Category: Private Property

The Co-evolution of Diversity in Property and Economic Development: Evolutionary Economics and the Vertical Dimension (Part 2)

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Having laid out the horizontal dimensions of diversity in property in Part 1, I here offer a critique of the assumption in mainstream economics that all kinds of property institutions need to be or will be transformed into private property to promote economic development. I also reflect on my previous work that applies and develops Darwinian mechanisms of variation, inheritance, and selection鈥攚hich has been extensively discussed in evolutionary biology and evolutionary economics鈥攖o study property regime transformation in China.

While working on , Professor Erik Reinert introduced me to two very important books and encouraged me to think about the relevance of the work of Darwin and Veblen to study property regime transformation in China: by Stephen Jay Gould (1941-2002), Harvard biologist and historian of science; edited by Erik himself and Francesca Viano. Erik also introduced me to the work of evolutionary economists including of Columbia University.

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The Co-evolution of Diversity in Property and Economic Development: Key Concepts and the Horizontal Dimension (Part 1)

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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.

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Land, property, technology: interrogating an infrastructural promise

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Land has served as a central means of sustenance, but also as a nexus of wealth and power for people throughout the ages. The has estimated that more than seventy percent of the world鈥檚 population lack access to legally registered land titles. Existing land registries are centralized databases, vulnerable to corruption and destruction. There is an increasing turn towards emerging technologies such as blockchain for recording the relationships between people and land, coordinating and synchronizing that data for efficient governance, and making the information publicly available.

This essay explores the abstraction of blockchain as employed for formalizing land rights in emerging economies. Behind the seemingly neutral fa莽ade of the technology, diverse aspirational claims and narratives guide its implementation in different societies, shaped by particular histories and socio-political contexts. This highlights the need to explore blockchain-based land registries as distributed knowledge infrastructures, uncovering their broader embeddedness in older, non-digital modalities, and the 鈥減eopled infrastructures鈥� of informal networks with their histories and cultural repertoires. As digital technologies can facilitate an illusion of enhanced visibility of some elements while obscuring others, I argue that more attention is needed to the role of broader colonial legacies and enduring North-South inequalities that frequently remain backgrounded in the adoption of such technologies.

An increasing number of governments are investigating the prospects of transferring their land registries to blockchain (). Blockchain applications are explored as enabling the formalization of property rights in the countries of the Global South, as well as providing more efficient coordination of real property markets in the Global North. Blockchain registries have several advantages as compared to centralized digital or paper-based databases. Records on blockchain are distributed and verified by a multitude of nodes in a peer-to-peer digital network, affording them more transparency and resilience. As new additions to the chain of blocks are cryptographically time-stamped, this makes tampering or accidental data loss less likely. Auto-executing 鈥渟mart contracts鈥� that transform legal agreements into code could mediate contracts ().

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Property rights and transaction costs in developing countries: A political settlement perspective

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Photo by Dennis Jarvis. .

Transaction costs due to distributional conflicts, political settlements, and weak enforcement capacity have important implications for the implementation of property rights in developing countries. While critical analysis of these factors is missing in the mainstream economics approach to property rights, it is obvious that incorporating such analysis will be crucial in designing policies to minimize transaction costs that hinder an efficient functioning of property rights. Specifically, there is a need for an alignment of interests among powerful political and economic interests if property rights are to be more efficient at reducing transaction costs.聽

A fundamental limitation of contemporary property rights theory is its inability to incorporate factors that might reduce property rights from solving transaction costs, particularly in developing countries. This piece reviews the mainstream explanation of the relationship between property rights and transaction costs and then evaluates factors that can inhibit property rights from reducing relevant transaction costs, which include distributional conflicts, costly enforcement capacity, political settlement, and measurement problems. Major emphasis is placed on social conflicts and organization of power which are missing from the conventional analysis of property rights.

In this respect, the political settlements framework developed by SOAS economist Mushtaq Khan can enrich our understanding of the operations of property rights in developing countries. Khan () defines political settlements as 鈥渟ocial orders characterised by distributions of organizational power that together with specific formal and informal institutions effectively achieve at least the minimum requirements of political and economic sustainability for that society鈥�. In short, political settlement means the distribution of power among different groups.Read More »

A Critical Review on the documentary 鈥淧overty, Inc.鈥�

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PovertyInc.jpg

The documentary 鈥淧overty, Inc.鈥� has become so influential that it is now part of many courses at the university level. The good news is that at universities we apply critical thinking to the information we receive (or we are supposed to). As a development economist, I share here my views on this famous documentary.

On the positive side, the documentary does a good job in making some points for an audience unfamiliar with economic theory, such as the idea that dependency does not end poverty, or that current foreign aid (money flows between governments) has 鈥渦nintended consequences that do more harm than good.鈥� However, both ideas are not new in development studies. The much quoted 鈥渢each a human to fish鈥� is an idea associated with many philosophers, including Maimonides (about 850 years ago). This criticism of the structure of current foreign aid is a relatively old idea in the development literature. Perhaps the best point made by the documentary is the argument that Non-governmental Organizations (NGOs) can do a better job if they base their strategies on effective communications with local entities, although this idea is not new either.

What are, then, the problems with this documentary? Many. Firstly, the development literature has two main perspectives; namely, the conservative and the progressive. A documentary that omits a of argumentation is not responsible and carries 鈥渦nintended consequences,鈥� such as misinforming that unfamiliar audience. Besides mentioning supranational entities, the documentary did not expose crucial structural problems: there is no serious analysis on geopolitics, global power relations, or class issues, among others. A class analysis would not, for instance, focus on stressing that 鈥淣GOs need the poor to exist鈥� but that 鈥渢he rich need the poor to exist鈥�.Read More »