Hernando De Soto’s
interesting perspective on property rights, capitalism and poverty.
So our thesis is, basically, the reason it doesn’t work for the majority is because the system can only work with property rights. Markets and capitalism are about trading property rights. It’s about building capital or loans on property rights. What we’ve forgotten, because we’ve never examined the poor, we’ve sort of thought that the poor were a cultural problem, is that the poor don’t have property rights. They have things, but not the rights.
And when you don’t have the rights, you don’t have a piece of paper with which to go to market. You don’t have a legal system that undergirds that piece of paper and allows it to circulate in the market. The question now is whether we’re going to follow the Western route—let’s say that capitalism started 500 years ago—and go through one revolution after another, tremendous wars, social wars and then finally, four centuries, five centuries later the system comes together, or we’re going to be able to learn from you and get it over with in the next five, 10 years.
But that requires for capitalism to understand that looking at the poor is not the task of the First Lady of the republic. It’s the task of the president. It’s not a question of just doing macroeconomic stability, getting your accounts right, stabilizing money. It’s about finding out why the poor can’t use the legal system and revamping it. It’s major surgery. That’s why we’re at a time where capitalism is going to be tested. Will it be able to cater to the poor, or will it continually be seen in places like Latin America as something that essentially relates to libertarian clubs and to people who are wealthy, in many cases who don’t necessarily believe in capitalism. They just believe in helping their own wealth. Or are we going to make it inclusive and start breaking the monopoly of the left on the poor and showing that the system can be geared to them as well?
Interesting view, but what makes it more so is the almost excessive emphasis that De Soto places on property rights. One thing in common about all economists (apart from the light bulb, that is) – each one has his own particular pet peeve.