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JOURNAL OF INSTITUTIONAL STUDIES (Журнал институциональных исследований) • Том 6, № 4. 2014
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ИНСТИТУЦИОНАЛЬНАЯ ЭКОНОМИЧЕСКАЯ ТЕОРИЯ
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ЭКОНОМИКА РАЗВИТИЯ: НЕОИНСТИТУЦИОНАЛЬНЫЙ ПОДХОД ЭРНАНДО ДЕ СОТО
НУРЕЕВ РУСТЕМ МАХМУТОВИЧ,
Заслуженный работник Высшей школы РФ, доктор экономических наук, руководитель департамента экономической теории Финансового университета при Правительстве РФ, ординарный профессор НИУВШЭ, г. Москва, e-mail: nureev50@gmail.com
Статья посвящена анализу работ Э. де Сото и их влиянию на экономику развития. Рассматриваются общие черты неоинституционального подхода и особенности их реализации в его книгах «Иной путь» (1989) и «Загадка капитала» (2000).
Первая книга посвящена анализу неформальной экономики. Она состоит из двух частей: эмпирической и теоретической. В эмпирической части он рассматривает три сферы нелегальной деятельности (жилищное строительство, торговлю и транспорт), а в теоретической части исследуются, главным образом, трансакционные издержки.
Для развивающихся стран по-прежнему актуальной является традиционная урбанизация, толчок которой на Западе дала промышленная революция. Однако на Западе параллельно с ростом городов росли и мануфактуры, которые создавали рабочие места для вновь урбанизированного населения. Поэтому не было разрыва между ростом городского населения и ростом занятости в промышленности. Иная ситуация в третьем мире. Здесь темпы роста городского населения значительно опережают темпы роста занятых. Средние масштабы теневой экономики составляли, по оценке Ф. Шнайдера, в конце ХХ века в развивающихся странах 35-44% (от официального ВВП). Поэтому если бы не было нелегального сектора, то важнейшие городские проблемы так и не были бы решены. Руководимый Э. де Сото Институт свободы и демократии провел целый ряд экономических экспериментов для выяснения "цены подчинения закону" в Перу, с тем чтобы определить издержки, которые вынуждены нести лица, желающие заняться обычным легальным бизнесом. Автор "Иного пути" предлагает в связи с этим оригинальную классификацию трансакционных издержек на основе критерия "легальность - нелегальность".
Первая их группа - "цена подчинения закону", т. е. издержки законопослушного поведения. Предприниматель в легальном бизнесе должен нести единовременные "издержки доступа", связанные с получением права заниматься определенным видом экономической деятельности. Получив официальную санкцию на свой бизнес, он должен постоянно нести издержки "продолжения деятельности в рамках закона": платить налоги и социальные платежи, подчиняться
бюрократической регламентации производственных стандартов, соблюдать обязательные нормы при руководстве персоналом, нести потери из-за неэффективности судопроизводства при разрешении конфликтов или взыскании долгов.
Делая выбор в пользу нелегальной организации, предприниматель избавляется от "цены подчинения закону", но зато вынужден оплачивать "цену внелегальности". В эту вторую группу трансакционных издержек входят "цена уклонения от легальных санкций" (риск поимки и наказания частично снижается взятками как особой формой страхования), издержки, связанные с трансфертом доходов, повышенные ставки на теневом рынке капиталов, невозможность участвовать в
© Нуреев Р. М., 2014
Экономика развития: неоинституциональный подход ...
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наукоемких и капиталоемких областях производства, относительно слабая защищенность прав собственности, "цена невозможности использовать контрактную систему" (опасность нарушения деловых обязательств) и недостаточная эффективность внеконтрактного права.
Отсутствие легально зафиксированных прав собственности приводит к неэффективному хранению и использованию внелегалами своих ресурсов. К тому же они не могут свободно отчуждать свою собственность или использовать её в качестве залога.
Возникает своего рода порочный круг: рост теневого сектора приводит к сокращению легального. Однако при сохранении уровня общественных расходов это означает необходимость увеличения налогов на легальный бизнес, что приводит к растущей привлекательности теневого сектора и т.д. Поэтому раскол общества на легальный и нелегальный бизнес "оказывает негативное воздействие на экономику в целом, выражающееся в снижении производительности, сокращении инвестиций, неэффективности налоговой системы, удорожании коммунальных услуг, замедлении технического прогресса и многочисленных трудностях в формулировании макроэкономической политики" (De Soto, 1995. P. 216), и отнюдь не освобождает общество от необходимости совершенствования институциональной структуры.
Что же нужно сделать? С точки зрения де Сото, необходимо приблизить правовую систему к действительности. Этому и посвящена вторая работа «Загадка капитала», где автор пытается решить пять загадок:
- загадку недостающей информации,
- загадку капитала,
- загадку политической неосведомленности,
- забытые уроки истории США,
- загадку правового бессилия.
Де Сото ставит важный вопрос о том, почему законы о собственности не работают за пределами Запада. Эрнандо де Сото полагает, что значительная часть накопленного в развивающихся странах капитала недокапитализирована. Если на Западе активы ведут двойную жизнь: не только непосредственно используются на хозяйственные нужды, но и являются источником капитала (то есть гарантией получения кредитов), то в третьем мире и бывших соцстранах они этой второй функции не выполняют, тем самым фактически не являются капиталом. Поэтому де Сото выделяет шесть эффектов частной собственности:
- фиксация экономического потенциала активов,
- интеграция разрозненной информации,
- ответственность собственников,
- повышение ликвидности активов,
- развитие общественных связей,
- паспортизация сделок.
