Abstract
The libertarian case for legal titling is that formalization of the economic (de facto) rights of those who own land and buildings improves prospects for capitalism and, ultimately, development. Although all rich countries have private property rights, we argue that the success of legal titling depends on a certain kind of state—what we call a property-protecting state—that is often missing in developing countries. We use insights from Austrian economics, public choice, and institutional economics to clarify the political basis for legal titling to improve land tenure security. Evidence from Afghanistan shows that legal titling has not worked because the country does not have a property-protecting state. We suggest focusing on improving political institutions before investing in legal titling. In the meantime, it makes more sense to register land ownership at the community level, without the state.
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Notes
See, for example, Umbeck’s (1977) classic study on the gold rush in California that commenced in 1848–1849. However, Umbeck’s libertarian argument about the emergence of rights is not without critics. First, rather than a legal vacuum, the US federal government was actively adjudicating land claims during the gold rush (Clay 1999). Second, it is not clear that the miners had private property rights. According to Clay and Wright (2005), the miners had almost no ability to exclude others from their claims, and lost their rights if they were not continually guarding their claims. Hadfield (2016) explains further that it makes little sense to refer to the miners as establishing “law” because their rules were not enforceable by third parties, which is a defining feature of and legal order.
It is important to recognize that private property is not inherently superior to communal property. For example, Kopsidis et al. (2015) show using administrative data on land ownership from Russia in the late nineteenth and early twentieth century that communal property was in some instances more productive than privately owned land.
McCloskey (2010) argues that dignity afforded to entrepreneurs is what contributed to capitalism in England. De Soto’s argument is similar, although it is not based so much in analysis of culture, but of legal recognition. It is possible that in the US, there was also a cultural transformation that contributed to legal recognition.
Another issue is that Native American governments on reservations are more predatory than surrounding governments, which further contributes to underdevelopment (Anderson and Parker 2008).
It is important to acknowledge that the presence of such monitoring does not mean they will necessarily succeed. Experts failure is a perpetual challenge, including when projects are monitored by organizations staffed with economists (Koppl 2018). Nonetheless, the presence of such monitoring by independent expert organizations is likely to provide at least some useful information about the performance of land reform projects.
We make no claim that the state is the only source of public goods. In many instances, public goods, including roads, can be privately provided (Clark and Powell 2017). However, it is still the case that the state’s ability to provide public goods, such as roads, is likely to improve prospects for successful legal titling.
Boettke and Candela (2019) argue that political constraints are an explanation for state capacity. We agree, but also view the state’s administrative capacity as influencing ability to record ownership, while political constraints influence individual beliefs about whether the government will respect those rights in the future.
Pashtuns are the largest tribal confederation in Afghanistan, constituting around 40 % of the population. Most Taliban and most nomads are Pashtuns.
The United States Agency for International Development (USAID) was active in land reform in Afghanistan the 1960s and 1970s, but the government capacity to implement policies was limited and civil war eliminated chances for more meaningful reform.
From 1992 to 1996, several groups competed for control. The situation was anarchic, but by 1996, the Taliban controlled much of the country.
Zahir Shah was Afghanistan’s king for over three decades. While Zahir Shah held elections, it was mainly for show, as the Afghan parliament had no real authority to challenge his rule (Dupree 1973).
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Murtazashvili, I., Murtazashvili, J. The political economy of legal titling. Rev Austrian Econ 32, 251–268 (2019). https://doi.org/10.1007/s11138-019-00442-3
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DOI: https://doi.org/10.1007/s11138-019-00442-3