Property Rights from Below

Commodification of Land and the Counter-Movement

Olivier De Schutter, Balakrishnan Rajagopal, Olivier De Schutter, Balakrishnan Rajagopal

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781317220022
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Propiedad inmobiliaria

Recent years have seen a globalization of property rights as the Western conception of property over land has extended across the world. As formerly community-owned land and natural resources are privatized and titling schemes proliferate, Property Rights from Below questions the trend toward treating land as a commodity and explores alternatives to the Western model.

As we enter an era of resource scarcity and as competition for land and associated natural resources increases, purchasing power cannot become the sole criterion for land allocation; and the law of supply and demand in increasingly financialized markets cannot become the sole metric through which the value of land is determined. Using a range of examples from around the world, Property Rights from Below demonstrates that alternatives to this model often emerge from social innovations supported by local communities and that there is an urgent need for a broader political imagination when it comes to land governance.

This innovative cross-disciplinary perspective on the pressing problems surrounding global property rights will be of interest to academics, students and professionals with an interest in property law, development economics and land governance.

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Property rights from below

An introduction to the debate

Olivier De Schutter and Balakrishnan Rajagopal

At the juncture of the multiple global crises that we are witnessing – food, water, ecological and political – is the increasing contestation over property. Especially intense concerning property in land and land-use arrangements secured by law, these crises have resulted in increased displacement, dispossession, evictions and concentrations of inequality in access to resources. These crises, and the struggles they have generated, provide the main motivations for the questions that arise in this volume.

There are two distinct contributions that we aim to make. First, we aim to critique the dominant models and conceptions of property and their distributional consequences and explore alternative understandings of property such as the commons. Second, we intend to highlight the juris-generative role of social movements and their contestations for the transformation of the law and politics of property, at several scales, from international to the very local. In doing both, we reveal our intention to echo many of the concerns and approaches adopted in earlier works in law and social sciences as being “from below” in contradistinction to traditional approaches in the social sciences or law, which focus on actors and approaches “from above”. A central element of such approaches to law from below is the role of social movements and dissident understandings and ideas and to reinterpret them as being more central to the understanding of law and social sciences. In international law, Rajagopal launched the effort through International Law from Below (2003). This volume attempts to be the first to try this approach in the realm of private law. It takes an approach that combines international law – especially human rights law and property law in dialogue with insights from experts in other disciplines such as sociology, history and political science – with a focus on law and social movements. In this effort, it shares much in common with many concerns that led to critical and progressive approaches to property in law, from Third World Approaches to International Law (TWAIL) (Ngugi 2004), Critical Legal Studies (Kennedy and Michelman 1980), Feminism (Lim and Bottomley 2007), Critical Race Theory (Harris 1993) and Progressive Property Theory (Peñalver and Katyal 2010).

A central question in our volume, and in many of the critical strands of the literature on property, is what to make of the institution of property itself. This question is not new and has been with us at least since the nineteenth century.

What to do with property? Is the institution corrupt beyond redemption, due to its role in upholding the class structure of capitalism, or can it be reformed to become a tool of progressive politics? It is this debate that led to the famous polemics between Karl Marx and Pierre-Joseph Proudhon in the 1840s. Marx was initially an admirer of Proudhon, at the time the most famous of the French socialists. Proudhon published his tract What is property? in 1840. The book caused a scandal, in part because of the provocative statement with which it opened: “property”, Proudhon claimed, “is theft”. Marx admired the boldness of the formula. He was only 26 at the time; to read a pamphlet as radical written by a man almost ten years older than him could only have made a strong impression on the young German intellectual. Indeed, it is in order to pay homage that he sought to meet Proudhon when he spent the month of July 1844 alone in Paris, as his wife Jenny had returned to Trier to visit the family.

We don’t know how the meeting went. Yet, after Proudhon published Système des contradictions économiques ou philosophie de la misère in 1846, Marx retorted in June 1847 with his Misère de la philosophie (Poverty of Philosophy) (Marx 1952 [1847]), in which he attacked Proudhon for remaining wedded to bourgeois values and for seeking to save a capitalist system by reformist proposals, when Marx of course expected capitalism to collapse under the weight of its own contradictions. Engels too would later attack Proudhon for his legal fetishism and petty bourgeoisie attitudes in his discussion of the housing question in Europe (1872).

