Land, Economic Change, and Agricultural Economics
Castle, Emery N., Agricultural and Resource Economics Review
This paper analyzes in three contexts the effects of changing economic conditions and varying economic perspectives on the way land is considered in economic doctrine. The first considers agricultural land use where agriculture is connected to the rest of the economy exclusively through input and commodity markets, and when all other parts of the economy are assumed to remain constant. The second connects agriculture to the remainder of the economy by virtue of a shared natural environment, facilitating a discussion of natural resource and environmental economics in relation to agricultural, institutional, and land economics. The third context permits economic change in the entire economy with particular attention given to population density, space, and distance. Private and public decision making are discussed with attention to federal, state, and local division of powers.
Key Words: applicability limits, central place theory, public and private decision making, rural economics
The Inconstant Role of Land in Economic Doctrine
Land plays numerous roles in economic doctrine. Economies always are in a state of change as they move on their unique trajectories through time. Further, those who make use of economic doctrine have different motivations for doing so. If the role of land in economic doctrine is to be understood, one must account not only for economic change, but also the motivation of economists.
The applied economist does not have the luxury of using a single conceptual lens to view reality. Land provides a different bundle of goods and services in the rural areas of the Great Plains than it does in the urbanized Northeast. Further, the motivation of researchers who seek to understand land varies among, as well as within, geographic situations. When speaking or writing about land, economists will not communicate well even within their own discipline, unless the economic characteristics of land, as well as the motivation of analysts, are recognized explicitly.
Three distinct contexts are considered in this paper. One is concerned with the agricultural firm and the agricultural industry in an economy wherein the remainder of the economy is placed under the heading of"all other conditions remain the same."1 A different context arises if the agricultural use of land has effects on the remainder of the economy that cannot be reflected in the outcomes of unregulated markets. I make reference to external effects which are not consistent with market-generated input or output prices under "ideal" conditions, a condition described in introductions to numerous texts in environmental economics. The third context considered involves the use of land as a policy instrument to influence the nature, direction, or impact of economic activity.
The view here, then, is that land plays different roles in economic affairs, and there exists more than one valid analytic approach that may be applied to land. This view is consistent with a pluralistic economic research methodology described by Bruce Caldwell (1982). The contrary prevailing, but largely implicit, view of economic research methodology asserts that one basic paradigm for economics exists. This paradigm is usually considered to be the neoclassical model underlying the theory of the firm, consumer demand, price determination, partial and general equilibrium, and welfare economics (see Hausman, 1992, figure 15.1, p. 271).
In addition to this neoclassical core, numerous fields exist in economics such as labor economics and public finance. If empirical work in economics is to be appraised thoroughly, these fields within economics should be considered, as well as that stemming directly from the theoretical core. If this were done, it would be found that numerous approaches supplement, replace, and modify the neoclassical model. Yet, to the best of my knowledge, there is little literature appraising how decisions get made which establish limits of applicability of particular economic models in the various applied fields of economics. …