Re: MD the ideology of capitalism - what is capitalism?

From: Sam Norton (
Date: Mon May 16 2005 - 12:54:10 BST

  • Next message: Sam Norton: "Re: MD the ideology of capitalism - what is capitalism?"

    Hi Mark,

    Some time to get back to this debate. This post is just about one aspect of
    de Soto's work.

    I pointed out that de Soto's analysis of capitalism does not preclude common
    ownership of assets, whether by state power or by co-operatives of various
    descriptions. As such, I don't think that it is precommitted to a particular
    political stance. Moreover, I think that in practical terms, de Soto's
    principal motivation is to help the lives of poor people around the world,
    and your comments reveal an assumption that, on the contrary, he is a
    predatory capitalist. I think that is an unsustainable position to hold. I
    would really urge you to read the book itself. There is also a website:

    > msh:
    > The question I'm hoping you'll ask yourself here is, if all de Soto
    > cares about is making sure that the title of the land is established
    > by law, so that the potential of it can be fixed, then why not opt
    > for common ownership of land via the State? Very simple, very easy
    > to administer. Then all those entrepreneurs who want to use their
    > genius to derive profit from the common lands need only pay fair rent
    > to the common owners.
    > See, I think all his talk about establishing clear title by law, is
    > really about securing private property rights for existing
    > landholders, while ignoring the moral dimensions of land ownership
    > in the first place.

    That last sentence is why I think you have got completely the wrong end of
    the stick regarding his analysis. De Soto's principal concern is that those
    activities of the poor which are outside the capitalist framework are
    vulnerable to predation by those with physical power. So for example, he
    runs through various countries (Peru, Philippines, Egypt) describing the
    economic size of the assets OF THE POOR and argues "In every country we have
    examined, the entrepreneurial ingenuity of the poor has created wealth on a
    vast scale - wealth that also constitutes by far the largest source of
    capital for development. These assets not only far exceed the holdings of
    the government, the local stock exchanges and foreign direct investment;
    they are many times greater than all the aid from advanced nations and all
    the loans extended by the World Bank". What happens is that those who have
    no legal title to that land are a) prevented from using it as collateral to
    gain access to credit; b) operate outside the law, and so have no protection
    from police and other officials; c) are vulnerable to decisions by
    landowners and governments to have their property and businesses destroyed
    without compensation.

    I don't mean to be rude but THE WHOLE POINT OF WHAT DE SOTO IS ARGUING FOR

    That's one of the major reasons why I like it. Now it is perfectly possible
    to say that de Soto is misguided, that he thinks he is helping the poor when
    in fact he is just a front for vested capitalist interests. But I think you
    need to take his position more seriously before you say "I think all his
    talk about establishing clear title by law, is really about securing private
    property rights for existing landholders, while ignoring the moral
    dimensions of land ownership in the first place".

    I'll quote another paragraph from him:
    "The words 'international poverty' too easily bring to mind images of
    destitute beggars sleeping on the kerbsides of Calcutta and hungry African
    children starving on the sand. These scenes are, of course, real, and
    millions of our fellow human beings demand and deserve our help.
    Nevertheless, the grimmest picture of the Third World is not the most
    accurate. Worse, it draws attention away from the arduous achievements of
    those small entrepreneurs who have triumphed over every imaginable obstacle
    to create the greater part of the wealth of their society. A truer image
    would depict a man and woman who have painstakingly saved to construct a
    house for themselves and their children, and who are creating enterprises
    where nobody imagined they could be built. I resent the characterization of
    such heroic entrepreneurs as contributors to the problem of global poverty.
    They are not the problem. They are the solution."

    And before you get uptight about the reference to 'heroic entrepreneurs' and
    think he's a closet Randian, a large part of his research is about the steps
    you have to go through to either get a business registered legally in Peru.
    He set his academic researchers the task of registering a small garment
    workshop. They spent six hours a day on this, for 289 days; it cost $1231 -
    31 times the monthly minimum wage. Building a house on state- owned land
    took six years and eleven months - requiring 207 steps in 52 separate
    government offices. That's what you need to do in Peru if you're going to be
    legal. Of course, the vast majority of the poor don't have the resources of
    an academic department - if nothing else they're too busy earning a living -
    but it means that all the activities that they undertake, which generate
    wealth and support their existence, are vulnerable to exploitation. I can't
    think of a clearer example of moral conflict, which - using Pirsig's
    hierarchy - the sense of capitalism that de Soto is talking about is the
    major step that will safeguard all those people.

    To be honest, I really can't see why you object to it. But I'll come on to
    your other post with the details next.


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