Part of the debate concerned the question whether property, as an institution, could be reformed or whether it should be simply abolished in a communist society. Proudhon was seen as a dangerous anarchist by most of his readers and certainly by the intellectual establishment at the time. The Academy of Besançon, to which he had dedicated his pamphlet What is property?, was so disconcerted that it felt compelled to disavow the work publicly, denying any responsibility for the content, and a vote was organized to strip Proudhon of the grant they had been providing him. (Since the two-thirds majority was not reached, Proudhon could keep the money, but he had to take the blame.) To Marx and Engels however, Proudhon was trying to save capitalism, remaining blind to the forces of history that would inevitably lead to its ruin. Proudhon’s critique of property, indeed, did not go at the heart of the institution. What he was denouncing was its abuse by the owners who used the monopoly rights conferred upon them by the right to property to coerce others into making unreasonable concessions (as happens when the owner of capital forces workers to labour against wages that barely allow them to survive). Marx believed that the faith of Proudhon in the possibility of changing that state of affairs was naïve; henceforth, it is he who, together with his new intellectual partner Friedrich Engels, would keep the radical flame alive.

In a way, the debate could be seen as terribly outdated – not simply because the specter of communism is not haunting us today as it was a century and a half ago, but also because the absolute character of property as an institution has long since been challenged. The various limitations Proudhon had envisaged to “domesticate” it and to ensure it would not be abused have become banal; what was then seen as revolutionary would appear to us today as largely harmless. Yet, at the same time, the more fundamental question forming the background of the debate – Should progressives call for a more equal distribution of property or denounce the institution of private property itself? – is more alive than ever. Indeed, it has reemerged with particular political urgency in the current struggles of social movements; the question of the role of property and how it should be protected was spectacularly revived in 2008, when the financial crisis followed the global food price crisis in close succession. It is this revival and the contestations that accompanied it that form the background of this volume and provide its main source of inspiration.

1. The crises of 2008 and the revival of the debate on property rights

The first reason we have witnessed a renewed interest in the question of the role of property is because land has become a target for financial speculation, with its exchange value increasingly detached from its use value. The origins of this development have been discussed elsewhere (De Schutter 2011). The high volatility of agricultural markets since the mid-2000s, culminating in the global food price crisis of the spring of 2008, is explained by the growing pressures on land and by fears concerning the scarcity of resources relative to a rise in demand – for food of course, but also for fuel and fiber. This increased volatility of markets sent a clear message both to the buyers of agricultural commodities (the agrifood companies in particular) and to governments. Agricultural markets henceforth would be less and less reliable, and therefore strategies of vertical integration, by taking direct control of the most productive agricultural land, should be accelerated. The result was what nongovernmental organizations soon denounced as “land grabbing”: in many parts of the world, and particularly in relatively weakly governed countries with corrupt governmental elites, the best land was bought, or leased through long-term arrangements (typically for 33 or 99 years), depriving the local land users from access to natural resources. The most affected were small farmers whose land had not been titled. The government considered these farms to be its own property, which could be sold to private investors or foreign states, to groups depending on communal lands (artisanal fishers needing access to fishing grounds and pastoralists using open grazing grounds) and to indigenous groups, who depended on the products of the forests (Haralambous et al. 2009; Cotula et al. 2009; Deininger et al. 2010; Kugelman and Levenstein 2009; Center for Human Rights and Global Justice 2010; De Schutter 2011).

Just months after the rise in the prices of agricultural commodities rocked the markets, a financial and economic crisis sent waves across the world – arguably the most important such crisis to hit the global economy since the Great Recession of 1929. Again, the triggering factors are well-known, and again they have much to do with how property rights have evolved. During the two decades that preceded the crisis, households in many industrial countries were encouraged to take loans from banks in order to finance the acquisition of flats or houses. As the price of houses seemed to rise endlessly, investing in real estate seemed a wise and safe strategy both for homeowners and for the lenders. Banks were eager to provide loans, not so much because of the interest rates that applied (the rates were in fact low in the beginning, one reason why clients were encouraged to borrow), but especially because of the commissions both bank employees and salespersons perceived on the transactions. Those loans were then “securitized”, repackaged as financial products that banks sold to other financial institutions. This continued, more or less unnoticed until it was discovered that, following a rise in interest rates and the explosion of the housing bubble, the borrowers might default. The financial assets held by the creditors had become “toxic”. However, since these assets had by then spread across the financial system, the realization led to a sudden loss of confidence and to an almost complete freeze on interbank lending. That was the start of the crisis. Since most institutions that had been lending to people who wanted to acquire a house were themselves heavily indebted, their inability to borrow money meant they might go bankrupt – as did Lehman Brothers on September 15, 2008. A spectacular rise in the number of evictions resulted, as millions of households found that, while the value of their houses had dramatically fallen, they had accumulated considerable debts that they were unable to repay.

In both these developments, the role of property as an institution plays a decidedly ambiguous role. On one hand, it is tempting to see the role of progressives as having to defend property against the land grabs threatening the livelihoods of small farmers in the Global South (as well as in some parts of the Northern hemisphere) and against the wave of housing evictions that followed the financial crisis of 2008–2009. On the other hand, perhaps counterintuitively, it is property itself – or more precisely, the commodification of resources and of assets essential to a life in dignity – that allowed the crisis to have such massive impacts.

