Institutional change in Icelandic agriculture, 1780–1940

Abstract

Abstract This article examines the restructuring of the institutional framework of Icelandic agriculture with emphasis on institutional arrangements inhibiting the modernization of agriculture and the growth of non-agrarian sectors. Two institutions were of particular importance in this respect. One was the system of land tenures with its heavy obligations to landlords and insecure farm leases, which discouraged fixed capital investment on the farms. The other was a wide-ranging social legislation set up to regulate family formations and to maintain a balance between agriculture and the fishing sector in favour of the former. The most effective regulatory device was a stringent labour bondage which had few parallels in Europe. The paper analyses the disintegration of the traditional institutional framework from the late eighteenth century onwards, and points to the historical circumstances at work.