimensions, the state regulation (‘regulationist’) dimension and the social welfare (‘populist’) dimension.

I am also going to use the model at the level of societal interests to illustrate how a triangle of ideologies (‘liberal&‘, ‘regulationist’, and ‘populist’ ideas) influences politics, instead of the often mis- leading binary left-right dimension (‘radical’ versus ‘conservative’ ideas). In this sense, the model is used both at an ideological level (three main lines of struggling ideas influencing each other) and at a political level (three political vectors in a force space producing certain policies as a result of compromise or struggle).

Wallerstein develops the system mode1 along Marxist lines, using the concept of modes of pro- duction. According to Wallerstein, the historical forms of social system, the reciprocal, the re- distributive and the capitalist market modes of production follow each other and are found together in the world economies (Wallerstein, 1979). Under- lying Wallerstein’s analysis, as in all Marxist thought, there is a historical determinism claiming that there is a fourth stage of development (social-

ism), which supersedes the previous modes of production.

During my period of analysis (1960-1990), agri- cultural policies have contained elements of these three political bases in varying degrees. I want to use a metaphor from physics: the dimensions may be seen as three vectors pulling in their own direction with a strength determined by the political situation at the time. The resulting political outcome of the more or less opposing forces may then be seen as the resultant. If one of the dimensions is particularly strong at the time, the resultant will be drawn in that direction, modified by the two other forces.

My colleague Oddmund Otterstad has changed the In this way, the model is used both as an analytical mode1 and adapted it to the present situation in the tool to describe the content of agricultural policies

Norwegian fisheries. The reciprocal system is used and as a metaphor to understand how societal

to denote local forms of production with a high interests manifest themselves in the political struggle

degree of equality between the actors (Otterstad, and ideology production. The model may also be

1991). He uses the redistribution system in a used as one possible interpretation to make socio-

heuristic model for a state regulated economy, while political periodizations of different historical

he uses the term market system to denote a mode1 periods. Thus we may both analyse country cases

for a free market economy. Otterstad claims that all and compare country cases where similar agri-

these three systems coexist and have different cultural policies make that possible (for instance, impacts in various political phases (Otterstad, 1991: the Nordic countries Norway, Sweden and

2-4). Finland).

All three related system models have strengths and weaknesses. The dimensions are very similar, although Otterstad uses a more modern version of the redistributive system. However, I am not going to use my model as a system model to describe historically sequential production modes (Waller- stein) or to analyse the coexistence and inter- dependence of local economic modes of operation (Otterstad). Since I agree with the above-mentioned authors that their three abstract dimensions emerge as the three most significant forces in the creation of political stability and change, I will use the triangle

After a first draft of this model was launched (Blekesaune and Almis, 1992), I have found that Collins (1992) has used a very similar mode1 to analyse the rise and fall of modernism in politics and religion. According to Collins, the modernist notion of a binary dimension in politics, ranging from a traditionalist/conservative pole (‘right’) to a pro- gressive/liberal pole (‘left’) is misleading. Instead, he has proposed a triangular political structure with centralization/bureaucracy, mass participation and decentralization/balance of powers at the three points of the triangle (Collins, 1992: 173). Except for

Agricultural Policy Cycles 17

The social welfare

dimension

The state regulation

dimension

The free market

dimension

Figure 1. The triangle of agricultural policy.

the decentralization apex, these dimensions are very similar to mine.

In order to get a better picture of the three dimensions of my analytical model, I have depicted in Fig. 1 what I have called the triangle of agri- cultural policy.

The interpretation of this model is that agricultural policy is, at any given time, a working compromise between the three dimensions; the compromise always takes into consideration the free market, the welfare of the agricultural population, and the nation state plans for development policy and regulation. I regard the state as being ‘relatively

autonomous’; it not only establishes policies that reflect coalitions of interests in society, but it also acts on its own behalf. In each period, or political cycle, one of the dimensions will be dominant, but all of them will be evident in varying degrees. The market dimension is a necessity in the sense that agricultural production must be consumed, either on the farm or via the market place. As barter trade is almost negligible in our period of analysis, market consumption dominates. Hence some kind of market, ‘free’ or regulated, must therefore be operating. The relative market power of the dif- ferent actors, however, will vary from time to time, because of the degree of organization by producers and consumers and because of state intervention.