Следствием отрезанности большинства населения от шести положительных эффектов частной собственности является маргинализация общества. Уровень жизни, по его мнению, начнет расти только там и тогда, где и когда правительство изменит законы и систему собственности таким образом, чтобы стимулировать углубление разделения труда. Если же этого не происходит, то стремительно растут масштабы внелегальной экономики.
Концепция де Сото обладает рядом очевидных недостатков. Собственность - не только передаточное устройство, которое отражает и хранит определенную информацию, но прежде всего общественное отношение между людьми. К тому же возникает заметный парадокс: попытка анализировать собственность вне всей системы экономических отношений создает известную оторванность экономического анализа от социального. Собственность - не только готовая предпосылка развития рыночной экономики, но и ее результат. Поэтому
JOURNAL OF INSTITUTIONAL STUDIES (Журнал институциональных исследований) • Том 6, № 4. 2014
JOURNAL OF INSTITUTIONAL STUDIES (Журнал институциональных исследований) • Том 6, № 4. 2014
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Р. М. Нуреев
неразвитость отношений собственности отражает неразвитость экономических общественных отношений на периферии современного мира.
Работа Э. де Сото положила начало новому направлению неоинституциональных исследований - экономико-правовым концепциям развития (Law and Economics of Development)1.
Конечно же, мы далеки и от того правового фетишизма, который присущ концепции де Сото. Но нельзя не согласиться с автором, что без трансформации системы традиционных институтов, норм и правил, создания необходимых институциональных предпосылок невозможно построить настоящую рыночную экономику. Важно при этом не забывать, что дело не сводится только к изданию хороших законов. Нужно претворить их в жизнь. А для этого необходима разработка механизма enforcement - механизма принуждения, в котором должны быть не только отрицательные, но и положительные стимулы для того, чтобы новые институты обрели плоть и кровь.
Ключевые слова: экономика развития; легальная и внелегальная экономика; неоинституциональный подход; урбанизация; безработица; неполная занятость; цена подчинения закону; цена внелегальности; трансакционные издержки.
DEVELOPMENT ECONOMICS: NEOINSTITUTIONAL APPROACH OF HERNANDO DE SOTO*
NUREEV RUSTEM, M.,
Honored Worker of Higher School of the Russian Federation,
Doctor of Economics (DSc), Head of Economics Department, Financial University under the Government of the Russian Federation, Tenured Professor of National Research University - Higher School of Economics, Head of the Department of Economic Analysis of Markets and Organizations, Moscow,
e-mail: nureev50@gmail.com
This paper analyzes the works of Hernando de Soto and their impact on the economy development. Discusses similarities neoinstitutional approach and features of their implementation in his books "The Other Path" (1989) and "The Mystery of Capital" (2000).
The first book devoted to the analysis of the informal economy. It consists of two parts: empirical and theoretical. In the empirical part, he examines three areas of illegal activities (housing, trade and transport), and in the theoretical part investigates mainly transaction costs.
Led by Hernando de Soto Institute for Liberty and Democracy conducted a series of experiments to determine the economic "price obeying the law" in Peru, in order to determine the costs that have to bear the persons wishing to engage in the usual legal business.
Opting for an illegal organization, the entrepreneur gets rid of the "price obeying the law", but is forced to pay "the price of illegality." This second group includes transaction costs "price evade legal sanctions", costs associated with the transfer of income, higher rates on the black market capital, the inability to participate in the knowledge-intensive and capital-intensive areas of production, relatively weak protection of property rights, "the inability to use price contract system" etc.
What should be done? From de Soto’s standpoint, it is necessary to bring the legal system
1 Обзор работ 1990-х гг. см.: (Buscaglia).
* The paper is done based on the report materials prepared by the author for 4th ESHET Latin America Conference “Originality, Adaptation, and Critique: the place of Latin America in the History of Economic Thought” (Belo-Horizonte - Brazil, 19-21 November 2014).
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to reality. And the second is devoted to this work, "The Mystery of Capital," in which the author tries to solve five puzzles:
- The riddle of the missing information,
- The Mystery of Capital,
- Riddle political ignorance,
- Forgotten lessons of U.S. history,
- Riddle legal impotence.
De Soto puts the important question of why property laws do not work outside the West. Hernando de Soto believes that a significant portion of the accumulated capital in developing countries is undercapitalized. If the assets in the West have double lives: not only directly used for domestic needs, but also they are source of capital (ie loans guarantee), the Third World and former communist countries that they do not fulfill the second function, thereby not actually capital. Therefore, de Soto identifies six effects of private property.
Marginalization of society is the consequence of being cut off from the majority of the population of six positive effects of private property.
Job Hernando de Soto is a new line of neoinstitutional research - economic and legal concepts of development (Law and Economics of Development).
Keywords: development economics; legal and illegal economy’ neoinstitutional approach’ urbanization’ unemployment; underemployment; price obeying the law; the price of illegality; transaction costs.
JEL: B25, E24, J64, Kll, N26, N41, N46, N76.
1. Hernando de Soto’s “The Other Path”: new view on illegal economy
This paper analyzes the works of Hernando de Soto and their impact on the economy development. Discusses similarities neoinstitutional approach and features of their implementation in his books "The Other Path" (1989) and "The Mystery of Capital" (2000).
