# 2. **The State and the Community: reducing the potential for "local capture"**

As many anthropological and economic studies show, strong socio-economic hierarchies seriously undermine the potential for collective action for the common good within communities, and increase the potential for "local capture" of benefits. Societies with considerable income and asset inequalities are typically characterized by sharp conflicts of interest between groups. Quantitative analyses find that collective action works better among people who are relatively equal and have similar needs and resources.<sup>8</sup> However, moderate degrees of socio-economic differentiation can be less inimical to collective action. Relatively mild differentiation can actually be helpful by allowing scope for local leadership, as indicated in studies reviewed by Baland and Platteau (1999).9 We describe here how the dynamics of substantial inequalities within communities can hinder collective action.

# **_Patron-client relationships as constraints on_** _collective_ **_action:_**

Patron-client relationships, with their inter-linked contracts, are a familiar feature of many agrarian societies. The classic example of this is the patronage relationship between landlords and tenants, where a single contract has intertwined within it tenancy and credit arrangements.'<sup>0</sup> Analyses of landlord-tenant "labor-tying contracts" have shown how richer, less risk-averse people can prey on the insecurity of the poor. " The crux of the matter is summarized in Breman's (1974) succinct phrase "patronage and exploitation": flipsides of the same logic of exercising one's power as a landlord. For the patron, such _noblesse oblige_ enhances their social and economic power, while ensuring their clients' continued survival and participation in the relationship of vulnerable dependence. Patrons seek to circumscribe individual mobility among their clients, using if necessary the threat of withdrawing insurance and even physical force (Appendix 1).

Under such circumstances, collective action is difficult to initiate. The elites will perceive collective action by the poor as a threat to their hegemony, and will strongly discourage it. For their part, the poor are unlikely to want to engage in collective action for fear that the elites will seek retribution or appropriate the gains. The literature on South 8 For example, Banerjee and others (2001) find that sugar cooperatives work less effectively in more unequal communities, and Bardhan (1999) finds the same in the context of local cooperation for managing irrigation systems.

**9** See also Olson (1971).

10 See for example Braverman and Stiglitz (1982), Srinivasan (1979), Binswanger and Rosenzweig (1984), Ghatak and Pandey (2000).

" For example in West Bengal India, Bardhan and Rudra (1986) concluded that landowners take advantage of the fact that security is the greatest need of the poor, they offer security in exchange for considerable amounts of foregone income and loss of freedom and autonomy. Thus many people would not go to work in a neighboring village despite higher wage rates, because they did not want to risk breakng their ties with their patron.

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