In order to describe the equilibrium of political and ideological forces that prevails at any given time, I will use the term ‘policy model’. This meaning of model is different from the term ‘model of analysis’ used in the social sciences. I use the term mode1 in both meanings in this paper, well aware that this might lead to some conceptual schizophrenia. Policy model should be understood as the actual working compromise of policies in a political conjuncture.

With the vector metaphor, the working compromise as the resultant of the strength of the three political dimensions at the time.

The state’s dominant interest as a regulator is to follow a line of rationalization. In its most extreme form this is the planned economy. Cultivation of the free market would mean allowing the market to determine development. Finally, a consistent social welfare (populist) line would mean a firm defence of the family farms. However, there are different interests within the farm sector. Those interests are further differentiated through the modernization process of the rural sector. To identify and accen- tuate farm interests is, then, a part of the power play along the social welfare dimension.

Changes in agricultural policies occur as fluctuations around the three axes, and these fluctuations are partially dependent upon each other. The political forces and their relations at any given time, which I call the policy model cycle, determine the relation- ship of power between the dimensions. The different organized groups in the agricultural population try to intervene in politics and in the market place to have their voices heard. Classes and groups exo- genous to agriculture, such as organized consumers, workers and industrial lobbies are also fighting for market and state influence. How those interests try to find channels of influence to the state and the market at a given time is described well by Havens and Newby (1982).

The aspiration level in the agricultural policy being carried out will also vary. The aspiration along the state regulation dimension will determine the extent of this variation. Interventionist regimes tend to have a higher level of ambition than liberalist regimes (McMichael, 1991). The concept of inter- national trade regimes may be useful here, and was

18 Reidar Almis

first introduced into the sociology of agriculture by Harriet Friedmann in an analysis of the internationa1 food and agriculture regime which emerged after World War II (Friedmann, 1982). National regimes are influenced by the international food and agri- culture trade regime, which according to Friedmann was dominated by the United States of America after World War II. Food aid and food trade was used as a means of promoting foreign policy interests (Friedmann, 1991).

The post World War II agricuiturai production regime

Before continuing, it might be a good idea to recapitulate the development that has led to today’s agricultural production regime in the Western industrialized countries. After World War II, it became clear that agriculture in these countries had too much manpower. People on farms had to be encouraged to move into more productive employ- ment. At the same time, those who remained in agriculture had to produce enough food for the whole population. In order to manage this with fewer hands, there had to be an increase in pro- ductivity, for example, by using more technology (free market consideration).

In society at large, a relatively rapid economic growth which was characteristic of Europe at this time, added to pressure on the traditional agri- cultural sector. The industrial sector of the 1950s and 1960s needed more manpower, and agriculture and rural areas were regarded as a pool for extracting the labour and capital needed for industrial growth. A growing industrial sector provided job opportunities and it represented a channel for upward social mobility for rural people.

Another important condition for this capitalistic growth project was a truce between the various classes of society. The exodus of manpower and the closing down of farms could not take place so quickly that the remaining farm population became dissatisfied (social welfare consideration). In other experiments in this century, political leaders have managed to get the farmers on their backs and have suffered a consequence. However, through edu- cational systems and labour market regulations, both those who left and those who remained in agriculture were kept relatively satisfied.

Therefore, after World War II, all of the advanced. industrialized countries in the Western world kept social peace with the farmers through subsidy arrangements that were to prevent the market powers from having a free hand to decrease agri-

culture so rapidly that it could lead to serious political unrest (Friedmann, 1978). It was upon this social contract that a truce was made. To a great degree. this led to the farmers remaining a rather stable group of voters who supported the centre and conservative parties. An agricultural bureaucracy was formed whose task it was to put this gradual rationalization into effect (state regulation dimen- sion). The political architects of post-war develop- ment of Western industrialized nations wanted to avoid any repetition of the polarization that took place during the period between the wars, when the agricultural population’s varied social strata had supported extreme solutions that were both at ‘the extreme right and the extreme left in politics.

