Consider a peaceful lake. You can go there to water ski, canoe, or just lay on the beach. What you don’t see is the potential energy that is stored in that massive body of water. That is, until an engineer builds a dam. I use this example because it’s a great way of illustrating what capital is. The lake represents an asset like your home or car and the electricity generated is the surplus value, or “capital.” That dam is the mechanism which turns a dormant lake into power that you can use to watch TV or read this blog. Likewise, our legal system of property takes assets and extracts surplus value.
Moreover, property, like energy, is a concept; it cannot be experienced directly.
Economist Hernando de Soto writes in his book, The Mystery of Capital: “Moreover, property, like energy, is a concept; it cannot be experienced directly.” It’s easier to understand property as the physical item that you own rather than as an abstract concept but it confuses the two. The house is what the property refers to but property is about the house’s legal representation. Let’s look at a concrete example. In the cities of Tunisia, where the recent Arab upheaval began, millions of people live and work outside of the legal system. Merchants occupy stores in the market and sell goods but they have no license or title linked to their business. On paper, the businesses don’t exist. So what? I’m glad you asked. The biggest problem is that they have no access to credit because they have no collateral to put up. No one can trust you because they have no way of verifying who you are, what you do, and what you own. You can’t expand your business and thereby increase your income. So you’re stuck and most likely poor. We can see that it’s a social institution because it shows everyone what belongs to you. It provides a way for all of us to know who owns what. I can invest in a firm without ever seeing any of the employees because I can trust the public records. So what does this have to do with the Bible?
The Lord spoke to Moses, saying, “Command the people of Israel, and say to them, When you enter the land of Canaan (this is the land that shall fall to you for an inheritance, the land of Canaan as defined by its borders)…
Numbers 34:1,2 God provided a “deed” to the land for each tribe of Israel. If the people had been faithful to the covenant then they would have been secure and prosperous in the land. Instead, they violated God’s law and each other by stealing from their neighbors. If we also are righteous in how we assign property and obey the rules of that system we will be blessed. Indeed, we know that through free enterprise system billions of people have been lifted out of crushing poverty over the last 200 years. Property is not just about money but also justice and God is certainly just. These laws ensure our well-being. They don’t oppress. Likewise, God’s laws don’t enslave us but liberate us.
I do not turn aside from your rules,
for you have taught me.
How sweet are your words to my taste,
sweeter than honey to my mouth!
Through your precepts I get understanding;
therefore I hate every false way.