Dead capital: De Soto’s fallacies in Zimbabwe

A recent opinion piece in the Zimbabwe Independent by Eddie Cross, was titled “Land: Africa’s greatest but still dead asset”. It very clearly picked up on Hernando De Soto’s ideas on ‘dead capital’ and the need for clear property rights on land and other assets in order to release their value.

Cross’s article is extraordinary for its failure to engage with the substantial critique of this argument, presenting a simplistic and patronising perspective on ‘tribal’ (sic) tenure systems. It is doubly extraordinary as the author is the MDC-T’s Policy Coordinator General and is a member of the National Executive of the party, as well as being MP for Bulawayo South.

It demonstrates perfectly the poverty of understanding and debate on this subject in many quarters. The MDC’s website carries only a very general statement on land and agriculture, but if future policy is being informed by the sort of arguments presented in this article it is a tragedy. Even the World Bank rejects the simplistic argument that individual property rights are the solution to economic growth, and particularly around land where registration and titling approaches have long been shown to be costly and ineffective.

The article betrays a remarkable lack of understanding of African tenure and land governance systems, and offers a simplistic narrative peddled by right-wing think tanks, such as the Cato Institute (whose strap-line is ‘Individual Liberty, Free Markets and Peace’). Indeed, Cross himself wrote a Cato Institute paper on land reform with this line of argument in 2009.

However, this perspective has been widely challenged. For example, Ben Cousins and colleagues at PLAAS produced an excellent briefing paper a few years back which challenged the claims of De Soto and his followers. The central criticisms they focus on are “his oversimplification of the informal economy and associated property relations”. The paper is short and well worth reading. Virtually all the criticisms they outline are repeated in almost pure form in Cross’s piece.

They conclude: “De Soto’s ideas have mesmerised many policy makers and politicians, but a significant body of scholars and land reform practitioners are concerned that his policy prescriptions are highly misleading”. Policy makers, they argue, “must resist the temptation to seek simplistic solutions to poverty of the kind offered by De Soto”.  It seems Eddie Cross, like others, has been mesmerised. Let’s hope the MDC does not come out with highly misleading and simplistic policy prescriptions too.