Urban abandonment and "the failure of capitalism"
- isobelaraujo
- Jan 12, 2018
- 3 min read
“Dead capital exists because we have forgotten (or perhaps never realized) that converting a physical asset to generate capital...is a very complex process...Why assets can be made to produce abundant capital in the West but very little in the rest of the world is a mystery.” - Hernando de Soto, The Mystery of Capital
In his discussion of dead capital, de Soto describes how the failure of capitalism in non-Western countries is due to the untapped potential, or “dead capital” of private property, and a lack of highly structured and formalized systems of property rights and land titles in the non-Western world. This makes me wonder- how would de Soto address the phenomenon of empty cities across the world, from Ireland to China? With this in mind, it becomes clear that throughout the Western and non-Western world, the value of land has been conceptualized and articulated into words through land titles. Yet I would also argue that this is also a form of “dead capital”. If we assign value to an asset, does that automatically make it valuable? If a city is constructed in the middle of nowhere and no one is there to inhabit it, does it really create capital? Locke would perhaps say that it is a waste, following his logic that any land not used intensively is wasted.
This idea of dead capital and abandoned buildings brings me to the picture above. This was taken on the roof of an enormous, completely abandoned 4-story warehouse in Chicago’s Chinatown on the near South Side. It represents a widespread phenomenon in many American cities. Speculative development created the ghost towns in Ireland and China, but what caused the abandonment of this urban ruin? It was once a productive and useful property in a densely populated area on valuable land. There is no doubt that the land and the building could be put to some use. Yet this complicated system of land titling, zoning, and ownership that, according to de Soto, drives the success of capitalism in the West, also makes property ownership inaccessible. It leads to paradox, abandoned properties that belong to no one, alongside overcrowded homes that people can’t afford to leave.
If the government subsidized a program to allow the urban poor to buy up all the properties in abandoned buildings and empty cities, would the availability of these “frontier settlements” combat the issue of a lack of property rights? Is the best solution building new properties, fixing up abandoned buildings, and giving the people property rights? This brings me to my next point- that the urban poor, from Milwaukee to Mumbai, are criminalized for living on land that is the legal property of another entity. From Matthew Desmond’s portrait of eight Milwaukee families hit with eviction notices, court dates, fees, and late fees, in Evicted: Poverty and Profit in the American City, to Katherine Boo’s account of the struggles and criminalization of informal settlement dwellers in Behind the Beautiful Forevers: Life, Death, and Hope in a Mumbai Undercity, a pattern of criminalization is apparent.
The issue is not as simple as formalizing systems of property rights and land titles- the issue is distributing those rights equally.
The equal distribution of property rights isn’t just an issue in the non-Western world. The practice of redlining is another example of the very real barriers to property ownership in the United States. To bring it back to de Soto’s discussion of dead capital, I would add to his assertion that “dead capital exists because we have forgotten (or perhaps never realized) that converting a physical asset to generate capital...is a very complex process”, that the presence of a highly structured, formal system of property rights might benefit the elite in both the Western and non-Western world, while the most marginalized urban citizens are criminalized for occupying land, and explicitly prevented from gaining property rights.
Stepping back from the framework of de Soto's argument, it is also my personal view that deepening inequality, instability, and concentrated poverty is actually an indicator global capitalism's success, rather than its failure in developing countries.
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