Keith Hart on Fri, 4 Feb 2011 20:08:22 +0100 (CET) |
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Re: <nettime> Hernando de Soto: Egypt's Economic Apartheid (WSJ) |
I sure hope Felix is right ('the end of the end'), but I want to talk about this first. Hernando de Soto is an interesting figure who attracts a lot of hate mail from "progressives". This is not hard to explain since he sticks to one line that places him in competition with defenders of the poor, promotes himself shamelessly, made his name as a freedom fighter against Shining Path (see the name of his institute) and makes sure that he stays onside with powers that be. Perhaps his greatest crime is that he is a populist fond of lacing his lectures with punchy lines like "There are 1 bn people in rich countries, I bn rich people in poor countries and 4bn poor people. Ehat matters is address the neeeds of the 4bn, but the others get in the way." His two books are *The Other Path* (1989) and *The Mystery of Capital*(2000). In the first, he argued that Peru was a mercantilist state whose over-regulated and impenetrable national bureaucracy served the economic interests of a narrow clique and excluded the vast majority from effective participation in development. The latter was an entrepreneurial peasantry flocking in ever-larger numbers to the main cities. They were forced to operate informally, that is outside the law, in sectors such as housing, trade and transport. Peru?s tradition was inherited from the Spanish empire period and the term ?mercantilism? has been used to describe European political economy from the 16th to 18th centuries. It was succeeded, principally thanks to Britain, by a free-trade regime more conducive to industrial capitalism. Peru?s development in the 20th century was parallel to the West?s earlier. A massive migration to the towns led to legal exclusion of the poor by mercantilist bureaucracy; but the ?informals? won in the end by cheapening production, making the regulations irrelevant and from time to time erupting in violence. Peru was thus headed for a revolution along French or Russian lines unless the national bureaucracy simplified, decentralized and deregulated itself. In *The Mystery of Capital*, Peru and other poor countries at the millennium are seen to be trapped in a world economy dominated by the first industrial nations. Red tape is mainly an effect of a global regime that forces marginal states to adopt inappropriate institutional practices. The result is the same: migrants pile up in cities and are forced to work outside the law. De Soto claims that there is no shortage of wealth in the non-western world. What is missing is a property regime that would enable the masses to realize their wealth as investment capital. The banking sector is dominated by foreign corporations and it runs along lines now standard in the rich countries. Informal property rights cannot be converted into collateral for loans. This is particularly unfair since countries like the USA, which dominates this global financial bureaucracy and the institutions that supervise world trade and investment, made the transition to modern capitalism by giving flexible informal practices full rein in their own development. It follows that similar flexibility has to be shown today if the poor urban masses are to have a chance of joining global development on less unequal terms. The alternative is more recruits to terrorist networks and large social explosions before long. Brian is right to argue that this interpetation and political recipe is too one-sided. Obviously we need a new mix of states, markets and voluntary associations capable of taking on corporate monopolies at every level from the global to the national. States are good for redistribution, guaranteeing social rights and organizing public bureaucries serving the people in ways they can't serve themselves. But where is the state these days? By which I mean the political units capable of giving the people what they want and in some way coordinating all the other ways they pursue their economic ends? I wish I knew, but I agree that this is the level we need to discuss the options. In solidarity, Keith On Fri, Feb 4, 2011 at 4:07 PM, Brian Holmes <bhcontinentaldrift@gmail.com>wrote: > Thanks for this, Patrice. > > De Soto's analysis is striking and the problems he reveals are part of what > needs to be addressed. > # distributed via <nettime>: no commercial use without permission # <nettime> is a moderated mailing list for net criticism, # collaborative text filtering and cultural politics of the nets # more info: http://mail.kein.org/mailman/listinfo/nettime-l # archive: http://www.nettime.org contact: nettime@kein.org