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This blog post builds on the 鈥業nstitutions, Economic Development, and China鈥檚 Development Policy for Escaping Poverty鈥� piece and comprises two parts dealing with the key concepts (Part 1) and mechanisms (Part 2) for evaluating the co-evolution of diversity in property and economic development. I argue that diversity in property plays a key role in economic development and that there are two dimensions that are important for examining the co-evolution of diversity in property and economic development鈥攈orizontal (Part 1) and vertical (Part 2).

In this post, I offer a critique of the assumption in mainstream economics that private property is the only kind of property institutions that can stimulate and preserve economic development (I am, of course, not the first to offer critiques of this assumption; for existing studies, see e.g., ). I focus on the meaning of 鈥榙iversity in property鈥�, which concerns the horizontal level analysis.

Introducing the concept of 鈥榙iversity鈥�

鈥樷�� means 鈥榤any different types of things or people being included in something.鈥� Professor Erik Reinert introduced me to the concept of 鈥榙iversity鈥� and encouraged me to examine the nature and significance of diversity in institutions such as property and the co-evolution of diversity in institutions and economic development. I started my research in this area by co-authoring a working paper on 鈥�鈥� with Erik in 2013.  

In , Erik and I examined diversity not only as part of nature鈥檚 strategy for the survival of species from natural shocks but also as a strategy consciously employed in human societies for the same reason. We argued that diversity constitutes a key element in economic development. Starting in the 1400s, Europe鈥攁nd later the West in general鈥攅xperienced an explosion of intellectual creativity and economic development, due to increasing diversity in polities, policies, cultures and ideas. Simultaneously, China started a process of de-diversification in that period and fell behind. We were worried about the lack of concern for diversity in today鈥檚 mainstream economics and development policies.

Due to diminishing diversity in mainstream economics and development policies, economists and policy makers tend to see聽 (Reinert 2000: 180) and changes to be predicted or prescribed. When this pattern of thinking is transferred to evaluate the nature of property and the process of property regime transformation, the importance of 鈥榮trong and clear鈥� property rights is emphasised as if they were a panacea that can create and preserve a well-functioning market. Further, to promote economic growth, other kinds of property institutions need to be transformed into private property as 鈥榞ood institutions鈥� understood by (). Diversity in property is eliminated.

Diversity in property

When examining the nature and significance of diversity in property, I see diversity in property as a 鈥榙evelopment-promoting鈥� institution, in contrast to what is considered 鈥榞ood institutions鈥� by the World Bank, which tends to focus more on eliminating corruption and securing private property. To understand the nature and significance of diversity in property, we need to clarify some basic concepts.

First, property refers to both a resource over which an individual, a community or the state has overall control and the way a resource is managed and regulated by an individual, a community or the state. Property is more concerned with how a resource is used, managed, or governed rather than how it is owned. , for example, means 鈥榓 resource over which a community and its members together have overall control and the way a resource is managed and regulated by a community for its collective purposes鈥�. The term 鈥榩roperty鈥� is more helpful than 鈥榦wnership鈥� especially in the Chinese context where ownership is defined by the owner鈥檚 identity (which gives little information on how the resource is used and governed) and closely associated with ideology.

Second, the concept of private property is both ambiguous and broad: individual and corporate ownership are 鈥榩rivate鈥�, while 鈥榞overnment ownership of resources such as office buildings [is also] essentially private鈥�, as ) argued.  When referring to a resource controlled by a human person, it is better to use the term 鈥榠ndividual property鈥� rather than 鈥榩rivate property鈥�.

Third, within communal property, individual property rights/interests may co-exist with communal property rights/interests. Here I use rather than 鈥榩rivate property rights鈥� which may be held by either a human being or an artificial legal entity. The introduced in China in the late 1970s is a classic example. The collective issues contracts to the household, which has responsibility for the management of farming an area of land called 鈥榬esponsibility land鈥�. Farmers have an individual property right/interest in rural land to possess and use it for farming purposes.

including the household鈥檚 interest and the collective鈥檚 interest. Although diversity in property is not unique to China, the household responsibility system is an innovative development-promoting institution introduced in China in the late 1970s, while the ideological function of collective ownership of rural land is preserved but less constrained for individual and communal property rights performing their economic functions.  

Diversity in property in China

Diversity in property has a much broader scope than that of diversity in ownership. The latter exists in China鈥檚 鈥榮ocialist market economy鈥� with a mix of state ownership, collective ownership, and individual ownership. Diversity in property differs from the evolution of diverse forms of property, for example, from communal property to individual property or from informal property to formal property. These are different forms of property existing at different times.

To use my previous work as an example, my book discussed the re-emergence and recognition of private property rights in the context of China鈥檚 social and political transformation and economic development since 1978. Illustrative cases include the revival of private property rights in the reform of State-owned enterprises (SOEs) and development of township and village enterprises (TVEs). The focus was on diverse forms of property.

After my 2014 book, I moved my research area from examining diverse forms of property at different times to diversity in property. Two research projects facilitated this new area of research. I was awarded two research projects on diversity in 2014: funded by the European Commission, Joint Research Centre (completed in 2015); funded by the British Academy International Mobility and Partnership Scheme 2014-17 (completed in 2017).

The meaning of diversity in property (in rural land) in the Chinese context is elaborated in the following table, focussing on four key periods of property regime transformation. The collectivisation period (1956-1978) is not included, as diversity in property was virtually eliminated in this period. Diversity in property includes two levels:

1. the coexistence of different types of property;
2. within communal property, the coexistence of individual and communal property interests.

Table 1 demonstrates that diversity existed in most parts of China鈥檚 long-term property regime transformation except the collectivisation period.

Table 1: Property regimes across vertical and horizontal dimensions

Diversity in property, offering a better reflection of China鈥檚 socio-economic realities than diversity in ownership, plays at least three important functions in reshaping development policies:

1. it shifts the focus away from ideological debate on public versus private dichotomy;
2. it directs the focus to thinking about how a resource can be better governed;
3. it directs policies to match context.

In my next blog post (Part 2)., I will explore the vertical dimension of the co-evolution of diversity in property and economic development by focussing on some key mechanisms informed by evolutionary economics.

Ting Xu is Professor of Law at Essex Law School, University of Essex. Her research focuses on comparative property law; Chinese law; law, governance and development; and political economy. She tweets at .