Referring again to our model, the triangle of agricuItura1 policy had to contain elements of all three dimensions in order to have stabiiity. Each individual country had its own special solutions based on its own political structure, on the size of the agricultural population, and on other local and regional conditions. If we compare Norway and Sweden in the first decades after World War II. we see that Swedish Social-Democratic governments followed a rural depopulation policy, stressing trans- fer of labour force to the strong urban-based industrial sector. Norwegian Social-Democratic governments followed the same policy of transfer of labour and capital, but with a different combination of social welfare goals and free market. Both governments were strong regulationists, but the Swedish policy gave priority to market before social welfare, while the opposite was the case in Norway. This may be explained by the strong position of farmer interests in the Norwegian Social Democracy (Alm&s, 1993). To see the socio-economic results of this policy difference, you only need to pass the border between Norway and Sweden in a rural area.

However, all Western countries had a common set of basic features - an agricultural-political social peace based on three elements: free market economy, state regulation and political support for the family farm. I can say that political stability - the peace between the classes - was built upon a political consensus to sustain those family farms which would always be necessary to supply the poputation with food. In some countries which had recently experienced food shortages because of the war (such as Finland and Norway), food supply was given high priority. With the vector metaphor there was an equilibrium of forces that moved the result- ant in favour of the interests of the agricultural population (social welfare). This compromise guaranteed survival for farmers as a class, but it did not say anything about how many would survive within this class. The ‘survival rate’ of farmers was

Agricultural Policy Cycles 19

strongly influenced by the balance of power between those three dimensions in the model.

I have included this common Western perspective in order to go beyond the narrow national approaches we often see in analyses of agricultural policies. To illustrate the model, I am going to present some specific developments that occurred in Norway during the latter half of the 1970s and the beginning of the 1980s. I have in mind such things as a greater degree of self-sufficiency, increased subsidies, easy access to loan capital and overproduction.

The significance of national policies

Perhaps some Norwegians think that the Bksnes Committee was acting on its own when it proposed increased Norwegian self-sufficiency in 1974 (NOU, 1974: 26). Yet at that same time stable prices and enhanced production were established as one of the goals of the Common Market to ensure food supply (Tracy, 1982). The background for this was, among other things, the world conference on food supply that took place in Rome (1973), which had requested the countries of the West to counteract the threat of a world-wide food shortage. During that same period, when Norway put forward its plan for increased production, other advanced industrial- ized countries also increased subsidies to agriculture (USDA, 1990). This happened while the banks were running after the farmers with money - here as in the U.S.A. Since then, all Western countries have had to live with the inevitable overproduction.

This does not mean that the experience we have had on a national level is without importance. However, if we fail to keep the international situation in mind - and that includes all three axes in the triangle of agricultural policy - we will miss seeing the

explanatory factors. For example, we cannot explain Norway’s high level of subsidies by pointing to income from oil, when we see that Switzerland and Finland have equally high subsidies. We must then search for other explanatory factors such as hard- won political independence and experience with the supply situation during war and other times of crisis (Almas, 1990). The analysis should therefore con- tain international influences including market con- ditions, political conditions (national regulations) and changes in public opinion (mobilizing a ‘green’ opinion). Supernational regulations, like the EEC agricultural policy CAP, must also be taken into consideration.

Norwegian agricultural policy in progress 19751992

I have now made a sketch of a model for the three agricultural dimensions: the free market, state regu- lation and social welfare of the sector population. I have also argued that international conditions must always be considered, not only in the light of today’s ‘internationalization’. How significant have these dimensions been in the period we are considering, in other words after 1975?

In order to shed light on the course of development in Norwegian agricultural policies we must go back to 1960. At that time two reports formed the basis for agricultural policy. The one report was from the Agricultural Committee of 19.56. The other was from the Agricultural Appropriations Committee of 19.56. On the basis of these committees’ reports, the Report to Storting, No. 64 (1963-1964) evolved over a four-year period. This report was built upon a regulationist model.

The aim of the agricultural policies of the 1960s (see Fig. 2) was to develop the strong and stable family

The social welfare

dimension

The state regulation

dimension

The free market

dimension

Figure 2. The Norwegian agricultural policies of the 1960s.

