The Mystery of Capital

Discussion with Graham Alder; Shlomo Angel; Edesio Fernandes; Olga Kaganova, Ph.D.; and William Valletta

In his most recent book The Mystery of Capital Hernando de Soto, writes, "Most of the poor already possess the assets they need to make a success of capitalism...But they hold these resources in defective forms... They lack the process to represent their property and create capital... They have houses, but not titles... It is the representation of assets in legal property documents that gives them the power to create surplus value."

In Spring 2001 Interplan invited several experts who have been thinking and writing about such matters and who are engaged in practical efforts to develop the legal and planning infrastructure of property markets to discuss de Soto's themes. Highlights of this "virtual roundtable" were published in the June 2001 issue of Interplan.

Below, with the participants' biographies, are links to the full texts that were sent to us.

This is the questionnaire that was sent to participants.

• In your experience, what are the practical challenges to achieving the "representation of assets in legal property documents"?
• Can you describe your experience with "extralegal systems," and how can they be incorporated into a larger and legal property system?
• In October 1999, the U.N. and the International Federation of Surveyors held a Workshop on Land Tenure and Cadastral Infrastructures for Sustainable Development in Bathurst, Australia. The "Bathurst Declaration" stated "land administration systems need to be re-engineered, using modern technology for recording and describing tenure arrangements." Please comment on the effort to "re-engineer land administration systems" based on your own experience.
  
• The Bathurst Declaration also stated: "An integrated perspective of the interface between markets, land registration, spatial planning and valuation indicates that society, through processes of good governance enabled by access to appropriate and reliable information, sets minimum requirements in terms of environmental standards and expectations and social tolerances." Dr. Edesio Fernandes has written that "a new, socially oriented and environmentally friendly approach to property rights is needed ... A wide range of legal-political options should be considered ..." Any comments or observations, based on your experience?
  
• Richard May makes the case (in another article in this issue of Interplan) that de Soto's research and findings help relate the two current campaigns of the U.N. Center for Human Settlements ("security of land tenure" and "good governance") to the broader topic of "finance for development." In June, there will be a special session of the U.N. General Assembly to discuss progress in implementing the Habitat Agenda ("Istanbul plus 5"). There will be a lot of discussion about the two campaigns, and "finance for development" (FfD) will be the subject of a global U.N. conference in 2002. What can organizations such as Habitat learn from de Soto's research?
  
• What do you imagine will be the impact of these ideas and findings on donor approaches to property reform and good governance?
  
• What can planners—and planning—contribute to the process of changing dead assets into capital?
  
• In the absence of an effective legal system to enforce and manage property rights, microlending programs can be effective in drawing on other abstract assets that people might have such as social connections and a good payback history. This is already happening in what the author refers to as the extralegal sector. Microcredit is a way to extend credit opportunity for investment until a better legal framework for identifying physical capital is developed. A microlending system can work hand in hand with the property rights system adjustments the author is calling for. Any comments on this?
  

Participants

Click on each participant's name to read their full comments:

Graham Alder is a sociologist with 25 years of experience in urbanization issues, primarily in Africa. His areas of special expertise include institutional development, urban policy and management, poverty reduction and community-based approaches. He played a leading role in designing innovative urban poverty interventions in Kenya and urban environment programs in West Africa, and has helped shape peri-urban policy in Swaziland. He has also published research on urban community-based approaches and recently analyzed fiscal and administrative decentralization in Ghana. He currently works for Matrix Development Consultants in Nairobi, Kenya.

Shlomo Angel is an Adjunct Professor of Urban Planning at the Wagner Graduate School of Public Service, New York University, and a senior housing policy advisor to the Inter-American Development Bank (IDB) in Washington, D.C. Over the past two years he has completed housing policy reviews for the IDB in eight Latin American countries. These reviews follow a new conceptual framework for treating housing policy and an indicator-based methodology for analyzing the housing sector, developed in his recent book Housing Policy Matters: A Global Analysis (Oxford University Press, 2000). Dr. Angel obtained a degree in architecture and a Ph.D. in urban and regional planning at the University of California, Berkeley, in the early 1970s. He moved to Asia in 1973, and helped build the Human Settlements Division at the Asian Institute of Technology in Bangkok, a regional graduate school for engineering and planning serving South- and Southeast Asia. He served as a professor of Human Settlements Planning there for 10 years, specializing in housing research in Asia, working in squatter communities, building a mutual-aid housing project, and, since 1984, conducting comparative housing research and consulting governments and international organizations on housing and urban land issues.

Edesio Fernandes is a Lecturer at the Development Planning Unit of University College London and a Senior Research Fellow with the Institute of Commonwealth Studies of the University of London. His research interests include urban and environmental law, planning and policy, local government and city management, and constitutional law and human rights in developing countries. He worked as a city planner and as a lecturer in Brazil (1980-86) and as a legal advisor during the national constitution-making process (1986-88). He has been a consultant to many governmental and non-governmental organizations, in Brazil and elsewhere. He is the author of "The Challenge of Environmental Management in Urban Areas" (Ashgate, 1999) and editor of "Environmental Strategies for Sustainable Development in Urban Areas: Lessons from Africa and Latin America" (Ashgate, 1998). He is coordinator of IRGLUS — International Research Group on Law and Urban Space. He holds a diploma in urban planning and a Ph.D. from Warwick University.

Olga Kaganova, Ph.D. is a Research Associate at the Urban Institute, Washington, D.C. She has been providing technical assistance on real estate and municipal reform in countries in transition (NIS and Eastern and Central Europe) as part of USAID and World Bank projects. Her most recent work is related to two topics: property redistribution among central and local governments and the private sector, and municipal asset management. She also has conducted land appraisal, feasibility and market studies for private and public clients, assessed problems of small enterprises in the Kharkiv region of Ukraine, and consulted to municipal governments in Russia, Armenia, Bulgaria, Croatia, and Kyrgyzstan on improvement of the investment climate and management of city's assets. Dr. Kaganova has published numerous professional articles in the U.S., Western Europe, and NIS.

William Valletta is an attorney and urban planner with special expertise in municipal and regional administration, land use, and environmental regulation. For the past year he has been working as on USAID projects in Ukraine and Russia. He has been an advisor to the Environmental Committee of the National Peoples' Congress of China on drafting and implementation of the Land Administration Law, and to the legislative committee on implementing the Land Administration Law in the province of Sichuan. Other assignments have taken him to Turkmenistan and Lithuania. From 1984 until 1987 he was the chief legal officer for the New York City Department of City Planning, advising on all issues of zoning, urban development, urban renewal, environmental quality review, infrastructure, and strategic planning. He holds a master's degree in urban planning from Columbia University and a law degree from the University of Connecticut School of Law.