Fig. 1. Urbanization and Suburbanization in the Course of Economic Development Source: (Ingham, 1995. P. 266).
Hernando de Soto was born in the city of Arequipa (Peru) in 1941. After completing graduate studies in Geneva, he worked as an economist in the GATT and later the director of the Central Reserve Bank of Peru. As president of the Institute for Liberty and Democracy he spent an interesting study, which formed the basis of his book. De Soto examines the evolution of forms of illegal activities, showing their importance in the development of market economy from the "bottom", the creation of a truly competitive environment.
JOURNAL OF INSTITUTIONAL STUDIES (Журнал институциональных исследований) • Том 6, № 4. 2014
JOURNAL OF INSTITUTIONAL STUDIES (Журнал институциональных исследований) • Том 6, № 4. 2014
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Р. М. Нуреев
Fig. 2. Urbanization and Industrialization Source: (Gillis, Perkins, Roemer and Snodgrass, 1996. P. 486).
The first book devoted to the analysis of the informal economy. It consists of two parts: empirical and theoretical. In the empirical part, he examines three areas of illegal activities (housing, trade and transport), and in the theoretical part investigates mainly transaction costs.
The fact is that from 1940 to 1981 in Peru the urban population in the country has increased from 35 to 65%. This meant no longer the primary industrialization associated with the replacement of the natural economy of agrarian market economy and urbanization, as a result of which creates prerequisites for the development of modern industry. As a result of this traditional urbanization occurs industrial society. For developed countries — it is already the past, former metropolitan concern is the problem of de-urbanization and the creation of a post-industrial society where the city centers of science are located around (see Fig. 1).
For developing countries the traditional urbanization is still relevant. It was driven by the industrial revolution on the West. However, in the West along with the growth of cities grew and manufactory which created jobs for the newly urbanized population (see Fig. 1). So there was no gap between the growth of the urban population and employment growth in the industry (see Fig. 2). The situation is different in the Third World. Here, urban population growth significantly outpaced the growth of employment (see Table 1).
Table 1
Types of Incomplete Use of Work in Developing Countries
Type Unemployment Underemployment
Explicit Mostly among recently urbanized population Agricultural and seasonal workers
Implicit Basically women (who ceased search for work) Agrarian + city informal sectors (the latent unemployment)
Source: (Gillis, Perkins, Roemer and Snodgrass, 1996. P. 229).
Average size of the shadow economy is estimated (by F. Schneider) in the late XX
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century in developing countries as 35-44% of official GDP (see Table 2). Therefore, if there were no illegal sector, the most important urban problems have not been resolved.
Table 2
Average Level of Shadow Economy 1988-2000, in % of GDP
Countries AVERAGE LEVEL OF SHADY ECONOMY
Developing countries 35-44
Transition economies 21-30
OECD countries 14-16
Source: (Schneider and Anst, 2002).
The fact is that in the mass urbanization of the country, the authorities were unable to provide housing for migrants, and migrants are not of their own accord became informals. De Soto shows step by step how people carry out the illegal seizure of land and creating an illegal organization seeking the legalization of illegal housing. This approach is not only for the benefit of people with low incomes and safeguard the city from becoming a solid slums, but also contributes to the establishment and strengthening of private property (see Table 3).
Table 3
Housing construction in Lima, 1982 (%)
Illegal Legal
Buildings Slums
Share of buildings 42,6 49,2 8,2
Share of population 47 45,7 7,3
Value of Buildings 90,6 9,4
Source: (De Soto, 1995. P. 54).
His analysis of the illegal trade shows how people are trying to overcome the resistance of the authorities to organize the supply of the population with food and basic necessities. Hernando De Soto defines two types of illegal trade: street and market.
In the street vendors in the capital of Peru (Lima) involved 200-300 thousand people. A turnover is 6.2 million dollars per week and 322 million dollars annually. Monthly turnover point of serving the poor, ranging from $ 155 (services) to 431 dollars (food). Specialty of trade is as follows: 59.5% were for food; 17.5% - for the sanitary and hygiene products; 13.7% - for services and 9.3% of household and office equipment (De Soto, 1995. P. 101-102).
The simplest form of street trading is peddling ("peddlers"), with which consumers face every day on the streets and in public transport. It occurs in the early stages, when the dealer has little capital, and it is not available official credit. Major investment at this stage - it is an investment in human capital. At this time, collects the necessary information about the profitable areas, as well as the possibility to gain a foothold on them. Once these points have been found (the forecourt, the end of the bus routes, etc.) begins the capture of the street. Merchant overcomes the resistance of the local shopkeepers, residents and authorities. Begin the search for allies and organization of mini-markets. Inside them there are elements of the division of labor and specialization, thus expanding the range of products provided.
Traders have a specific ownership on the territory, there is a special relationship between the seller and the place at which it was fixed. Undoubted advantages are recognizable as a sign of seller reliability, increase reputation with customers and suppliers, the ability to obtain loans (mainly illegal). The disadvantages include that
JOURNAL OF INSTITUTIONAL STUDIES (Журнал институциональных исследований) • Том 6, № 4. 2014
JOURNAL OF INSTITUTIONAL STUDIES (Журнал институциональных исследований) • Том 6, № 4. 2014
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Р. М. Нуреев
ownership coming illegally, constantly hovering threat of expulsion from the "home place." In these conditions it is impossible to do long-term capital investments. Hence -the difficulties resale captured space (such a "sale" only possible "countryman"). Ways resolve the controversy is the use of trolleys (vehicles) that allow you to dramatically expand the range of shifts and share trading. It is curious that such traders tend to pay the tax to the municipal authorities, as the payment of tax gives the appearance of the legalization of the captured space. In turn, this creates a good source of income for local authorities. Municipal authorities in Lima, for example, such a tax is 1.7 times more taxes from the official dealers.