20 Reidar Almas

farm through planned national policies. While the the international market in those areas where we market was taken into consideration, Norwegian had our own production. Self-sufficiency was to be agriculture was to be protected. The welfare of the increased in keeping with the recommendations farm population was to be kept under consideration, from the 1973 Rome conference. New and higher but the smallest farms were no longer considered goals were set for stabilizing the distribution of the viable, so industry was to prepare itself to absorb the population and agriculture was to be one of the manpower that became available. In the triangle of major contributors to this goal. In the ideological agricultural policies, both state regulation and aftermath of the ‘No’ to the Common Market (1972) market were to be given priority before social and the Hitra farmers’ protest movement (1975), welfare. The income and welfare for those who were these popular fundamental ideas found their way to stay behind on the farms were to be secured by into the resolution. There was still to be government rationalizing farm structure and improving pro- and regulation, but the governing bodies were to ductivity on the remaining farms. State regulation ensure that one man-year in agriculture was to result would aid this process by supporting the amalga- in the same income and living conditions as one mation of farms and acquisition of more land. With labour year in industry [Storting Resolution 14 our vector metaphor, state regulation and market (197661977)j. C onsiderations of the market and forces were the strongest in the political working rationalization were to be given less priority than c~~mpromise. The third dinle~sion - social welfare c~)nsideration of social welfare for those who were - was a weaker vector in the farm policy itself, working in the field. This policy cycle, where the because the redundant farmers could find a way to social welfare vector dominated the balance of make a living in other sectors. power, was fully adopted in December 1975.

This agricultural policy cycle, where rational, state regulated development with stable competitive family farms was a priority goal, was replaced by a new mode1 during the first half of the 1970s. If we keep to our model, the social welfare dimension now received higher priority, A new committee pre- sented their report in 1974, after two years’ work (NOU, 1974: 24). This ‘self-sufficiency report’ argued for raising farmers’ incomes to the level of industrial workers through the Storting Resolution 14 (1976-1977). This resolution gave priority to considerations of the social welfare of the agri- cultural population and the farmers’ incomes.

According to the new policy model after 197.5 (Fig. 3), rationalization of farm structure was no longer to be accelerated; instead, it was to be suppressed. Norwegian agriculture was still to be protected from

This agricultural policy cycle from 197.5 became a short interregnum. How long this social welfare cycle was dominant is a matter of opinion, but it received quite a blow when production of meat and milk reached a peak in the early 1980s. Both the market - through price reductions - and national regulation - through bonus and quota arrange- ments - became stronger elements. Even though the speakers for agriculture in Storting, the organiz- ations and the governing bodies continued with their welfare rhetoric, from the mid-1980s it was evident that a new cycle was on its way. Before the Alstadheim committee had completed its work, economic liberalism was already coming to the fore and the cycle shift was in progress. In the first part of the 198Os, more state regulation and reduced in- comes were combined with a liberahzed market; later, a deregulationist policy was adopted. Inspired

The social welfare

dimension

The state regulation The free market

dimension dimension

Figure 3. The post-1975 agricultural policy cycle.

Agricultural Policy Cycles 21

The social welfare

dimension

The state regulation The free market

dimension dimension

Figure 4. The deregulationist/re-regulationist agricultural policy cycle.

by both internal and external currents in agriculture - both national and international - deregulation and free market considerations replaced the social welfare cycle toward the end of the 1980s. The confirmation of this development came when the Alstadheim committee’s report was submitted in December, 1990 (NOU, 1991: 2B).

A new deregulationist policy model was carved out where free market conditions were given precedence (see Fig. 4). Even though the role of state regulation was sustained, and income and living standards were still regarded as important, the focus was now on adaptation to the liberalization of the international market. The new catch-phrase was ‘robust oper- ational units which can withstand the pressure of international competition’. Greater consideration for the environment, which had already appeared under the social welfare model, could not conceal the fact that the liberalist dimension was taking over the leadership of policy formation. As Butte1 has pointed out, the environmentalization or ‘greening’ of politics means that welfare arguments are re- placed by environmental arguments in political rhetoric (Buttel, 1992). Hoyever, the green politics were just a new garment for an entrance to a more free market. The resultant of vectors moved in the direction of deregulation, but was held back by the balancing forces of state regulation and social welfare. In this respect, re-regulation might be a more appropriate term than deregulation (Marsden, 1993).

While this new type of policy was being formed over the next few years, the social welfare voices in

‘We have data for periods of five years, such as 1975- 1979, 1980-1984, and so on. ‘Negative reproduction means that the farm income is not sufficient to give both a reasonable labour income and at the same time reproduce the farm capital.

agriculture would eventually become the losers. However, because the populists would fight for their social welfare positions and state regulation would be needed to put this new policy cycle into effect, the balance of power would never be moved completely in the free market direction. Only a radical free market solution in GATT will create a completely new balance of power in Norwegian agricultural policy.

