About a century ago as my native Oklahoma was preparing to become a state, the Indians of what was still Indian Territory were given land allotments as private property, something they had never known. Efforts were made to protect their right to something they did not understand, but with time the restrictions on their selling land expired, and a whole class of entrepreneurs openly and often proudly calling themselves grafters (from the word graft, meaning getting something unfairly or dishonestly, especially using political connections) became extremely creative. In a particularly colorful episode, when the restriction expired for one category, a special train was sent to various places the Indians lived and conveyed them to my hometown of Muskogee, where they were treated to an all-night party offering “all the whisky they could drink and cigars they could smoke,” during the course of which the merrymakers were separated from their property for such royal sums as $10 and sometimes less. In subsequent years they could often be found living with relatives in utter squalor.
With the countryside this part of the world having lived for seven decades under the feudalism of collective farms, there is a real danger of something not altogether dissimilar happening, so the provisions restricting land sale for the time being do make sense. Much will depend on what happens in the Ukrainian village in the next few years to transform its inhabitants into independent private ones with a strong sense of private property. Yet, the right to sell and mortgage land is absolutely indispensable if Ukraine’s agriculture is to ever come even close to realizing its tremendous potential. The hard truth of the matter is that Ukraine has far more people than it needs in the countryside, about 25% of its population, while the 3% of the US population in agriculture has turned the United States, where the land is not nearly as rich as here, into an agricultural powerhouse. Land is for a great many people the only thing of lasting value they will ever own and the only real collateral they can offer in order to get a loan they might need to upgrade their business, especially if that business is a farm. Nobody will loan them money unless in case of nonpayment he will something worth at least as much. Some will lose, but there is really no alternative. How socially painful and economically successful this process will be depends on the totality of the transformation that takes place here. The Land Code is a step in the right direction, but only a host of other steps in the direction of real, not simulated reform, will prevent it from having disastrous consequences.