Tuesday, February 24, 2004


Flagrancy to reason has an interesting treatise--fueled by Hernando DeSoto--on the uncomfortable confluence of interests between free marketeers and Kautskian agrarian reformists in the effort to return land to the masses.

De Soto's idea, in essence, is that poor people are poor because they are not rich, by which he means they don't own capital (for most people around the world, their most substantial investment of capital is place where they live). Because these people cannot lay claim to the productive uses of this capital, they systematically get the shaft in terms of economic and human development opportunities via their socioeconomic relationship with owners of capital entailed by their landlessness. Thus, the poor remain mired in poverty. Most Wobblies and raving Nation readers would have no problem agreeing with this analysis.

The reason most people can't lay claim to this source of wealth, DeSoto argues, is the incomplete development of a system of property rights rules, which are at heart a political issue over the choice of the institutional regimes to underpin market exchange. His solution, to expand property rights--dividing property into ever smaller parcels--to offer people the protection and reward of their share of property.

DeSoto's is an interesting idea, and refreshingly pragmatic in the debate on global poverty and micro-level development, however the smaller chunks of property there are, the easier they are to trade (just look at the trading volumes of the S&P 500 futures and the e-mini futures), and the more vulnerable small property holders are to the asymmetrical power of large market actors, which produces what I like to call gentrification. Nuf said.

So, DeSoto, close (and the right direction), but no cigar.


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