Haters of Mankind

The Grubby Basement

Why has capitalism "triumphed" in the West, but languished in most other nations around the world?  Doubtless the reasons are many, but one in particular stands out.  Western nations have developed and deployed systems of universal recognition of property, and sanctioned them with property law and rights of ownership.

One reason this has occurred in the West, but not elsewhere, is a consequence of  the Christian faith.  Property, according to the Christian world-and-life view, is not just sanctioned by the eternal omnipotent God: it is protected by His holy law.  To the extent that a society does not comply with the rights of ownership, of private property, and attendant due penalties against theft and covetousness, property ownership will be undermined and under attack.

One consequence of such beliefs is the necessity of registering title to property, which in turn requires accurate and widely recognised definitions and descriptions of the property in question.  Think motor-vehicle registers, along with number or registration plates for example.  Or reliance upon serial numbers, for another.  It is hard--impossible--for private enterprise and capitalism to develop in nations which have no way of representing, defining, and describing what is owned by whom.

As De Soto puts it:

The reason capitalism has triumphed in the West and sputtered in the rest of the world is because most of the assets in Western nations have been integrated into one formal representation system. [Hernando De Soto, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (New York: Basic Books, 2000), p. 52.]

"One formal representation system" is necessary, but not sufficient.  There also needs to be a dominant faith system which holds a person's property as  sacrosanct as his or her body and family.  Without a divine sanction and a fear of disobeying the Ten Commandments, it is hard, if not impossible, for capitalism to develop in a culture or within a nation.

Interestingly, in the West the formal universal system of registered property ownership developed gradually, over a long time.  But as long as God was feared and the Ten Commandments honoured, the development of legally binding representations of property and the ownership of such were inevitable.

This development is neither to be under-estimated, nor taken for granted.

This "pulling together" of property representations, a revolutionary moment in the history of developed nations, deposited all the information and rules governing the accumulated wealth of their citizens into one knowledge base.  Before that moment, information about assets was far less accessible.  Every farm or settlement recorded its assets and the rules governing them in rudimentary ledgers, symbols, or oral testimony.  But the information was atomized, dispersed, and not available to any one agent at a given moment.  [Ibid.]

Neither, we may add, was the information reliable.

This is one reason the former Soviet Union is failing miserable to develop economically, since shuffling off the communist coil.  Who owns what in Russia is still not clear.  Nor is title to property sacrosanct.  Any property title can be neutered or overridden by a criminal gang, by the petty officials of local government, by an oligarch, or by the state.  Possession is nine-tenths of property law, and possession is malleable and fluid.

There is another powerful civilizing outcome when property registers are established and recognized by the civil and criminal courts.  Citizens are brought out into the light and are made accountable.  With property comes responsibility.

Formal property's role in protecting not only ownership by the security of transactions encourages citizens in advanced countries to respect titles, honor contracts, and obey the law.  When any citizen fails to act honorably, his breach is recorded in the system, jeopardizing his reputation as a trustworthy party to his neighbors, utilities, banks, telephone companies, insurance firms, and the rest of the network that property ties him to.  . . .

A great part of the potential value of legal property is derived from the possibility of forfeiture.  Consequently, a great deal of its power comes from the accountability it creates, from the constraints it imposes, the rules it spawns, and the sanctions it can apply.  [Ibid., p. 55.]

In the West we take all this for granted.  But, step back and think for a moment if few or none of these constraints around property existed.

The lack of legal property thus explains why citizens in developing and former communist nations cannot make profitable contracts with strangers, cannot get credit, insurance, or utilities services.  They have no property to lose.  Because they have no property to lose, they are taken seriously as contracting parties only by their immediate family and neighbours.  People with nothing to lose are trapped in the grubby basement of the pre-capitalist world. [Ibid., p. 56.  Emphasis, ours.]

 The Marxists intone, "private property is theft".  Their mantra actually destroys society.  Ask anyone in Venezuela whether such is the case.  Not only does the Marxist suspension of property rights tear down a civilisation in very short order,  it enslaves it in the grubby basement forever.