Table 4
Public Transport in Lima, 1984 (%)
Legal Illegal
Buses 9 91
All public transport, including taxi 5 95
Source: (De Soto, 1995. P. 137).
At street vendors arise organizations to protect their mini-markets operate, in addition, the function of maintaining cleanliness and order, and often attract the National Guard or a municipal police to protect their interests. Thus, the street trade grows organically in the market. The overwhelming majority of markets (in Lima -82.8%) appeared just so illegally. The location of these markets is much more convenient for the public and especially for its poorest segments.
A similar path was illegal and transport. Public transport in Lima has developed mainly on an illegal basis (see Table 4).
Types of illegal vehicles are diverse: a taxi - for 5 people, minibuses 8-11 and 1618 seats, as well as buses for 71-90 passengers. The cost of illegal bus fleet was in Lima in 1984 - 620 million dollars. Here there is the same situation as in the illegal trade: are the most profitable routes and organized their constant maintenance, resulting in lower operating costs, ensure the regular provision of services, and, protection is the route from competition from newcomers. The main functions of organizations drivers are: organizational and economic activity by operating the route (including pricing), the struggle for legal rights, as well as the establishment of a joint insurance fund.
What pushes people to organize such an extensive illegal activities? First of all, the high transaction costs of primary legalization and maintaining legitimate business and bureaucratic over-organization, which prevents the free development of market relations. Hernando de Sotos work turns on its head the traditional evaluation of shadow and legal businesses in the "third world"2. Until recently it was believed that only the legal sector is the carrier of modern economic culture, while the informal sector - an ugly relic of the traditional economy. In fact, proves the Peruvian economist, legal economy of developing countries enmeshed mercantilist ties, and it teneviki establish a truly democratic economic order, organizing their private economy on the principles of free competition. Because bureaucratic regulation is greatest in developing and transition economies, it is in these countries the scale of shadow economic activities are the most enormous.
Led by Hernando de Soto Institute for Liberty and Democracy conducted a series of experiments to determine the economic "price obeying the law" in Peru, in order to determine the costs that have to bear the persons wishing to engage in the usual legal business. To register, garment factories experimenters had to spend 289 days and an amount equal to 32 m monthly minimum wage (the cost of bribes, fees, lost profits).
2 About H. De Soto’s impact on development of informal economy see: Latov Y. (1999). Informal Economy as a global historical thing. Evolution studies of the informal sector abroad // Shadow Economy: Economic and Social Aspects. Moscow, INION Publ., pp. 13-66.
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Even getting a license to sell at a street stall requires 43 days walking on the bureaucratic maze and cash costs 15 times the minimum wage (De Soto, 1995. P. 12-13)3. As for the "knock-out" of land for housing, this bureaucratic marathon requires almost 7 years and 56 years the minimum wage. This system shuts off completely from participation in legal business people with low incomes, but provides extensive scope for targeted distribution of privileges ("cronyism") and corruption.
Table 5
"The price of submission to the law” in Peru
(Experiments of The Institute for Liberty and Democracy of H. de Soto)
ACTIVITY KIND EXPENSES
Time (days) Money (minimum of the salary *)
Factory registration on tailoring 289 32
Reception of the licence for trade in a street booth 43 15
Reception of the land lot for housing accommodation building 2500 (about 7years) 56
* The minimum monthly wages in 1983 in Peru were equal $38,47 Source: (De Soto, 1995. P. 12-13).
"Our study shows - writes Hernando de Soto - that willingness Peruvians act outside the law is largely the result of a rational assessment of costs ... law-abiding." Thus, the main cause of shadow economic activity should be considered irrational legal regime as "the prosperity of the company is less dependent on how well it works, and more - from the costs imposed on it by law. Entrepreneur who is manipulating these costs or relationships with government officials, appears to be more successful than the one who is concerned about a production. "The result of "bad laws" becomes an economic situation where illegal activities in Peru, accounting for 48% of the economically active population and 61.2% of the time, 38.9% of official GDP. In some areas of the economy, such as transport, teneviki all become major producers (De Soto, 1995. P. 178, 189): as illegal transportation of the overwhelming majority (93%) of the vehicle fleet of the capital of Peru. It should be emphasized here that the goods and services produced tenevikov essentially no different from the production of legal production.
Another important theoretical achievement Peruvian economist is study of the mechanism of self-organization of economic "underground". In the shadow business rules not brutal violence, as it is often represented as a kind of illegal law. Done by Hernando de Soto analysis of illegal housing construction, trade, transport, shows that there exist stable organization, coordinating contacts tenevikov with each other and with the outside world. One gets the impression that the "shadow" of living a kind of parallel world with their "trade unions", the courts, and established rules of law, it is much more effective than those that exist in the official world. Even inevitable, for the shadow economy, the process of bribery of public officials is converted into a stable order, you agree with all the participants. High transaction costs of doing business purely individualistic activity obviously inefficient, causing tenevikov rally illegal organizations.
