The 'mystification of capital': legal title for the low-income housing market

The crux of De Soto's argument revolves around why nations of the developing world are desperately impoverished, and often burdened by crippling poverty. This, according to him, is largely a function of the deficiencies in their organisation of property rights. This applies to legal institutions as well as their implication and adaptation to factual circumstances. De Soto's position is that the poor have at their disposal all of the material resources they need to secure prosperity. What they lack is a formal, officially registered right of ownership of these assets. The absence of such legal instruments means that the assets of the poor cannot be purchased, exchanged, sold, bequeathed, lent, or transferred in any way other than within the framework of limited networks, often subjugated to parasitic local institutions of power. These assets, therefore, cannot serve as the basis for an efficient and dynamic accumulation of capital. They become, in De Soto's words, 'dead capital'. Thus the informal sector becomes what is usually called undercapitalised and as a result cannot realise its full potential.