Hernando de Soto and the 'mystification of capital': a critical exploration of the difference that legal title makes for the low-income housing market in South Africa

Abstract

Hernando de Soto's analysis of the high cost of establishing, protecting and trading in property rights in his home country of Peru and other developing nations demonstrates the centrality of institutions to economic analysis and outcomes. The effective denial of property rights to hundreds of thousands of poor people means that their economic potential and that of their countries is largely untapped. If this dead capital were legalised, it would elevate the poor out of poverty. Against the background of some of de Soto's key ideas and tenets, including the concept of dead capital, this paper critically explores the centrality of his thesis to the creation of a single integrated housing market in South Africa, as part of a larger national goal to alleviate poverty.