Changes in farmers’ strategies in light of the model shift

My colleague Arild Blekesaune and I have pre- viously documented empirically how the micro- sociological changes in agriculture may be seen as adaptation strategies to these policy shifts, for the period 1975-1990 (Blekesaune, 1991; Blekesaune and Alm&, 1992). During the period between 1975 and 1979,’ the social welfare policy cycle was in its glory with great transfers of subsidies. Most of the farms with negative reproduction4 went over to the group of developed family farms for the period that followed (1980-1984). At the same time a majority (57%) of the farms that recorded no commercial production in 1975-1979 started up again with production during the period that followed (Blekesaune and Almb, 1992). There was also a high level of stability in the type and mode of production.

If we regard the strategy shifts that occurred between the periods 1975-1979 and 1980-1984 as effects of the social welfare model’s dominance in agricultural policy, we can see a good correlation between what the populists wanted and what they got. There was greater stability, and on the whole, those who changed strategies went over to more ‘developed’ strategies. When this social welfare

22 Reidar Almh

cycle wavered, and the market started to determine the direction of policy more, the hopes of those who wanted a freer market were fulfilled. Among the changes in strategy that occurred in the period from 1980-1984 to 1985-1989 (Blekesaune and Almas, 1992), there were relatively fewer households that held on to the developed strategies. At the same time there was great instability, showing that the households changed strategies to a greater degree or, to use a phrase from the upcoming free market model. they ‘adapted to the market’.

Anticipatory strategies

We also see that farmers adapted themselves before the actual changes took place. During the second half of the 1980s expectations that conditions would be more difficult and that markets would become liberalized made people act as though these changes had already taken place. The mechanism appears to have worked prior to the fact, probably because people positioned themseives in relation to expected changes. This type of ‘distant future’ planning by farming households brought about a balance in the strategy changes. When the expected hard times in agriculture actually arrived, it was often the case that they were not as bad as expected. Those who went in for the opposite of what was predicted benefited the most in the end.

During any given period, it was apparent that the movement toward earning money somewhere other than on the farm was an important strategy for farm households (Blekesaune and Almas, 1992). This has been shown to be a quite widespread strategy all over Europe, involving larger and larger farms (Zurek, 1986; IIetland, 1986). However, during the last part of the 198tfs, a far greater portion ended up as purely residential farms. This is a result of the free market policy cycle in progress. On those farms where one or both spouses earned wages, the full- time combination attracts our attention the most. This strategy -where one partner farmed full-time and the other was a wage earner - increased greatly, especially toward the end of the 1980s. If we look at the average age, area and production (Blekesaune and AlmHs, 1992), we see the emergence of a type of combination farm with relatively young farmers, a large amount of land, and a large scale of production. Production doubled from the first period (1975-1979) to the last (1985- 1989). This shows a strategy where income attained from sources other than the farm is necessary, even with a high level of production. This outlines a type of household where the family’s consumption is covered by an outside income, while the farm, in the worst case, can cover its own costs. It is doubtful that

this can be a sustainable strategy for very long. For farms where there are long-term loans, this strategy may last through most of a generation, until the loans are paid off.

In addition to this part-time strategy - one of the spouses employed away from the farm - we also see a change toward more forestry. While the rate of felling trees was relatively low in all the farm types during the first period, there was an increase in felling at the onset of the period with stronger dominance toward the free market policy cycle. This was especially the case for developed family farms and the farms with negative reproduction.

It appears that a robust and viable strategy is one where the households have a large amount of capital. Farms with a lot of wood ready to be cut down or with plenty of land are examples of farms with owned capital that can be both a source of cash and a means of expansion through personal effort. This is also true for buildings not shackled by loans, and tractors that are in good condition, provided they are sufficiently modern. The buildings that were built and the tractors that were purchased during the period of social welfare dominance will probably last until after we have moved on from the present liberalist orientation.

