The Political Economy of Land Privatization in Argentina and Australia, 1810-1850: A Puzzle
Abstract: This paper compares public land privatization in New South Wales and the Province of Buenos Aires,in the early nineteenth century. Both claimed frontier lands as public lands for raising revenue. New South Wales failed to enforce its claim. Property rights originated as de facto squatters’ claims, which government subsequently accommodated and enforced as de jure property rights. In Buenos Aires, by contrast, original transfers of public lands were specified de jure by government. The paper develops a model that explains these differences as a consequence of violence and the relative cost of enforcement of government claims to public land.
Review by Manuel Bautista Gonzalez
The U.S. economy has racked up an enviable record of two centuries of sustained economic growth —an achievement, it has often been asserted, that was predicated on the establishment of institutions guaranteeing the security of property rights. My aim in this article has been to qualify this assertion by reminding scholars that economic development also requires that societies be able flexibly to reallocate property rights in response to new technological and other developments. If such reallocations could always occur smoothly—either through market transactions or a consensus effort on the part of society to capture the resulting gains in efficiency—there would be nothing mysterious about this qualification. As I have shown, however, reallocations in the United States have often been involuntary, and losers have not always received adequate (or any) compensation. Owners whose property has been taken from them have routinely charged that property rights are in fact not secure, but aside from some relatively brief episodes when broader protest movements have taken up their cause, these kinds of complaints have never become general. Hence the mystery. Despite the many involuntary reallocations of property that have occurred repeatedly since the formation of the republic, Americans still strongly believe that their property rights are secure and they act in their economic lives accordingly. – Lamoreaux (2011), emphasis added.
This paper was first distributed by NEP-HIS on 2012-05-15. The paper reviewed in this post was a more recent version from January 4, 2013, made available by the authors.
Dye and La Croix’s paper is an illuminating exploration of the history of land property rights in the province of Buenos Aires (Argentina) and the colony of New South Wales (Australia) in the first half of the nineteenth century. Whereas Australian squatters acquired de facto claims over lands outside the official settlement areas defined by colonial authorities and some of them managed to transform their claims into de jure property rights, porteño landholders often relied on the will of the authorities of the nascent republic to enforce de jure property rights, with mixed results. Why did authorities honor or not existing claims over land when governments stood to lose revenues from their sale or lease?
In their answer, the authors refute the presentist bias of popular institutionalist and factor-endowment accounts: contrary to the belief, developed countries have not always had a better record of securing and enforcing property rights over land than developing countries. Why?
The authors argue that it is not institutional inheritance but the distribution of power and the militarization of conflicts over land which ultimately affect the recognition and enforcement of land property rights. By considering land privatization in Argentina and Australia, two countries of relatively new European colonization, Dye and La Croix reinstate contingency to historical narratives assuming the enforcement of property rights as a main driver in economic change through time.
The paper is a valuable contribution to the economic history of land in newly settled territories, as well as an invitation to study how governments have claimed land for fiscal purposes often facing dilemmas of temporal inconsistency. A question that surges is how to incorporate speculation behind land booms and rushes into the model. Another question that remains pending is how efficient the government was on the ground level through direct agents and indirect state presence. Including the altitude variable in Figure 4 would allow for comparisons between the Province of Buenos Aires and the Figure 3 depicting New South Wales.
Dye and La Croix invite economic historians to embed in their narratives the diversity of property rights and heterogeneous legal regimes across space and time. Their approach to the Australian case is a welcome addition to the literature questioning the view of common law countries as uniformly and consistently better at law-abiding. Dye and La Croix’s paper is an inviting exploration of how sovereignty over land is construed and modified to better serve political coalitions and powerful men in public offices. Their study also raises the question of the importance of land surveyors in creating legal limits to claims on lands with rather uncertain spatial extensions.
Dye and La Croix’s model would ultimately be helped by micro-evidence provided by future case studies that combine both archival evidence with spatial history techniques. The authors provide much needed insight into the heuristic decision to compare countries with different paths of economic growth: When does it become necessary to explain the impact of expansive imperial governance vis-à-vis unstable republican policymaking in early stages of nation-state building?
When can we set aside the difference between negotiation and coercion? When does pacific settlement of the frontier end? When do conquest and exploitation begin? The paper suggests that the timing of colonization and the various forms it is performed through demand a revision on the claims of indigenous populations over disputed lands. In so doing, we need to consider their agency in the face of dispossession performed by both public and private interests.
In the end, this paper reminded me of the importance to reread Karl Polanyi (2001) on the formation and significance of land markets in capitalist economies and the disruptions the commodification of land brings to fragile groups on the margins of the market society. This study certainly helps reopen the debate on the importance and optimality of certain forms of property rights over land. A historical understanding of the political economy through which land has become a commodity is necessary to avoid simplistic and often mistaken policy recommendations for developing countries.
– Lamoreaux, Naomi R. “The Mystery of Property Rights: A U.S. Perspective.” The Journal of Economic History 71, no. 275-306 (2011).
– Polanyi, Karl. The Great Transformation. The Political and Economic Origins of Our Time. Boston, MA: Beacon Press, 2001 (originally published in 1944).