The author of "Other way" offers concerning original classification of transaction costs on the basis of the criterion "legality - illegality."
The first group of them - "price obeying the law," ie, the cost of law-abiding
3 Минимальная месячная заработная плата в 1983 г. в Перу была равна 38,47 долл.
JOURNAL OF INSTITUTIONAL STUDIES (Журнал институциональных исследований) • Том 6, № 4. 2014
JOURNAL OF INSTITUTIONAL STUDIES (Журнал институциональных исследований) • Том 6, № 4. 2014
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Р. М. Нуреев
behavior. Businessman in legal business should bear one-time "access costs" associated with getting the right to engage in certain kinds of economic activity. Received official sanction for his business, he must constantly bear the costs of "continuing activities within the law": pay taxes and social payments to obey bureaucratic regimentation manufacturing standards, comply with mandatory standards in personnel management, to incur losses due to inefficient judicial conflict resolution or debt collection.
Table 6
Comparative analysis of costs in legal and illegal sectors of economy
Price obeying the law The price of illegality
Access costs "Price evade legal sanctions" (the risk of capture and punishment is partially mitigated by bribes as a special form of insurance)
Continuing activities within the law Costs associated with the transfer of income
Higher rates on the black market capital
The inability to participate in the knowledge-intensive and capital-intensive areas of production
Relatively weak protection of property rights
"The inability to use price contract system" (risk of violation of business obligations)
The lack of effectiveness of non-contractual rights
Source: (De Soto, 1995. P. 176-215; Oleynik, 1999. P. 143).
Opting for an illegal organization, the entrepreneur gets rid of the "price obeying the law", but is forced to pay "the price of illegality." This second group includes transaction costs "price evade legal sanctions" (the risk of capture and punishment is partially mitigated by bribes as a special form of insurance), costs associated with the transfer of income, higher rates on the black market capital, the inability to participate in the knowledge-intensive and capital-intensive areas of production, relatively weak protection of property rights, "the inability to use price contract system" (risk of violation of business obligations) and the lack of effectiveness of non-contractual rights (see Table 6).
Lack of legally enshrined property rights leads to inefficient storage and use of their resources by illegal people. In addition, they can not freely dispose of their property or use it as collateral.
Their collective organizations, unfortunately, unable to fully compensate for the lack of legal property rights. It is not surprising, therefore, that "extralegal settlements, markets, industrial workshops give the impression of an unfinished. Houses Adjourned, construction materials piled on the sidewalks, the equipment is not staffed. To some it may seem - de Soto writes - that is as a consequence of laziness Peruvians, but it wrong. Simply tenevikov advantageous to accumulate funds in the form of materials, and not the money, because of what the financial system does not work" (De Soto, 1995. P. 196).
There is a vicious circle: the growth of the informal sector leads to a reduction in legal. However, while maintaining the level of public spending, this means the need to increase taxes on legal business, which leads to increasing the attractiveness of the informal sector, and so on (see Fig. 3). Therefore division of society into legal and illegal business "has a negative impact on the economy as a whole, expressed in lost productivity, reducing investment inefficiency of the tax system, cost of utilities, slowing technological progress and the many difficulties in the formulation of macroeconomic policy", and does not exempt the company from the need to improve the institutional framework (see Fig. 4).
Therefore the division of society into legal and illegal business "has a negative impact on the economy as a whole, in terms of decreased productivity, reducing investment inefficiency of the tax system, cost of utilities, slowing technological progress
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and the many difficulties in the formulation of macroeconomic policy,” and does not relieve the Company the need to improve the institutional structure.
Fig. 3. The vicious circle of illegality Fig. 4. Consequences of the vicious circle of illegality Source: (De Soto, 1995. P. 219). Source: (De Soto, 1995. P. 219).
Hernando de Soto makes a distinction between good and bad laws. "Good law -he writes - guarantees and improves the efficiency of the housekeeper and community activities, they controlled and bad breaks or completely eliminate the one and the other." The fact that a large majority of the population chose the informal sector, and the minority is using its capital outside the country, clearly demonstrates that the laws that prevail in it - bad.
Why in Peru dominate bad laws? The fact that the government is busy mainly redistribution of existing income, and not the creation of new wealth. Therefore, the best minds in the country and the energy of entrepreneurs spent no real progress, and to engage in redistributive wars. The result is that there is no equality before the law, because for some laws promise privileges, while others are not available. Meanwhile, "the development is only possible if effective legal institutions within reach of every citizen" (De Soto, 1995. P. 233).
Over 98% of all laws of the state are taken by the executive branch in violation of the elementary and bypass democratic procedures and almost never published. "These procedures depend on each minister" and by changing the bosses changed again and again. "Our laws are unstable and unpredictable, because depend on who won the redistributive war" (De Soto, 1995. P. 245, 247). In a country where the law can be bought, where you can be generous for others, run rampant corruption. More extensive system of regulation and control, in order to lower stage moves decision-making and a real opportunity to actively influence the mechanisms of redistribution. Therefore, the power to become the exclusive province of the most petty bureaucrats, does not shrink from nothing. "In view of the legal and political tradition, our rulers, even democratically elected, get absolute power over the economic and social activities, and it is impossible to imagine any property rights or contracts which the state can not arbitrarily break it. ... In almost all cases, there is no mechanism for the effective protection of the rights of the majority of citizens of the state" (De Soto, 1995. P. 290, 291).
