The historic region of Morang has made a remarkable transition over 200 years from a forested frontier at the fringes of the Mughal empire to a breadbasket and source of natural resources for the emerging state of Nepal. This chapter reviews this historical transformation. It begins by exploring the subordination of the ‘Adivasi mode of production’ to feudalism, particularly following its annexation into the centralised Gorkhali state. Interconnected processes include the imposition of agrarian taxation, stratification within the indigenous peasantry, the clearing of the forest frontier and the distribution of land grants – the precursor to the absentee landlordism of today. The analysis goes on to look at the emergence of imperialism, and how the persistence of rural feudalism went alongside the distorted and uneven development of capitalism, particularly of industry. The final section explores the changes in the rural economy following the downfall of the Rana regime and rise of the monarchical Panchayat system. As the king pursued a developmentalist agenda in the 1960s, the agrarian relations on the ground remained similar, yet the relationship between caste, class and ethnicity shifted – particularly in the wake of the 1960s land reforms. In particular, the chapter charts the declining wealth of the indigenous Tharu landed elite, and the emerging dominance of absentee landlords at the apex of the agrarian structure with close ties to the state. The final part of the chapter charts the emerging articulations with capitalism following the establishment of manufacturing industry in the Morang region and the perpetuation of semi-colonial trade relations.

The story of agrarian transition in southern Morang in many ways epitomises the larger crisis facing the global peasantry and its relationship with capitalism in the early decades of the twenty-first century. Capitalism is expanding into the most peripheral corners of the world, and the peasantry, particularly those at the base of the agrarian structure – who are facing rising costs and agroecological stress – are increasingly drawn into capitalist labour markets via migration and local off-farm labour. It is these articulations between the capitalist and pre-capitalist which are increasingly central to peasant livelihoods.

Recognition of this process of agrarian transition whereby capitalism and peasant farming co-exist, with the former providing substantial profits to the latter, is of course not new and, as noted at the start of this book, these phenomena are generating renewed academic interest (Shah and Lerche, 2020; Zhan and Scully, 2018; Sehgal, 2005). However, what has received far less attention is the added complexity posed by additional axes of exploitation on the farm which long predate the peasantries’ integration into capitalist labour markets. This is a gap which this book has sought to address with a focus on the additional layers of livelihood stress when the economic and cultural burdens of neoliberal capitalism intersect with the legacy and persistence of landlordism and rent-seeking merchant capital. In doing so, this book offers a more nuanced analysis of the ‘pre-capitalist’ itself and its symbiotic (rather than subordinate) relationship with capitalism.

The global peasantry today is at an important crossroads. With much of the world well into a fourth decade of economic liberalisation, there are few localities left which are outside of the reach of globalised capitalist commodity or labour markets. Unprecedented improvements in transport and communication over recent decades have intensified this process of integration into the world economy. While capitalist industrialisation across the periphery is highly uneven, urban areas are experiencing a more dynamic trajectory of growth, with a surging service sector and the rise of a consumerist middle class. However, for the countryside, the expansion of capitalism has left in its wake a wave of monetisation, enclosure of land, rising costs of living and intensified inequalities (see Levien et al., 2018). These are paralleled by a cultural transformation, which includes a rising ambivalence towards the peasant ‘way of life’ (White, 2012). This is evident particularly amongst young people, who are increasingly in touch with the aspirations of globalised youth via the vastly improved telecommunications networks of recent decades and the social media revolution.

These economic and cultural transformations for the farming population converge with the rising ecological stresses associated with climate change. With spiralling costs of farm inputs and a depleted natural resource base, some of the gains of the ‘Green Revolution’ years are being reversed (Vaidyanathan, 2006). Agrarian stress, alongside cultural change amongst youth, has consolidated cyclical labour in the capitalist sector as a major feature of rural life (Shah and Lerche, 2020; Singh, 2007; Sugden, 2019; Zhan and Scully, 2018) – either via long-distance migration or ‘commuting’ to local towns.

Capitalism is a unique economic system, and its emergence is arguably the most important turning point in the history of humanity, transforming how societies function and the physical environment in unprecedented ways. Nevertheless, it is critical to acknowledge that far from emerging onto a blank slate, capitalism has been built upon the foundations of much older economic systems which date back thousands of years. The purpose of this chapter is to review the well-established literature on the transition to capitalism within the context of an agrarian society while emphasising the need to acknowledge the ‘pre-capitalist’, as both an impediment to the expansion of capitalism and a mediating factor, which shapes how transition is taking place. In doing so, the conceptual framework for the book is introduced – in particular, the key concept of the mode of production.

The origins of capitalism date back to the early modern period – developing in the context of a crisis within feudalism in early modern Europe (Dobb, 1948). However, if one is to understand what lies inside of capitalism and what lies outside, it is useful to clearly define what this system actually entails. How we define capitalism has always been open to debate (see, for instance, recent contributions by Hodgson, 2016; Harris and Delanty, 2023), although Marx (1974), in the volumes of Capital, still gives by far the most comprehensive characterisation of the system, key features of which are still fundamental today.

