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Relative Efficiency of the Sharecropper Revisited
We contend here, in the main, that resource use on the land leased-in by the share tenant is unlikely to be less than that put in by their landlord under personal cultivation of the land. In trying to address the question as to why the empirical evidence on the efficiency of sharecropping tenancy is mixed, we note that the tenant leasing-in land from a big landlord, while being as efficient as their landlord, would prove less efficient than the tenant leasing-in land from a small landlord.
As we debate over the inputs used on the land leased-in by the share tenant vis-à-vis those employed by his landlord under personal cultivation of the land (briefl y the landlord henceforth), first consider the view so steadfast in earlier works (see for instance, Bardhan 1979; Bardhan and Srinivasan 1971; Bell 1977; Bliss and Stern 1982; Shaban 1987) and which follows from the basic position taken by Marshall (1952: 536). It is contended that the sharecropper employs resources less intensively than the landlord. The assertion is based on the following perspectives: (i) the production function or the relationship between inputs and output is the same, both for the tenant and for the landlord. (ii) The production function is characterised by diminishing returns. (iii) An increment in output corresponding to a given increase in resource use, the marginal product (MP) accruing to the tenant from the tenanted plot is less than the MP secured by the landlord, because, as per the sharecropping arrangement, the tenant gets only a part of the output they derive from the tenanted land, whereas the landlord retains the whole of the MP for themself. (iv) The unit cost of production of a plot of land is the same both for the landlord and the tenant. (v) The supply of non-land resources is perfectly elastic at the free market rate, with any bundle of additional resources used on the land being available at the same rate as the previous one, so that the unit/average cost (AC) and the marginal cost (MC) of the resources coincide and are expressed in real terms.
Under the conditions, the optimality principle that the declining MP should be equated with the perfectly elastic MC for profit maximisation, dictates that the tenant securing a certain proportion of the MP as their rental share employs only a part of the resources that the landlord, securing the whole of the MP for themself, utilises. The tenant is, thus, seen as undersupplying resources and deriving fewer returns relative to the landlord, in their attempt at maximising profit from the use of their non-land resources on the land under lease.
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