Definition
Land tenure is the body of law and custom that governs how land is owned, leased, worked, and passed on. It covers freehold and leasehold, slavery and serfdom, sharecropping and metayage, primogeniture and entail, common land and enclosed land. Smith treats tenure arrangements as a major determinant of whether a country's agricultural land is improved or run down.
The variety matters because incentives flow from the form of tenure. A cultivator who owns the land they work invests differently from one who rents it on a short lease, who in turn invests differently from one who is enslaved or bound to it.
Why it matters
How it works
Smith's mechanism is straightforward. A cultivator considers an improvement — draining a field, planting a hedge, fertilizing the soil — that will pay off over many years. They make the investment only if they expect to capture enough of the return. Secure ownership maximizes the captured return; long leases on fair terms capture much of it; short or insecure leases capture little; serfdom and slavery capture almost none.
Smith uses this to explain the agricultural backwardness of much of Europe in his time. Where land was tied up in great estates under primogeniture and entail, the heir often had neither the capital nor the inclination to improve it, and tenants on short leases would not. Where small freeholders dominated, as in parts of North America, every farmer was their own improver and aggregate productivity rose steadily. The institutional rules, not the soil, made the difference.
The same diagnostic survives. Modern land reform debates, formal titling of slum housing, customary versus statutory tenure in much of Africa and Asia, and the long shadow of historical land policy on regional inequality all turn on the questions Smith identified. The technology of agriculture has changed beyond recognition; the institutional question of who captures the return on improvement is unchanged.