The reactions that followed the global food price crisis of 2008 provide a vivid illustration of this ambiguity. Land grabs did not start in 2008. The crisis significantly accelerated a process of dispossession, however, which a growing number of nongovernmental organizations and social movements then started to denounce as threatening the land users’ access to the resources on which they depended for their livelihoods – for farming or fishing, for access to wild fruits, for water or for fuelwood. The immediate and obvious response to this threat was to speed up processes of land titling, which had been so popular in the preceding decade, for instance in the context of the privatization of the economies of Central and Eastern Europe. Clarifying property rights by such schemes was meant to provide security of tenure: to allow slum dwellers to be recognized as owners of their homes in the informal settlements where they were staying, or to allow small farmers to be protected from eviction from the land that they cultivated. Indeed, in the classic defense of titling programs provided by Hernando de Soto in his most important book, The Mystery of Capital (de Soto 2000), the security of tenure favoured through titling should encourage individual landowners to make the necessary investments in the land, thus improving their living conditions and, in rural areas, enhancing the productivity of the cultivated plot of land. The occupants, it was supposed, would not invest in their land unless they were certain to be protected from the risk of losing it. In addition, as emphasized by de Soto, titling of their property should have allowed the owners to mortgage their land and thus to obtain access to the credit necessary to make such investments. In the famous metaphor used by de Soto, this process transforms “dead (physical) assets” – “where assets can not be readily turned into capital, can not be traded outside narrow local circles where people know and trust each other, can not be used as collateral for a loan, and can not be used as a share against an investment” – into “live” capital that can be mobilized for investment (de Soto 2000: 6).

Yet, there is a profound ambiguity in the neoliberal promotion of property rights. Security of tenure is but one side of the coin; the other is the establishment of a market for land rights, allowing a more fluid transfer of property rights – a lowering of transaction costs, increasing the liquidity of these markets – to ensure productive assets go to the most efficient user. The intellectual roots of the argument are in the work of Ronald H. Coase, the 1991 Laureate of the Nobel Prize in Economics and the real intellectual godfather of law and economics. Coase famously argued that if transaction costs are low enough (and ideally, reduced to zero), the freedom of transactions will result in solutions that are most economically efficient (Coase 1960). The basic reasoning is simple enough: the buyer of property will pay the price he considers reasonable, taking into consideration the streams of income that are expected to flow from making a productive use of the assets acquired; therefore, if such assets are transferred to the highest bidder, as a well-functioning market for property rights should allow, they should ultimately be captured by the economic actors who can use them most productively, thus contributing to general economic growth.

This of course is not about preserving the rights of the land user by strengthening ownership rights. It is the exact opposite: it is about commoditizing land to make sure its productive function is maximized by being used by buyers with the deepest pockets and, thus, whose ability to invest in production is highest. This has sometimes been described as “fertilizing soil with money”. But in good neo-liberal newspeak, this is now repackaged as “security of tenure”: a 1987 study by two authors of the World Bank proposes that “the ability of an occupant to undertake land transactions that would best suit his interests” should be considered part of “security of tenure” (Feder and Noronha 1987: 159).

But commodification of land rights can result in exclusion, just as direct expropriation does. This may happen through four mechanisms. First, the process of titling itself may be captured by the elites. When the United Nations-sponsored Commission for the Legal Empowerment of the Poor (CLEP) delivered its final report in 2008, it noted that “[i]n many countries, speculators preempt prospective titling programmes by buying up land from squatters at prices slightly higher than prevailing informal ones. Squatters benefit in the short term, but miss out on the main benefits of the titling programme, which accrue to the people with deeper pockets” (CLEP 2008: 80, citing J.-Ph. Platteau 2000: 68; on the risks of elite capture, see also K. Firmin-Sellers and P. Sellers 1999). The Commission on the Legal Empowerment of the Poor also remarked that titling schemes may be manipulated or tainted by corruption; and, it added, the formalization of property may be too costly or complex for the poorest segment of the population to benefit. These statements are remarkable. Not so much because of their substance, of course: it is hardly new that elites are better positioned to reap the benefits of public programmes shaped with progressive intentions, a phenomenon economists sometimes refer to as the “Matthew effect”. But it is noteworthy that this is said by a commission established at the initiative of a range of governments from different regions, working together with the United Nations Development Programme (UNDP) and the United Nations Economic Commission for Europe, and placed under the co-chairmanship of Hernando de Soto and Madeleine Albright. Indeed, the CLEP was conceived as an independent body largely in order to provide support to the bold claims made by de Soto about insufficientl...