Resolving Douglass C. North's ‘puzzle’ concerning China's household responsibility system

Simon Deakin and Gaofeng Meng

Journal of Institutional Economics, 2022, vol. 18, issue 4, 521-535

Abstract: This paper considers Douglass C. North's ‘puzzle’ concerning China's household responsibility system (HRS) and offers a possible solution. China's HRS, which has evolved over the past four decades to become its dominant form of rural land ownership, has stimulated spectacular economic growth and poverty reduction; however, it is based on a type of ownership which is far removed from the property rights regime which North regarded as essential. Two features of the HRS merit attention. The first is ‘split ownership’: this refers to the allocation of different aspects of ownership, including rights of access, use, management, exclusion and alienation, to a range of individual and collective actors with interests in the land in question. The second is polycentric governance: rules governing land use are derived in part from community-level action and in part from state intervention. We argue that in explaining the functioning of the HRS we need to move beyond the narrow conception of legally enforced private property rights on which North relied. We should instead embrace understandings of ownership as an emergent, diverse and complex institution, of the kind emphasized by A.M. Honoré's legal theory of ownership and Elinor Ostrom's theories of the common-pool resource and polycentric governance.

Date: 2022
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