Interestingly, it is typical for the right and for the left-wing political parties. And they both contribute to the expansion of state activity and intervene directly in the economy. Both left and right are doing it with the help of bad laws. And those and others see the cause of the failure is not the lack of institutional conditions for economic development and the production of real wealth, and they have taken disability (bad!) Laws. Both left and right are not actually contributing to the development of market economy, and its discredit in the eyes of the majority. "Entrepreneurial resources of the country can emerge only when permitted by the dominant institutions. Just look at the
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Peruvians in their country doomed to poverty and stagnation, but to achieve success in other countries, where their activities are fenced relevant institutions" (De Soto, 1995. P. 300).
Easy to see that Russia's economic problems, in fact, not so far from those that must be solved in the Latin American countries. Growth of illegal sector is perceived by many-sided - a degradation of the national economy. However, as the experience of Peru, our suffering not so much from excessive, but from a lack of market relations. In this case, the shadow business development should be seen not only the symptoms of the disease, but also the beginning of the recovery. What should be done? From the point of view of de Soto, it is necessary to bring the legal system into reality. For this it is necessary to solve the institutional problems, both in the present and in the future.
To present the most relevant is the elimination of obstacles to the integration of legal and shadow sectors, the creation of a single economic system right and nondiscrimination. This involves three steps:
• simplification - optimization of functioning legal institutions by eliminating duplicative and unnecessary laws;
• decentralization - transfer of legislative and administrative responsibilities from the central to the regional governments, in order to bring power to the real life and the urgent problems;
• deregulation - responsibility and growth opportunities for individuals and their restriction to the state.
For the future it is necessary to modify the procedures themselves adopting new laws in order to avoid repeating the mistakes of the past. This implies:
• publication of the bills for their free discussion;
• analysis of the bills in terms of cost benefits, in order to exert a disciplining effect on government and reject the imperfect bills before they are published;
Only under such conditions "people a taste for independence and believe in the usefulness of their efforts," ie, "be able to believe in yourself and economic freedom" (De Soto, 1995. P. 317).
Hernando de Soto’s Book gave a new line of research neoinstitutional - economic and legal concepts of development (Law and Economics of Development)4.
2. Hernando de Soto’s on the way to solving the capital
What should be done? From de Soto’s standpoint, it is necessary to bring the legal system to reality. And the second is devoted to this work, "The Mystery of Capital" (De Soto, 2000), in which the author tries to solve five puzzles:
- The riddle of the missing information,
- The Mystery of Capital,
- Riddle political ignorance,
- Forgotten lessons of U.S. history,
- Riddle legal impotence.
A. Smith: “capital is the totality of property (assets), accumulated for the production purposes». The greater accumulated capital, the wider possibility of specialization and the higher labour productivity. The phenomenon of capital arose as a result the natural progress of humanity from society of hunters, herdsmen and ploughmen to commercial society. So that the accumulated assets would turn into the active capital and would serve expansion of production, they must obtain the specific form and be personified in the specific object.
De Soto puts the important question of why property laws do not work outside the West. Following R. Coase, he believes that "economists, for the most part, ceased to study the work of specific economic systems. They are limited to theorizing". Therefore, de Soto emphasizes that the mere copying of Western law does nothing, as "the majority of citizens have not had the opportunity to use the law, pay their savings into
4
Review of 1990th. See: (Buscaglia).
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capital" (De Soto, 2000, P. 24).
Hernando de Soto believes that a significant portion of the accumulated capital in developing countries is undercapitalized. According to his calculations, "the total value of real estate used by the poor countries of the Third World and former communist and other than their legal property, is not less than 9.3 million. Dollars", which is about twice as much as the entire amount being in the world economic turnover of USD (De Soto, 2000, P. 44).
If the assets in the West have double lives: not only directly used for domestic needs, but also they are source of capital (ie loans guarantee), the Third World and former communist countries that they do not fulfill the second function, thereby not actually capital. Therefore, de Soto identifies six effects of private property:
1. - Fixing the economic potential of assets
2. - Integration of disparate information,
3. - The responsibility of the owners,
4. - Increase in the liquidity of assets,
5. - Development of public relations,
6. - Certification of transactions.
1- st - Fixation of the economic potential of assets. Capital appears because of its reflection in the records about property rights, about the guarantee, in the text of contracts and etc. "Capital - says de Soto, - is due to the intensity of the records of ownership, the pledge, the text of contracts and other papers of this kind, fixing socially and economically the most useful features ratio of assets as opposed to the visible quality of the things themselves. ... In developed countries, the system of documentary display assets serves to ensure the interests of the other side of transactions and ensures responsibility, since it is these goals is the information in it, rules, norms and mechanisms to prevent the violation of these rules and regulations" (De Soto, 2000, P. 56 -57). None of the countries it surveyed Hernando de Soto did not find a single legal system of property registration. This means that most of the men of property are not legally protected. As citizens of developing countries can not legalize their private property, then they have to own it illegally. Hence the widespread development extralegal economy. Because of this, at first glance, a mere formality, according to de Soto, conceals the causes of underdevelopment of the capital market. "But the property -he said - is not just a paper document, a transfer device, which reflects and keeps most of the information that ensures the movement of the market economy. Private property fertilizes the whole system, because it makes people accountable, liquid assets, transaction records and provides Effectiveness of all the necessary arrangements for starting with the monetary and banking systems to production and investment spheres. Property - this is not house itself, but the economic concept of relative house, personified in the juridical documents. In the West the large part of objects of real estate can be with the ease used as the additional guarantee of credit as source of investment means as address of the collection of debts, percentages and taxes.