There is a widespread academic acknowledgement, much of which was covered in Chapter 2, that the classical ‘semi-feudalism’ which was the focus of Indian debates in the 1970s and 1980s is of limited relevance in the twenty-first century due to market expansion, labour migration and the subdivision of landlord estates (see Lerche, 2013). Even Nepali leftist commentators have suggested that the declining power of landlords and monetisation of wages mean that agrarian relations are now ‘capitalist’ rather than ‘feudal’ with the exception of a few pockets (see, for example, Sharma, 2019). However, a critical finding of this book is that landlordism has remained remarkably resilient through decades of change, which have included land reforms, the expansion of industry and a state-led modernisation agenda. While the old Tharu landlords’ economic power may have declined in the ways documented in some other parts of South Asia, the absentee landed elite retain considerable control over its holdings, and rent and usury continue to act as the so-called depressor (Harriss, 2013) – constraining the development of the productive forces and pushing households into extreme food insecurity.

Nevertheless, intensifying articulations with the capitalist sector in the wake of economic liberalisation, and rising dependence upon wage labour, on a theoretical level could undermine dependency on tenancy or merchant capital amongst the landless and small landholders. Expanding capitalist markets could also simultaneously open up new avenues for capital investment amongst the urban and rural elite, reducing the incentive for landlords to hold on to their estates.

Paddy, or dhan, is the most important subsistence crop produced by farming households across Nepal's lowlands, regardless as to whether they are farming as tenants or as independent peasants (see Figure 5.1). Not only is it viewed as an essential food staple, but its production is central to the culture and way of life of the Tarai-Madhesh and the larger Eastern Gangetic Plains. This, it should be noted, is a food culture in which Morang's Adivasi peasantry has been integrated into since the clearing of the forest frontier and their transition from forest-based shifting cultivation to sedentary agriculture. It is planted in the monsoon month of Ashadh (June–July), and ropai, or transplantation, is a time of peak labour demand – a process which entails extensive exchange of labour between households, albeit usually in a monetised form. During the mid-monsoon months, labour is limited to periodic weeding and irrigating in the run-up to harvest as the rains subside in the autumn.

After the paddy harvest with the onset of the cooler, drier months of winter known as the rabi season, the farmers plant a crop of dhal, mustard or more often wheat (see Figure 5.2), the flour of which is used to make chapatti (unleavened bread), a secondary staple. Wheat is harvested prior to the pre-monsoon storms in April. The severe heat and thunderstorms of the pre-monsoon months, known as the pre-kharif, mark a quiet period in the agricultural calendar nowadays.

The sub-Himalayan lowlands which make up the historic region of Morang have been shown to have a complex history, yet have emerged today with a clear geography of inequality. With waves of migration from the hills, the development of successful owner-cultivator communities to the north has been paralleled by the perpetuation of feudalism in the original Tarai- Madhesh settlements of the south – albeit with the rise of an absentee rather than local landlord class. However, even within the southern belt, which is the focus of this book, the peasantry is shown to be far from a unitary entity and is divided by land ownership status as well as a complex matrix of caste and ethnicity. These divisions are crucial to explore if one is to understand the contemporary interaction between the capitalist and pre-capitalist – and that is the focus of this chapter.

Before that, it is worth offering a bit more social and cultural context of the core field site and its diversity. The seven villages are located in the former Jhorahat, Bhaudaha and Thalaha VDCs, which in 2017 were merged into Gramthan and Katahari rural municipalities (see Figure 4.1). Travelling northeast from Biratnagar towards this cluster of villages on the recently widened road, the Singya Nadi river marks the northern boundaries of the built-up area. One passes some ribbon development, including new housing plots catering to urban dwellers, and a number of large agro-processing mills, and after 4 kilometres one reaches Jhorahat Bazaar (see Figure 4.2), the first settlement which is included in the study.

It is clear thus far that rural poverty in southern Morang has complex roots. Unlike in many villages of the Eastern Gangetic Plains, there is not a local landlord class or a traditional caste-based land ownership hierarchy, where villages are divided into neighbourhoods by caste, with clear disparities of wealth in terms of housing and asset ownership. The region also does not experience the open political and ideological subjugation by a local dominant caste or landlord class at a local level, such as those which garnered support for the Naxalite struggle in Bihar in the 1980s and 1990s (Kunnath, 2017) or in the central Tarai-Madhesh during Nepal's People's War. However, the largely Adivasi peasantry experiences a silent drain of resources through a more complex and ‘distant’ network of feudal exploitation, with rents being appropriated in parallel by urban-based landlords and merchant capital.

It is important to now understand what this means for household livelihoods and the reproduction of rural poverty in southern Morang, as well as the long-term opportunities for ‘accumulation’ within the peasantry. The first section of this chapter explores the ability of households to meet their minimum subsistence needs or produce a surplus in the context of ground rent, distress commerce and usury. The second goes on to look at the implications of this drain of resource for investment on the land – in other words, it explores the constraining role played by the relations of production in developing the forces of production at a time of economic liberalisation and state-promoted commercialisation.