Sunday, October 25, 2009

Kennedy on Property Rights and Economic Development

David W. Kennedy (Harvard) has posted Some Caution about Property Rights as a Recipe for Economic Development.  The abstract:

In recent years, enhancing the security and clarity or formality of property rights has become something of an idée fixe among global development policy experts. This is more ideological assertion than careful history, however. Western economies have experienced periods of aggressive industrialization and economic growth with a wide range of different property regimes in place. Throughout the West, property rights have always been embedded in a complex legal fabric which modifies their meaning and qualifies their enforcement. In fact, most proposals for “strong and clear” property rights rest, at least in part, on lay conceptions about the legal order which are simply not warranted. These include the following: that “property rights” have an ideal form which can be disentangled from the warp and woof of social and economic struggle in a society; that “private order,” including property rights, and “public regulation” can and ought to be cleanly separated, the one supporting the market, the other potentially distorting it; that “strengthening” property rights has no distributive implications, if only because property law concerns the “rights” of individuals over things rather than complex relations of reciprocal rights and duties among people with respect to things; that concerns about social uses and obligations are only properly pursued outside the property regime, through social regulation of one or another sort; that in a well functioning market economy, all “private” rights can and will be freely rearranged by market forces, rendering decisions about their initial allocation unimportant; or that the formalization of property rights leads cleanly to both efficiency and growth, eliminating the need for policy judgment about the desirability of alternative uses and distributional arrangements.

Each of these six ideas supports the notion that the development of a proper law of property can be accomplished without facing complex questions of social, political and economic strategy. But each is incorrect. Property law is a critical domain for engaging, debating and institutionalizing development policy, but it is not a substitute for strategic analysis and political choice. In this short essay, I review these common, if mistaken, ideas about property rights in the West in light of the Western experience. My objective is to place the strategic choices embedded in any property regime in the foreground and lead one to hesitate before accepting conventional neo-liberal wisdom about the importance of “clear” or “strong property rights” for economic development.

Matt Festa

http://lawprofessors.typepad.com/land_use/2009/10/kennedy-on-property-rights-and-economic-development.html

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