Consequence of isolation from the majority of the population of six positive effects of private property is the marginalization of society. Standard of living, in his opinion, will increase only when and where and when the government changed the law and the system of property in such a way as to promote the deepening of division of labor. If this does not happen, then the rapidly growing scale extralegal economy. Especially fast this is happening in the process of urbanization, which is well illustrated in the first book of Hernando de Soto "The Other Path".
2- nd — Integration of separate information. To majority of the citizens of developing and former socialist countries closed access to legal private property; therefore them it is necessary to manage extra-legally. In XIX century was undertaken the attempt to gather into the united system the separate facts and the rules, which determine property relations in the cities and villages, factories and farms. As a result long study and analysis was legalized information about the presence of active
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memberships and about their potential profitableness. This facilitates estimation of objects of real estate and operation with them, are created advantageous conditions for the creation of capital.
3- rd — Owner's responsibility. Release of owners from under the forging action of local standards and assignment by them possibilities to act within the framework united legal system increases their responsibility. The laws, which protect not only property rights, but also adherence to the treaty, bring up in the citizens of Western countries respect for the property. Third World Countries and former socialist camp does not give the possibility to conclude profitable agreements; therefore they do not have access to the credit, insurance. They do not risk to lose the property, which do not have, they; therefore they cannot be received seriously as participants in the agreements.
4- th - Increase in the liquidity of assets. In contrast to objects of real estate, property rights on them easily to combine, to divide, change, use for stimulating the economic operations. Because of system of private property united factory can be in property of many investors, any of them can sell its portion of property, and this will not affect integrity and functional fitness of enterprise.
5- th - Development of the social bonds. The system of private property makes it possible to establish: the history of assets, owners, correlation with the concrete owners, which creates the legally efficient addresses, condition for execution of contracts,network of easily identified and personally critical agents of business forms from the citizens of Western countries.
6- th - Certification of bargains. The important special feature of western systems of private property, is the fact that they are protected from the loss and forgeries. Public Archives store entire information about the facts, which limit or which increase the value of assets - against the presence of mortgage, additional rights (to the passage), about agreements of lease, about burdensomeness by debts. Archives guarantee accuracy and opportuneness of the renovation of information, simplicity and the ease of access to it.
3. Forgotten lessons of the USA history
150 with the small of the years ago USA were one of the Third World Country. Factors, which bring together America XIX cent. with the modern developing and former socialist countries:
• Mass migration of population
• Explosion of illegal activity
• Political agitations
• General dissatisfaction with obsolete legal system
The reasons, for which specialists in property relations practically did not deal with the study of problems of passage from the illegal rights to the united system of legal private property:
• Historical process is not yet completed
• The analysis of property relations traditionally is conducted on the material of developed countries
• It is difficult to trace history of creation of institute of property
Fall outside the limits of the obsolete British right. XVI cent.-unprecedented migration of Western Europeans into North and South America. Initially order was supported according to the principles of English property rights. However, subsequently it ceased to answer realias of the life of colonists. Reasons:
• Absence of uniform system of the geodetic works;
• The conflicts apropos of the agrarian property did not have precedents in the English usual right.
Self — dependent land capture is an old American tradition:
• Squatteration is a self-dependent occupation of vacant lands.
• Squatteration is the older than the nation and government.
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• Migrants occupied lands without any legal grounds.
New social contract: «tomahawk rights». Types of property right:
• «tomahawk rights»
• «cabin rights»
• «sowing rights»
These illegal rights were: bought, sold and given. All are as official property
rights.
Breakthrough in the region of the legislation: “primary rights”. «Primary right» -the legal innovation, which made possible for settler to redeem organized land by him before it will put out to the public auctions. In the next 200 years this principle played key role in process of legalization of illegal property in the USA.
More than legal obstacles - it is more than the illegal. In 1784-1850 years. USA joined - as a result purchases or achievements - the almost 900 mln. acres. Since 1784 year. the congress of states works at the limitation of encroachments of general national land. Demarcation and sale government's land: sections with an area of 6 sq. miles - 36 smaller, with area 1 sq. mile (640 acres). 1 acre =1$.
North Western ordinance (1787year). Affirmed concept “without conditional or unlimited property rights” (eternal property of objects of real estate with the unlimited right buy or sell it). Created first in the history of the USA guarantee of freedom to conclude transactions. Although the federal laws outlined the elegant structure of legal sale of government' s of lands, they were unable either control or hold in control displacements in the outskirts of state of growing number of migrants.
Main land administration (1812 year): confirmation of documents, which certify property rights to land; registration of purchases of land by credit.
«Land’s certificates»:
• Soldiers, who participated in the revolutionary battles
• War veterans 1812 year.
• Participants in the war with Mexico.
In the middle of XIX century. the Black Market for land certificates, which whipped both the speculation and illegal seizure of land, arose of 100 of those received land certificates 84 they sold them on the Black Market.
Migrants created our own “laws” on basis of the confluence of English legal tradition, the emergent in America rules of law and our own common sense. Result -“plurality of vested rights of property”, determined in two different legal and economic systems:
- codify and reflected in the arch of the laws;
- Used in the everyday practice.