Regarding owned capital, it is also significant con- cerning whether this has been divided by inheritance or not. In our material there are no data concerning this, but we know that the practice varies quite a lot. We know that the birth rate has decreased, also in the farming districts, and this means that there will be fewer children among which to divide things. On the other hand, there has been a change in attitude where young people from farms demand a ‘fairer’ share of their inheritance. It has been common to divide the personal property (dwelling house, furniture, etc.) since the one who has taken over the farm has been ‘given’ the farm as a sort of ‘reward’ for taking care of the siblings’ birthplace and their parents. However, ail research concerning the modernization of the farmer’s world points toward a more business-like attitude toward such things.

Conclusions on farmers’ strategies

In summary, I can say that having an acceptable amount of owned capital, and having employment away from the farm, emerge as two important strategies as the conditions of competition become harder. For the former, that is, the internal agri- cultural strategy, the lower the capital expenses, the easier it will be to achieve a reasonable income from running the farm. With the external strategy, the

Agricultural Policy Cycles 23

partner’s income (or both partners’ incomes) con- tributes to covering the consumption expenses. In theory, the farm can therefore survive for a period, even if it is only in balance without extra effort. One can say what one will about this alternative, but it will undoubtedly be used as a strategy to survive under deregulated and liberalized market con- ditions. The rapid increase of land area and pro- duction among the modern full-time combination farms from the period 19851989 (Blekesaune and Almas, 1992) are probably a warning of what is to come.

From escalation to reduction: a reappraisal of the neo-Keynesian social welfare policy cycle

What should be the verdict of the social welfare or neo-Keynesian escalation policy of Norwegian agri- culture in the mid-197Os? Many observers of agri- culture have maintained that the stepping up of agriculture was a waste, both for agriculture itself and for the country. The agricultural economist Normann Aanesland has appointed himself the speaker for this view. His major point is that escalation ended up with greater operational costs and increased expenses for real capital and interest (Aanesland, 1989).

However, from my micro-sociological perspective, this appears different. Without contradicting Aanesland’s data and analysis I would propose the following analysis, based on observations in many rural communities across the whole country:

1. The fact that net income after investments in- creased in the beginning, and then later declined long before the escalation levelled out, may be due to the consumer demand being filled rather quickly. Then, more of the total income was spent on farm equipment and building improvements. At first people acquired modern kitchen appliances, clothes, cars, went to Southern Europe for the first time - or just took a vacation - and satisfied their immediate need to ‘be like everyone else’ during the 1970s. We can be sure that the feeling of being left behind when they compared themselves to the prosperity and the social welfare in the rest of society was a driving force behind the holy wrath of those who were responsible for the mobilization of farmers in 1975. In the first years of escalation, there was a relative deprivation of the consumer among the farm population, which lead to private spending rather than investment.

2. After the first years of escalation, when this immediate consumer discrepancy was evened out, many started to look for ways of investing their

increasing total incomes. House additions with baths, insulated windows, tractors with heated cabins, milk sheds with tanks and piped-in milk, new silos with pulleys, transportable feeders and environmentally safe (waterproof) slurry pits are examples of the investments that were made in the next round (1980 and onwards). Most of these - and also many of the investments in the house - Aanesland regards as non-profitable investments. Family labour income was reduced, but family welfare was greatly enhanced. Thus they are placed by the economists on the debit side during the escalation period, while the farmers themselves saw this as a positive welfare effect of the escalation. Therefore most of them would answer that this was a good time for agriculture. It is important to remember that the main goal for many farm families is not the highest possible net income: but to sustain the family farm.

3. Many observers have posed the question, how- ever, of whether this was a good time for the rural areas. Even though I have to share Brox’s point of view that much of the money put into farming ended up in large farms in central areas (Brox, 19SS), we cannot ignore the fact that an increased gross income in agriculture was spread out over many rural communities, especially in the marginal agricultural communities. Who were the carpenters for the additions? Who installed the bathrooms? Who dug the slurry pits and built the silos? What economists of the monetary school, such as Aanesland, regard as being negative during the escalation was a plus for the local economy. We who travelled the length and breadth of these areas as sociologists doing field- work during that period could see this with our own eyes. Because farm households did not run to the supermarkets and spend all of their money. but rather invested it in permanent assets and social benefits instead, the money benefited the rest of the rural communities as well. Agricultural equipment and buildings were renewed, mostly by local entre- preneurs. The result was an improved work environ- ment and less pollution. Some ‘leaks’ are associated with those forms of expenditures, but multiplier effects were substantially higher than if the money was spent in urban shopping centres. We have also seen what has happened to local contractors and dealers since the agricultural incomes dried up. There have been many foreclosures and bank- ruptcies, especially in the central towns of rural areas.

