Rural & Urban

India lives in its villages. Or at least, that’s what we’re told. This statement is expected to elicit a certain kind of a nostalgic feeling to go back to an Indian village. Depending on where the person is from, the crops filling the fields would vary. However, the constant is that there is an agricultural field with some crop in it. Everyone knows everyone else in the village, relationships have a high trust factor and several other things that sum up a village strike one’s mind upon hearing the word “village”. There is more or less an agreement of what a village is. It is about as similar to someone saying the word bread. There is a general idea of what bread is, irrespective of the ingredients that went into it. As much as it helps to have a general idea of things, it begins to create problems when we don’t really have a fundamentally rooted definition.

Although it appears as if this is morphing into an ontological discussion of defining an identity, it must be noted that it isn’t for purely the joy of having a discussion. Knowing the words of a definition isn’t enough. We must also know how the definition was constructed. To start with, let us consider two definitions of what a rural area is. A broad swathe of definitions of a rural area begin with agriculture. As allied activities around agriculture developed, a new category of “non-farm” or “non-agricultural” activities were discovered. Though the modern definitions of a rural area have changed, they still leave one large gaping hole. This hole is invisible to the person who’s caught up in the debate of what construes a village. Karl Marx presents probably the best rebuttal to all definitions of rural and urban. His question in the communist manifesto necessitates that we move away from the vortex of defining via activities. Through the activities mentioned, the general theme that comes out is that rural areas and urban areas share a complementary relationship. Urban areas produce wealth, and consume food. Rural areas produce food & become unwitting consumers of wealth through the large welfare schemes & subsidies offered through government policy. Marx was right to argue that if these were the definitions, then rural areas & urban areas should be treated equally. Extending that argument, a rural area & an urban area are the same in terms of being producers & consumers of each other’s goods. Therefore, rural and urban areas exist in a continuum and are to be treated so. Yet, as one reads, the average reader would probably not want to live in a rural area.

If through the definition they can be equated, why is there a hesitation to be indifferent? Do we chalk it up to general preference of the average human? Even if we do, it merits a discussion as to why there is no equality in how many prefer living in a village compared to the number of people preferring what we call the “urban life”. When we are evaluating one individual’s choice, it leads us to understand one person’s bias. If we increase the number of people who make a similar choice, it becomes a question of how one bias is dominant over the rest.

David Ricardo appears to offer an insight with his theory of comparative advantage. We would be making a grave mistake to think it’s only due to comparative advantage that rural areas produce food. We must also understand how agglomeration works. In simpler terms, agglomeration is a sort of snowballing effect. Newer related things pile on to the existing set. It should be no surprise that trading centres that act as hubs of interaction often outgrow the places they facilitate the interaction for. Such hubs need not produce anything other than offer the market place, so to speak. When such trading activity takes place, there is an incentive to move to that area & become a trader. As more people move, there is an incentive for a construction business which then becomes a market for housing. That offers the way for ramping up production of construction material. This further expands the items that can be traded. Agglomeration isn’t unique to urban areas. It happens in rural areas as well.

What must be noted is that the extent of agglomeration is defined by what is needed for a business to run. Agriculture as we know it needs land & water. However, this isn’t the case for every single item that’s cultivated. Aalsmeer, a town in Netherlands, is renowned for its floriculture (flowers). Flowers don’t take as much time as a crop like paddy or wheat per cycle. Neither do they need as large spaces of land to be cost-effective for cultivation. Gambhira, a village in Gujarat in India, is one of the richest villages whose farmer cooperative had over ₹1,00,00,000 (~$130,000) in cash reserves. Every crop has its own characteristics of when it’s ideal for consumption. Paddy, which when milled and processed becomes rice, had a peculiarity. A harvest is usually processed & further consumed after being stored & aged for over a year. This is done to rid the paddy of its moisture so that the rice doesn’t become a sticky glutinous blob while cooking. The capital requirements for paddy & flowers differs widely.

However, one thing doesn’t change. Land for agriculture cannot be interchangeably used for any other economic activity. Such a situation affects density of population. To say so would mean a low density of population would imply a rural area. Census definitions use population density to identify a rural or urban area. Such a definition would still be ignoring the other variables of agglomeration. The next agglomerative activity is defined by what the status quo is. If land has to be contiguous, it means that roads have a limitation to be laid. When that happens, connectivity is severely affected. The allied activities should be unaffected by the requirement that land has to be contiguous. If agriculture can happen cost-effectively irrespective of this condition, there will be an incentive to begin building roads & increase connectivity. Since this would incentivise the lowering of the cost of transportation to where processing and eventual trade happens, the Marxist dream would be realised immediately. But since it’s still a dream that hasn’t been achieved, Marx was wrong about it. And if Marx was wrong, the definitions he used to offer rebuttals were wrong.

In the case where trade needs a warehouse for a buyer to look at and feel the product they’re buying, it is just the same as having uninterrupted areas of land to cultivate. Where this requirement ceases to exist, trade becomes just that; an exchange of custody rights. The limitation to production centres is with the number of producers. Trading & market driven prices dictate that over time, producers have to reduce in number as the industry matures. We circle back to Ricardo briefly. If everyone produces everything, no one is better off. Farm land needs to be uninterrupted & therefore any society that incentivises farm activity will end up limiting itself in an effort to recreate a version where trade is incentivised. Food has to get cheaper over time if no one has to die of hunger and starvation & when that happens, prices will have to fall. If prices fall over time, the number of people producing food will have to go down. The capital requirements to cultivate food & the cash flows of the market indicate one simple truth. There should not be a lot of people in the producer economy for a favourable quality of life for the producers.

If we could separate the concept of a rural area from a production centre, we’d make headway. The mistake we make is thinking both are synonyms. This is precisely where the definition of what a rural and urban area is, is wrong. Handloom industries, pottery industry & several other mature industries are a part of the rural economy as well. Every small inhabitation had its own way of doing these things & where trade happened, the market dictated the incentives for finding work. As trade advanced, limitations widened the chasm to where we are today. We need to understand how we went from city-states to cities & villages within a state. This lack of understanding is what causes us to be in a loop of a philosophical discussion of what construes a rural area & what makes an urban area.

The end to this would be an index of agglomeration to categorise as rural or urban instead of one by proxy metrics such as population or allied activities. Otherwise we’re just going to be in debates till kingdom come.

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