Investment in peasant economy: theoretical considerations

ABSTRACT This paper presents a model based on Marx and Chayanov which explains investment by the peasant production unit. The paper presents the basis of Marx’s pessimistic view, and Chayanov’s approach to the peasants’ special propensity for investment. Based on this discussion an analytical model is formulated which considers the Chayanovian potential derived from a microeconomic perspective of the peasant, and the limits on peasant investment in a capitalist system derived from a marxian macroeconomic perspective on the specific characteristics of petty commodity production. Finally, the paper points to generalizations which center on the contradictions between real restrictions determined by macro variables and the subjective potential of the family production and consumption unit, the essential focus of the interpretation of the diverse forms of the relationship peasant/capitalism.