(b) It is subject to income tax at the progressive personal rate,
rather than at the flat rate that characterizes the corporate income
tax on incomes over $100,000.
As a result, an advantage is given to the form of business enter-
prise that is large enough to be taxed at the flat 46 percent corpo-
rate rate, or to proprietary firms that are large enough to benefit
from the progressively increasing value of business-expense deduc-
tions from personal income tax liability.
In either case, a larger scale of farming enterprise is needed to
secure these advantages. To operate the needed large-scale enter-
prise a managerial class is needed that does not provide the capital
and does not provide the labor.
For this more complex managerial structure to operate success-
fully the number of variables dealt with by management must be
reduced as much as possible. This is achieved by concentrating on
one crop or product, and by selecting the crop or product that can
be produced with the smallest amount of managerial input.
This leads to a preference for monocultural field crops or single-
product livestock feeding enterprises. This further accelerates the
trend toward concentration, by generating both backward and
forward linkages to input-supply and product-marketing firms
that are tailored to monoculture, or one-product firms. This weakens
the market infrastructure that had grown up in the past to serve
multiple-crop or “mixed farming”.
This trend toward concentration and specialization is furthered
by the system of higher education in agriculture which puts a pre-
mium on turning out “managers.”
Flexibility, adaptability, and resiliency are lost in the process.
A production system in agriculture that combined the functions
of capitalist, manager, and laborer permitted the shortest possible
information chain linking decisions to invest (and capacity to invest)
with the evaluation of the outcome. There was no managerial layer-
ing in the feedback chain. When something was wrong with a field
activity the capitalist knew it without any filtering of the informa-
tion through an intermediate managerial relay.
When wage rates were unsupported by earnings of the firm, the
wage rate could be adjusted immediately. At the extreme, produc-
tion could be stopped with a minimum of social costs. The system
thus contained built-in stabilizing devices that led to efficient invest-
ment and production decision-making.
For the loss of this closed-circuit feed-back chain represented by
the single-proprietor farm firm to be a social gain there must be some
larger advantages from concentration and specialization. What are
they? Possible answers include:
(a) Ease and reduced cost of mobilizing capital in large amounts.
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