For better or for worse, people outside the West are fleeing self-sufficient and isolated societies in an effort to raise their standards of living by becoming interdependent in much larger markets. A legal failure that prevents enterprising people from negotiating with strangers defeats the division of labor and fastens would-be entrepreneurs to smaller circles of specialization and low productivity.
Property obeys what is known as Metcalfe's law: the value of network is roughly proportional to the number of users squared.
Many of the problems of non-Western markets today are due mainly to the fragmentation of their property arrangements and the unavailability of standard norms that allow assets and economic agents to interact and government to rule by law.
Political blindness consists of being unaware that the growth of the extralegal sector and the breakdown of the existing legal order are ultimately due to a gigantic movement away from life organized on a small scale toward one organized in a larger context.
The existence of prosperous enclaves in a sea of poverty conceals an abysmal retardation in a nation's capacity to create, respect and make available formal property rights to the majority of its citizens.
Throughout the Third World, extralegal activities burgeon whenever the legal system imposes rules that thwart the expectation of those it excludes.
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