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The myth of 'secure property rights': Good economics as bad history and its impact on international development

Working papers

The concept of secure property rights, supposedly an essential governance requirement for economic growth in developing countries, perpetuates a myth that emerged from 'Whig' political propaganda justifying the 'Glorious Revolution' of 1688. The Whig argument made famous by John Locke, that 1688 had made property rights 'secure', became central to the 'Whig interpretation of history' which portrayed the Dutch coup d'état of 1688 as 'progress'. This Whig interpretation was exported to the political philosophy of the United States (US) where the justification for 1688, although long rejected by serious historians, became an article of faith in economics and through that, in development.

Secure property rights is no more than shorthand for the political, social and legal underpinnings needed for economic activity. Advocacy of secure property rights as a condition for economic growth is therefore tautological – since an economy depends on its political, social and legal underpinnings – and ignores the historical evolution of economic growth with the political authority needed for investor confidence. This highlights an important limitation of current development thinking which fails to reflect the relationship between politics and economic growth. That 'property right institutions' were secure in England long before the late 17th Century also casts doubt on the ahistorical concept of 'institutions' for economic growth.

The political history of property rights underlines the challenge in international development that, while a wide variety of possible routes exist to improving economic growth outcomes, all depend on constructing the political legitimacy in developing countries without which property rights are never secure. The concept of secure property rights overlooks the constant political tension around economic activity that makes property rights at best stable not secure, and indicates the need to pay greater attention to the political history underlying the governance of economic growth.

Max Everest-Phillips