The Lessons of John Locke or Hernando de Soto: What if Your Dreams Come True?

Abstract

Abstract Hernando de Soto has presented the most powerful argument for the extension of property rights since John Locke's revolutionary Two Treatises of Government in 1689. De Soto calls for the legal titling of land for squatters and other illegal occupants of the informal economy on a promise of efficiency (increased productivity of land). However, efficiency arguments, which have dominated recent literature on property law and economics, fall short of an adequate basis for a just doctrine. Drawing on the theories of John Locke, this article addresses the need to understand the rules required to sustain the equity goals of society in the expansion of property ownership. These rules focus on the meaning of property, constraints on its use and accumulation, and delineation of the institutional embeddedness of these rights and obligations. Evidence from the impact of U.S. tax policy on housing illustrates the importance of property rules and their structure.