1986: 118). Even though urban land acquisitions far outstripped the acquisitions of rural land, the latter were considered particularly controversial, with the then minister of agriculture admitting publicly that he was “‘scared as hell’” by what was going on (cited in Duncan & Anderson 1978: 251). This even led to the establishment of a commission, the so-called Northfield Commission, which presented its rather futile attempt (Leftwich 2010 [1983]: 212) to establish patterns of institutional land ownership in the United Kingdom in a report in 1979.
In retrospect, the boom in farmland investments in the United Kingdom would be over in less than two decades. When inflation declined, agricultural futures looked increasingly bleak, UK tenant laws proved to be too restrictive, restrictions on overseas investments were lifted and other asset classes looked more promising in the early 1980s, so fund managers started to placed their capital elsewhere. As we will see in Chapter 6, back then the same rule of investment applied as today: “Investment in farmland was a matter of comparative returns and the return from agricultural property would be continuously compared with returns from other assets” (Munton 1985: 159). Suddenly the city antipathy towards farmland was back. It would last until the late 2000s. Nevertheless, even though the boom in farmland investments in the United Kingdom seems short-lived, this relatively early financial economization of farmland formed an important antidote to the contemporary finance-driven land rush, and is still remembered by some industry veterans as a “first attempt”. It led Sarah Whatmore (1986: 113) to a conclusion that reads like an excerpt from a recent paper in the Journal of Peasant Studies (one of the leading outlets for “land grab debates”) but is backed up by research that is rarely discussed in these circles: “The social and economic relations of modern agricultural land ownership have thus become thoroughly enmeshed in the sphere of finance or banking capital in which fictitious capital circulates.”
Finance from farming
“Finance” is often positioned as antithetical to farming or other domains of the real economy, as if it had developed a life of its own completely delinked from it. Modern finance, with its high-speed mode of operation and lust for disruption, seems to be the complete opposite of the world of agriculture, which is often portrayed as conservative, slow-paced and unpretentious. Often, modern finance is also presented as a child of late, deregulated capitalism, a historical formation in which agriculture in many places (at least, in the Global North) seems to occupy only a marginal social and economic position. Indeed, as capitalism has advanced, the economic role of agriculture in many countries of the Global North, reflected by its changing share in GDP and the total labour force, has declined (see Roser n.d. for a current incarnation of this argument). Yet such binary positioning of finance and farming makes us forget the crucial role that agriculture has played in the development of modern finance and some of its practices. Indeed, these roots even transcend the age of “modern” capitalism and the age of “global finance” often associated with it, and have a pre-capitalist history:
It would seem that almost all elements of financial apparatus that we have come to associate with capitalism – central banks, bond markets, short selling, brokerage houses, speculative bubbles, securitization, annuities – came into being not only before the science of economics (which is perhaps not too surprising) but also before the rise of factories, and wage labour itself.
(Graeber 2011: 345)
A few snapshots may illustrate how modern finance evolved via a domain that is often placed far away from it.
•As already outlined in the Introduction, the notion of “asset” can be historically traced back to the idea of an estate that produces enough output to satisfy one’s obligations (e.g. debts, legacies). It soon passed into a general sense of “property” that can be converted to ready cash as early as the 1580s, way before the rise of modern capitalism. When bearing this in mind, it becomes clear why an asset in the craft of modern portfolio management is not only something of value to someone but also something that allows potential obligations to others to be satisfied.
•The efficiency-seeking and highly calculative approach of management that private-equity-minded financiers like to instil into acquired companies in and beyond agriculture was first developed on slave plantations in the Caribbean and the antebellum South – prior to the rise of “scientific” management principles in the factories of the American Northeast. Benchmarking productivity levels across different farm units was a crucial part of this calculative regime (Rosenthal 2018). Ever since then benchmarking has become a crucial tool of firms and investors to assess the performance of subsidiaries, branches or portfolio companies.
•Slave plantations in the Caribbean and the American South were also among the first sites where separation between the management and the distant ownership of an asset – a very important model of operation in contemporary capital placements in agriculture – was first established. For some historians, separation of the ownership and the management of an asset represented a “‘landmark in the history of capitalism’” (Caitlin Rosenthal; cited in Johnston 2013).
•The development of future contracts and options, now widely used financial tools, as well as the development of early stock exchanges, such as the Amsterdam Stock Exchange in 1602 and the Chicago Board of Trade in 1865, can be historically linked to trade in agriculture (Clapp 2011; Bernstein 1998). As the historian William Cronon (1992) has shown, hedging has firm agricultural roots.
•The discounted cash flow (DCF) model, now a widespread tool for asset valuation in the financial industry, was first developed in forestry. Estimating the current value of an asset by estimating its future income-generating capacity, “discounted by a certain factor based on length of time and, if applicable, the uncertainty of their occurrence and size” (Muniesa et al. 2017: 37), the DCF model allows one to establish how much one should pay for an asset at the point of sale, and allows one to structure investment among “several scenarios involving different types of … [assets]” (ibid.: 43).
•Even the idea of “capital value”, which underlies the notion of “asset” as a property whose value is underpinned by its future income earning capacity, has firm agrarian roots. Economist Irving Fisher was instrumental in shifting the prevalent thought of the time. For him, “[t]he orchard produces the apples; but the value of the apples produces the value of the orchard … We see, then, that present capital wealth produces future income-services, but that future income-value produces present capital-value” (Fisher 1907: 13–14, emphasis in original).
But Fisher was not the first to underline that agricultural land is a very special “asset” that possesses both a capital and an income-generating value, from which financial gains can be derived:
Years before he wrecked the French economy with his scheme to colonize and monetize the Mississippi territories, notorious gambler and financier John Law captured the allure of financialized land in his 1705 pitch for a land mint, where he contended that “land conveyed by paper” loses nothing of its natural qualities, but rather, because it “serves the uses of money and produces at the same time,” it “will receive an additional value from its being applied to the uses of money.” … The obvious, “real” productivity of land makes the productivity of notes (or securities)
