Article, Urbit

Property and wealth

Even as an attenuated capitalist I find Hernando de Soto Polar’s The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else fairly persuasive, though it would benefit from quantitative data and probably some more skepticism toward the success of capitalism in the West (another topic for another time). Published exactly two decades ago at the end of the euphoric Clinton era and what was supposed to be the early days of the End of History, before 9/11 and history starting again without a clutch, the Neo-liberal Polar can be forgiven his triumphalism. So many years having passed, the question he asks is as important as ever: why are some countries wealthy and others not.

Polar’s proposed answer is that capitalism succeeds in creating wealth in countries with clear, enforceable, and enforced property rights. This allows entrepreneurs to use equity in fixed assets (like a home or farmland) as a foot in the door to capital markets. Where property rights are not recognized, or legitimization of ownership is onerous or even impossible, nascent wealth creation is smothered in the crib. If you can’t prove by title that you own a plot of land your family has lived on for decades or even centuries and there is no common law or other legal avenue that can allow you to claim ownership, you can’t hope to use it as collateral. Without collateral it is typically impossible to obtain credit and without capital from credit you might be able to open Shop 1, but not Shop 2,3,4…n.

Of course Polar is more than a little guilty of begging the question. There are plenty of good arguments that the ability and inclination of the state to enforce property rights are as much an outcome of macroeconomic wealth as vice-versa. Further, the lack of property rights is coincident with any number of other factors holding back national development. That said, the inability to lay a real claim to individual property hurts at the micro level. Imagine having farmed a plot of land for years but the government can’t (or won’t) say for sure if it’s yours or not. Imagine if it would take dozens of bureaucratic steps and as long as a generation to legitimize your right to the house you’ve lived in your whole life (one of the cases Polar puts forward, from Manila).

The future of Urbit is still being written, but at the heart of everything is an operating system on top of an address space that you own. It won’t target you or monetize you (an ugly word). It won’t try to get you to use it more or less often. Eventually it may become valuable collateral, but even if not it will always be your point of connection to peers across the world, across town, or across the street.