Eficiencia económica e instituciones agrarias

The paper shows that explanations in terms of economic models should be embedded in institutions in order to understand economic phenomena in a given historical situation. Thus, the way in which institutions and institutional changes are addressed from a neo-classic economic point of view is reviewed. In particular, it is argued that such a method fails to consider the market as an actual institution where the participants are by no means equal in terms of economic power. Examples from Indian agriculture are used to show that both agrarian credit and the product market exhibit arrangements and characteristics which are best explained as consequences of the unequal distribution of economic power. As an alternative to analysing economic institutions, the author puts forward the concept of class efficiency. Any institutional arrangement is considered class efficient when the most powerful class can maintain a higher income in its favour, despite the lower productive efficiency of the system. To conclude, institutions consider efficiency to be a useful concept to analyse agrarian institutions in backward regions, provided it is not mechanically understood as devoid of individual agency.