In the past, subordination to the state — in the form of conscription, taxation, and commodity pricing policies that favoured urban consumers—was regarded as a basic definitional criteria of the peasantry.
In Thailand, one of the forms this subordination took was the rice premium, which taxed rice exports both to generate government revenue and to reduce domestic rice prices for urban consumers. This “deliberate taxation of the poorest part of the population” (Silcock 1967) contributed around 20 percent of total government revenues during the 1950s and about 10 percent in the 1960s. It meant that rice farmers made a disproportionately high contribution to national tax coffers and also subsidised the food costs of the urban population.
However, over the past few decades the situation has changed. Industrialisation and diversification has been accompanied by a steady reduction in the fiscal burden on farmers. Political agitation and electoral mobilisation in rural areas has made agricultural taxation less attractive. The rice premium was abolished in 1986.
At present I don’t have a clear picture of the various taxes paid (directly or indirectly) by farmers in Thailand (if someone could point me to some good sources I would be very grateful). My experience of land tax, for example, is that it is very low indeed. Overall I get the impression that the flow of government revenue into rural villages is higher than the flow of taxation revenue out of them (though measuring this would be complicated given the enormous occupational diversity of rural households). I think that the emergence of this new fiscal balance has been accompanied by growing rural expectations that the state will provide health, welfare and education services along with infrastructure and a degree of protection from market fluctuations.
In an article that I find very thought provoking, Partha Chattajee argues that there has been an important shift in the political culture of the Asian peasantry. According to Chattarjee, peasant producers are still under livelihood pressure from market forces over which they have limited control. However, “government agencies have to find the resources to … provid[e] alternative means of livelihood to those who have lost them”. This livelihood support is provided in the form of poverty alleviation programs, employment guarantees, micro-credit schemes and emergency subsistence support. It helps sustain both agricultural commercialisation and livelihood diversification. The basic aim of government action is to guarantee livelihood security rather than to promote capital accumulation. It is driven by an emerging political consensus about the importance of welfare and development, by state desires to avoid social disruption, and by a recognition that the industrial sector simply cannot absorb the large numbers of people who would be displaced from unviable rural economies.
The result, according to Chatterjee, is a new form of “political society” in which the state is in the thick of peasant life and in which peasants are skilled at negotiating access to the state’s largesse.
What are the fiscal underpinnings of Thailand’s rural “political society”? Is the state really providing more resources for rural areas than it is taking out?
Without having read the article yet, though I might have certain expectations given the author, one might note, first, that, over the past four decades, people working in Thailand’s agricultural sector have been reduced from 80 percent to about 40 percent. Thus, the target groups for policy-making, and the policy areas, are a lot more varied than they used to be. Second, the constitutions of 1997 and 2007 contain entire policy agendas, in their sections on fundemental state policies, spanning all social groups. Third, this latter belongs to a welfare-state discourse that has been around for some time in establishment circles. Fourth, since the electoral and representational mechanisms are too weak to produce regularized and reliable welfare-policy directions, we have this “problem” of constitutional policy-making by illigetimate establishment groups, bureaucratic policy-making, and, a recent functional equivalent, Thaksin’s populism.
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Thanks to Andrew for the Chatterjee article, and also for resurrecting the “rice premium” as a matter of which we ought to be aware in our understanding of where Thailand has been and where it is headed. Dan Usher, if he is still alive, will be very pleased to see this posting, as might also be–albeit from his grave–Prince Sitthiphon. We need in this discussion to follow Andrew’s lead in talking specifics, rather than the exceedingly general points raised by Srthanonchai. Among such specifics, and dating from fully a decade before the end of the “rice premium”, the policies of Khuekrit and Bunchu in 1975/76 merit attention. While some were one-off payments at a time of–economic, social, and political–crisis, others addressed resource flows more systematically. These latter include measures relating to commercial banks and to the BAAC, about which I plan to have a chapter in a book now in progress ….
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On the evolution of the level of taxation/support of agriculture in Thailand and in major SEA countries, have a look at the “distortions to agricultural incentives” reports published by the World Bank. They’re not perfect, but they give you a good idea of the radical shifts that took place in most SEA countries during the last 25 years or so (i.e. a shift from net taxation to net support of agriculture and towards a reduction of the “bias” against agriculture and in favor of of non-agricultural sectors) .
ref: Anderson K. & Martin W. (2008) Distortions to Agricultural Incentives in China and Southeast Asia. Washington: World Bank.
Warr P. G. & Kohpaiboon A. (2007) Distortions to Agricultural Incentives in Thailand Washington: World Bank.
Warr P. G. (2008) Trade Policy and the Structure of Incentives in Thai Agriculture. ASEAN Economic Bulletin, 25(3): 249-270.
On the political implications of the agrarian transition (or structural change in the composition of the economy), I’ve found Hayami’s report very interesting as well, especially given the current political conflict in Thailand. Basically, he says Thailand and similar emerging countries are now faced with a double problem : 1st) pursuing industrialisation and fighting (urban) poverty, which requires low food prices, and 2) controlling and reducing the growing income gap between agriculture and non-agriculture sectors (which was typically done in current development countries by greater financial support of agricultural households by the state ). Failing to resolve any of these problems can lead to serious political agitation and economic troubles.
Ref: Hayami Y. (2007) An Emerging Agricultural Problem in High-Performing Asian Economies. Washington: World Bank.
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