USA began to live within framework of pluralistic legal system.
Fight with lawlessness: policy of the states. Politics increasingly were inclined to support of illegal. History of adoption of laws, which recognized right to land after the fact who its organized by, in the USA XIX cent. - this is history of lift of illegal as political force. They ceased to be “malodorous law-breakers”, who insolently seize the best land of the country, and they became into “valiant pioneers”, diligently of the workers above its development, and also potential voters.
Fight with the lawlessness: policy of federal center. 1830 year. - the coalition of congressmen of western and southern states conducted general law about the primary rights to land. 1832, 1838, 1840 years. - congress renewed law about the primary rights to land. To 1841 year. Law about the primary rights so was affirmed that the congress accepted the general law, which is applied to the future periods.
Fight with the lawlessness: action of illegal. The illegal organizations, which served protection those not recognized as law of property rights. Associations of aspirants to land- extended in the American Middle West in the first middle of XIX century. Assiduous regulations of mountain regions, which covered the West of the country after discovery of gold in California.
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Lessons of American experience for the Third World Countries and former socialist camp. In transformation of USA into the most powerful and most abundant by capital market economy of peace central role played the acknowledgement of legality of illegal property rights, their integration into general national system of private property. American experience shows that change of legal system in developing and former socialist countries is this the triune task:
To explain that the real property relations represent by themselves To integrate them within the framework legal law To advance political strategy, capable of ensuring success of reforms. Marginalization of society is the consequence of being cut off from the majority of the population of six positive effects of private property. Standard of living, to de Soto’s opinion, will increase only when and where the government changed the law and the system of property so as to encourage the deepening of division of labor. If this does not happen, then extralegal economy grows rapidly.
The concept of de Soto has some obvious shortcomings. Property - not only a transfer device that reflects and stores certain information, but above all a social relation between people. In addition, there is a notable paradox: an attempt to analyze the property of the whole system is economic relations creates a certain detachment from the social economic analysis. Property - not only prerequisite for the development of a market economy, but its result. Therefore undeveloped property relations reflects economic underdevelopment of public relations at the periphery of the modern world.
Job Hernando de Soto is a new line of neoinstitutional research - economic and legal concepts of development (Law and Economics of Development).
Fig. 5. Types of Economic analysis and its influence on the political changes Created by: Meier G. M. (1992). Do economists influence the developing world? // Developing Policy. L., N.Y., Macmillan Press, Ch. 2, pp. 20-34.
Of course, we are far from the legal fetishism, which is inherent in the concept of de Soto. But we can not agree with the author that without transformation of the system of traditional institutions, rules and regulations and necessary institutional prerequisites is impossible to build a true market economy. It is important to remember that it is not limited to the publication of good laws. It is necessary to implement them. And this requires the development of enforcement mechanism, which should be not only negative but also positive incentives to new institutions gained flesh and blood.
Summary. Neoinstitutionalists reject drastic government intervention in the economy. It is, in their view, is based on a low understanding of economic processes and leads to major political changes (see. Fig. 5), is not always beneficial to the economy. The classical liberal approach, in contrast, is based on in-depth analysis of the processes, understanding of trends in economic development and does not require drastic political changes. He only seeks to create an enabling institutional environment for market development, conditions that encourage the disclosure of potentials and opportunities for
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personal development.
REFERENCES
Buscaglia E. Law and Economics of Development. (http://allserv.rug.ac.be/ ~gdegeest/0580art.htm).
Brackman S., Garretsen H., Van Marrewijk C. and Witteloostuijn A. (2006). Nations and Firms in the Global Economy, Cambridge University Press.
Cypher James M. and Dietz James L. (2005). The Process of Economic Development. Routledge, London and New-York.
De Soto H. (1989). The Other Path. The Invisible Revolution in The Third World. Harpercollins. (Russian Translation - Moscow, 1995).
De Soto H. (2000). The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. New-York, Bantam Press, (Russian Translation -Moscow, 2001).
Development: Theory, Policy and Practice. / Ed. by Jan K. Coetzee, etc. Oxford,
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Easterly W. (2002). The Elusive Quest for Growth. The MIT Press, Cambrige. Gillis M., Perkins D. H., Roemer M. and Snodgrass D. R. (1996). Economics of Development. 4th Ed. N.Y.
Ingham B. (1995). Economics and Development, L.
Inozemtsev V. (2001). Attempts to revive the great illusion // Latin Amerika Journal, no. 3. (In Russian).
Mier G. and Raush J. (2000). Leading Issues in Economic Development 7th Ed.
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Nureev R. (2013). Development Economics: the models of genesis of market economy. 2nd edition, Moscow. (In Russian).
Nureev R. (2014). Survey of the History of Institutionalism. 2nd edition, Rostov-on-Don. (In Russian).
Oleynik A. (1999). Institutional economic. Topic 6. Shadow Economy // VOPROSYECONOMIKI, no. 6. (In Russian).
Preston R. W. (2000). Development Theory, an Introduction. Blackwell Publishers.
Schneider F. and Anst D. (2002). Lurking in the shadows. The growth of the underground economy. Whashington, DC. IMF. (In Russian).
Szirmai A. (2005). The Dinamics of Socio-Economic Development. An Introduction. Cambridge University Press.
Thirlwall A. P. (2006). Growth & Development with special reference to developing economies 8th Ed. London, NY.
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