Capitalist seed: property titles for millions of Latin American peasants could make the difference between serf and citizen.

The scenes playing out in Brazil would spook any self-respecting conservative. Hordes of landless peasants wave red flags of their political movement, chant slogans and brandish pitchforks outside the gates of large ranches. The ranchers' hired guns keep wary hands on their holsters.

In Brazil, as elsewhere in Latin America, such tableaux are becoming much more common as the landless become more militant. The specter of violence is putting tremendous pressure on even leftist leaders, such as Brazil's President Luiz Inacio Lula da Silva.

The disparity in land ownership and, just as importantly, the lack of legal titles, are the root of vast inequities in income, education and health. Peruvian economist Hernando de Soto has urged governments to provide deeds to millions of peasants, arguing that land ownership makes the difference between serf and citizen. "Capitalism doesn't work without property rights," de Soto, a freemarket champion, has said.

The lack of legal ownership undermines not only a poor farmer's incentive to invest in his land and apply for credit, it hobbles his participation in democracy: Officials can take away property from "uppity" peasants with little or no repercussions. Effective land policy "empowers poor people to participate in economic opportunities and in society more generally," World Bank Chief Economist Nicholas Stern, told reporters in June.

Increasingly, impoverished farmers prefer to stay and fight. Armed guerrillas--Mexico's masked Zapatistas and the Revolutionary Armed Forces in Colombia, whose members are overwhelmingly landless peasants--have chosen a violent struggle, while non-violent movements such as the National Confederation of Indigenous Nationalities in Ecuador and Brazil's Landless Rural Workers Movement (MST) have sought more peaceful means.

Brazil's MST or Movimento Sem Terra, which has helped settle more than 300,000 families since its founding in 1984, says its members are too desperate to wait for government reforms. The leaders have organized land invasions in the name of an estimated 4.8 million landless families in a nation where more than half of the arable land is owned by just 4% of the population and the poorest 40% of the population holds just 1%.

South America's largest social movement with an estimated 1.5 million members nationwide in Brazil, MST can be strident--blocking highways, looting food trucks, occupying government offices, and even taking hostages. But at its best, the group is a model for agrarian reform.

In 1998, I visited MST's Novo Sarandi Cooperative in Rio Grande do Sul state, which had once been an idle tract for an absentee landowner. Squatters had transformed the property into a US$12 million a year business, selling vegetable, dairy and meat products throughout Brazil. Such "guerrilla capitalism" has improved the lives of thousands of subsistence farmers.

To make the collectives more effective, Brazil doesn't have to rid itself of agribusiness, as MST hardliners argue. That would be lunacy. Agribusiness accounts for about 10% of the nation's gross domestic product, 35% of the country's exports and 23% of the economically active population.

Agribusiness and MST-like collectives need to learn to live side-by-side. For that to happen, Latin American presidents must buy or expropriate if necessary fallow lands, paying market-value compensation. They must offer small farmers credit, technical assistance, irrigation, water and electricity. Otherwise, the poor farmers will abandon plots for lack of loans and technical support.

Cash-strapped Latin American governments can pay for such programs with improved tax collection, as well as by seeking the support of international lending institutions.

Agrarian reform is a sure way to transform Latin America's unjust social structure and offer millions of landless peasants access to markets and a place in the new global economic order. Or, as it was said another way by de Soto, "Capitalism must understand that looking after poor people is not the task of the First Lady of the Republic. It's the task of the president."

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