Chinese customs and law have traditionally prevented a land seller from conveying outright title to a buyer. The ancient custom of dian, which persisted until the 1949 revolution, gave a land seller and his lineage an immutable option to buy back sold land at the original sale price. This little-analyzed custom discouraged soil conservation and land improvements, and, especially after 1600, contributed to China’s inability to keep pace with England. After calamitous experiences with land collectivization between 1951 and 1981, China’s Communist government began to confer private land-use rights. But, instead of making outright sales, it chose to award contractual rights only for a fixed-term, for example, 50 years in the case of an industrial parcel. For the same reasons dian did, this policy threatens to impair China’s prospects of economic development.
This is the abstract of Robert C. Ellickson’s latest paper. Land rights have been very much on my mind lately, as I am revising a paper studying their effect on rice productivity in Madagascar.
If you have an interest in development and are not familiar with Ellickson’s work, you are seriously missing out.
Ellickson is Walter E. Meyer Professor of Property and Urban Law at the Yale Law School. The first half of his book Order Without Law — which ranks among my the top five social science books — develops a theory of social norms, the essence of which is that social norms emerge and evolve in a way that maximizes the welfare of the community. This is the informal-sector equivalent to Posner’s hypothesis that the common law evolves in a way that is wealth-maximizing.
The second half of Order Without Law illustrates that theory by presenting a case study of the many social norms observed by the cattle ranchers of Shasta County, CA.
If you think you might be interested in reading Ellickson’s book but aren’t sure about purchasing the book and would like a teaser, read Ellickson’s 1989 Journal of Legal Studies article titled “A Hypothesis of Wealth-Maximizing Norms: Evidence from the Whaling Industry.” That article presents Ellickson’s theory of social norms and applies it to the norms that emerged to regiment New England’s whaling industry in the 18th and 19th centuries.