>How NOT to formalize property rights


Ben Cousins and colleagues of the Program for Land and Agrarian Studies at the University of Western Cape in South Africa have published a short report of their study of property rights procurement in Ekuthuleni, a city on the east coast of the country nestled in the Drakensberg mountains.

They critique the property rights formalization process put forth by Hernando de Soto in his The Mystery of Capital, released some years back, and its influence on the titling process undertaken by the government to bring various homesteaders (“squatters”, “settlers”…) into the white market. (That’s “white” market as in legal market, not Caucasian market, but that’s a whole ‘nether story….)

Their main point of contention is that the system of property popular in the West based on individual ownership doesn’t coincide with the communal and extended familial form of property rights informally adhered to among citizens on the periphery of the economy. Unfortunately in the case of Ekuthuleni, the requirements of formal titling didn’t mesh very well with the community’s long established methods of ownership and control,

members say they want to hold land in common to“prevent strangers from coming in and causing conflicts”
and because they cannot afford maintaining individual title.”Ekuthuleni clearly reveals the limitations of the
dominant system of property rights, which requires that an individual rights holder be identified; describes the
exclusive rights of the rights holder; and depicts the boundaries of land parcels through beaconing and geo-
referencing. But in Ekuthuleni property ownership is never exclusive to one person and is always shared by
a changing number of family members.The closest current law can come
to accommodating this would be a family trust, but even that would not
capture the nature, content, or governance of family- and community-based
land rights.The Ekuthuleni case reveals that there is often a fundamental
incompatibility between property rights in community-based systems and the requirements of formal property.

Not recalling de Soto’s book, which I’ve read most of, I will assume for the sake of argument that the authors of this report have him right, and that he agrees with the assumption and recognition of a single owner. Any upholder of the free market and of the “dispersed knowledge” inherent in highly differing cicrumstances among unique actors must be careful not to fall prey to yet another Hayekian term: “The Pretense of Knowledge”. In the case of Ekuthuleni, the peoples’ customs were overlooked, and a foreign form of property allocation foisted upon them.

For more information on the success and failure of property formalization see this, via Jim Henley’s blog “Unqualified Offerings“. In the case cited of South American squatter legitimation, the drawbacks to newfound collateral in homes and land is distrust of the banks they are now “priveleged” enough to work with. Not surprising. But that seems to be a failure of yet another statist projection of power over the currency, and corruption, not property rights.

(Hat tip: Kevin Carson of the Mutualist Blog.)


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