4. Much of the escalation also ended up as tax revenues in the communities. During the first years, a large portion of the incomes were invested, which led to increased deductions and hence a reduction in the farmers’ income taxes. But later, as the invest-

Reidar AImas

ment level stabilized and deductions decreased, there was an increase in personal taxes from the agricultural population. Therefore these subsidies to agriculture are still a major source of revenue in many rural communities a decade after the esca- lation policy cycle ended. Farmers who made their investments in the 1970s and early 1980s are some of the best taxpayers in many rural municipalities. Ahhough this may be seen as redistributed wealth from elsewhere in society, rural administrations would not get hold of those sources unless they were redistributed through the farm sector. The subsidies may alternatively be paid directly to the munici- palities, but such an arrangement would generate jobs in the public sector at higher capital and labour costs than in farming.

Therefore it is by no means certain what the situation would have been had the money been handed over to the communities in the form of business funds or other types of funding. During the latter part of the 197Os, the national incomes had to be used anyway. It was a matter of how the Norwegian society chose to use its oil revenues. When oil countries in the Middle East are in focus, we are reminded that there are many ways of disposing of such windfall revenues. Of course, the Norwegian government could have anticipated the future and used the escalation money in a more conservative manner. For example, efforts to con- trol production at the time of escalation could have prevented over-production. Critics of the escalation policy proposed such regulatory measures, but nobody listened to them.

Future policies and prospects

What will happen now that the Parliament has adopted a new deregulation&t agricultural policy [Storting Resolution 8 (1992- 1993)], and applied for EEC membership? The new policy is described as a de-escalation of Norwegian farming by agricultural interest groups. And certainly they have facts to substantiate their claim. Decreasing producer prices and lower subsidies will have some impact. Will this be the downfall of Norwegian agriculture as claimed by some actors on the policy scene? If downfall means a reduction in agricultural revenues and a reduction in investments and a decline in recruiting to the least advantageous farms, the answer is yes. But if downfall means that the type of agriculture we have today will disappear, the answer is no. A logical hypothesis is that we will experience the escalation process in reverse. In other words, the labour income per man-year will decrease in the beginning, but will increase later on. Those who have the greatest latitude, that is, those households

where one or more members have a good education, those who have considerable capital within the family, and those who live where the labour market is good, will manage without any problems. How- ever, investments will decline, and people will protect themselves by employing defensive strat- egies. There will also be a kind of ‘creative chaos’, where new types of diversified productions are developed, new forms of co-operation are initiated and new niches are found. Crisis is always the mother of change and new growth.

In this manner, when agriculture gains more freedom, there will be diversification, segmentation, and anarchy in production. This will bring the regulators out, and representatives of the state will say that we cannot have this type of anarchic development if we want to maintain modern agri- culture in Norway. They will demand more planning and control of the development as well as greater national investment. And then the policy cycle may start all over again within the agricultural triangle. Our conclusion must be that even a liberalist policy has limited effects. One can ask oneself why this is so. The answer must be that while one dimension is being strengthened for a certain period, counter- tendencies are mobilized within the other two dimensions of agricultural policy.

In a society such as ours, it seems that agricultural policies must be kept within a triangle of forces where the free market, the state regulation, and the social welfare of the sector’s population all are kept in balance. In Collins’ terms, this balance of powers coincides with the balance between the capitalist corporations, the welfare state, and the local sub- sistence economy (Collins, 1992: 183). This is valid both for Norwegian agricultural policies as well as for the transformation of the Common Agricultural Policy (CAP) in the EEC. Many have wanted to get out of this triangle of vectors, but none have managed it so far by democratic means. The strength of the three vectors, and consequently the resulting outcome policy, vary from time to time, but no political compromise in a modern society seems to escape from this triangle. This is a part of the checks and balances of a participatory democracy, and the resultant sector policy is an indicator of each nation’s balance of power. In the Norwegian case, the resultant has always had a strong component of welfare policy, even in times of deregulation. A comparative approach, where other country cases are included, may prove the fruitfulness of this agricultural policy model.

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