Credibility Thesis Research Articles

Cities without slums? China's land regime and dual-track urbanization

China's urbanization has avoided the expansion of slums despite the influx of rural migrants. What might explain this phenomenon? We argue that Chinese urbanization is driven by two tracks rooted in the country's land ownership: 1) a state-led track relying on land financing and expropriation, facilitated capital accumulation, infrastructure construction, and the provision of public goods; 2) an informal track based on collective land ownership and self-governance resulted in informal “urban villages” that provide affordable housing and services to migrants. China's urbanization underscores the credibility thesis, which posits that institutional form follows from function, as the urban villages – as informal settlements – fulfil a credible function in driving urbanization by accommodating the migrant population. However, Chinese urbanization is challenged by issues of sustainability and inclusiveness, and its current credibility might not last. In this context, local policy innovations may highlight possibilities to integrate the tracks and achieve a new type of urbanization by “formalization of the informal.” Put differently, the inclusion of that what is done into law, which should be critically distinguished from privatization through titling. At this point, one could consider the Credibility Scales and Intervention (CSI) Checklist, a “toolbox” of policy interventions predicated upon the credibility thesis.

Beyond ‘empty’ forms of formalization: The credibility of a renewed attempt at forest titling in Southwest China

Whereas the prospective benefits of formalization programs are well-understood and received, less attention has been placed on the feasibility of such actions. This paper studies titling under China’s Collective Forest Tenure Reform. We employ the Formal, Actual, and Targeted (FAT) Institutional Framework, based on the ‘credibility thesis’, to examine whether titling increases tenure credibility. To do so, we draw upon interviews and surveys collected in the Wuling Mountain Area (Southwest China), and compare formal policy objectives to households’ targeted (desired) preferences and actual forest rights. Our findings show divergences between formal and targeted versus actual rights. While titles were widely issued, socially supported, and farmers deemed boundaries and plot sizes clear, there is a paradox: (i) half of forest titles did not record boundaries; (ii) boundaries were not uniformly recorded; (iii) no on-site surveying had taken place; (iv) plot data were based on replicating older data, estimates, or averages; (v) titles had not been issued in contested areas; (vi) farmers had a weak legal understanding of ownership and lease rights. We argue that due to pressure from the central government to complete titling in five years, forest registration has emerged as an 'empty institution': an institutional compromise where spatial complexities were disregarded and neglected during implementation. Although seemingly credible at present, such outcomes of formalization bear the risk that future changes could easily dampen the reform’s institutional efforts and intentions.

The credibility of (in)formality: Or, the irrelevance of institutional form in judging performance

Informal institutions are often labeled as inefficient or “second-best” compared to formal property rights. Yet, the experience in developing and allegedly “developed” contexts alike demonstrates that informality can perform critical functions without detracting from their performance in socio-economic, political, cultural, and environmental terms. This special issue challenges conventional assumptions on the form of institutions by positing that informal arrangements as they have endogenously emerged and persist are functional and thus credible. To achieve this, the collection validates a double prediction of the Credibility Thesis: i) divergent institutions may perform identically to the same extent that identical institutions perform differently; and ii) institutions do not converge but diverge over the course of development. In accordance with the first prediction, the contributions examine the performance of formal arrangements such as lease, ownership, and strata rights as opposed to informal slums, “urban villages”, and self-governed commons. Following the second prediction, the contributions question the prevalence of formal arrangements in the Global North (such as the United Kingdom, Greece, and Israel) to the same extent as they ascertain the credibility of informal arrangements in the Global South (such as in China, South Africa, and Serbia).

The function and credibility of urban slums: Evidence on informal settlements and affordable housing in Chile

In recent decades, governments and international organizations have made strong efforts to promote homeownership among low-income households. However, in many countries, informal housing arrangements persist. A strong reason for this is emphasized in the “credibility thesis” which posits that informal settlements play a functional role and serve informal dwellers by supplying other valuable attributes that formal housing may not provide. Based on a comprehensive survey of 1588 households living in 69 irregular settlements and 32 subsidized housing projects in Santiago, Chile, we analyze the functionality of informal settlements by examining two hitherto under-researched indicators for credibility: residents' perceptions on location and neighborhood security. Results show that in the low-income housing sector some individuals may prefer to live in an informal settlement because these places are more functional with respect to some relevant urban attributes to which they give more weight. In effect, households living in informal settlements are less willing to move from their current municipal district, are closer to jobs, and report lower rates of neighborhood vandalism relative to those living in formal subsidized housing projects. This is related to the fact that in Chile many individuals who have had access to affordable housing have moved to segregated urban areas. The results show that even within well-functioning urban areas where there is strong protection to private property rights, urban informality may still provide a better geography of opportunities than formal homeownership.

A model for inclusive, pro-poor urbanization? The credibility of informal, affordable “single-family” homes in China

Internationally, there is considerable debate on the desired institutional form of informal housing, i.e. whether it needs to be formalized, prohibited or left informal. This debate is driven by demands for better functioning markets, urban planning, and sustainable development. Contrarily, we argue that the endogenous emergence of informal, untitled housing in China (known as Small Property Rights Housing or SPRH) may constitute a successful, albeit unintentional example of inclusive, pro-poor urbanization. To substantiate the argument, we examine how the property rights of SPRH function. In so doing, we draw on the “credibility thesis” and its underlying theory. This study is based on qualitative and quantitative fieldwork conducted in medium and large-sized cities distributed over North, Middle and South China. Despite lacking formal title, SPRH enjoys significant credibility ascertained through: 1) investment; 2) access to credit; and 3) the perceived likelihood of eviction. Noteworthy, most respondents (93 %; n=291) deem themselves owners, with the rights to inhabit (98 %), rent out (87 %), and sell (58 %). Lastly, opposed to the notion that informal housing equals low-quality, disordered slum housing, SPRH functions as affordable, single-family homes, consisting of professionally-built apartment buildings with multiple-room units averaging over 80 m2.

Apartment ownership around the world: Focusing on credible outcomes rather than ideal systems

No matter where in the world they live, if a person lives in a city it is increasingly likely that, if they can buy a property, it will be an apartment. Yet the documents a Sydney buyer’s lawyer will review will be different to those in New York or Helsinki because there are many different systems of multi-owned property ownership around the world. These differ because of underlying differences in property law, but also because different jurisdictions have dealt with the dual challenges of horizontal subdivision and cooperative management in very different ways.While creating typologies for these different systems is helpful to understand the varied forms they can take, typologies are challenged by the fact each system differs in practice. In this paper, we draw on Ho’s (2014) ‘credibility thesis’ to explain why it is so difficult to classify multi-owned property systems across jurisdictions. We demonstrate that similar legal systems of multi-owned property can result in different outcomes for owners in practice, just as different legal systems can result in similar outcomes. This is because the relationship between legal systems of ownership and the experiences of owners is mediated by local social, cultural, economic and political contexts.

Urban open spaces as a commons: The credibility thesis and common property in a self-governed park of Athens, Greece

Although abandoned, unused or underused urban open spaces can play an important role in urban well-being, the traditional approaches of state management and privatization have failed to revive them, due to the lack of necessary public funds, low private investment interest or the vagueness of property rights. Therefore, a solution might be to manage this land as a commons, where local users collectively undertake governance of the resource. The current paper explores a successful initiative, the Navarinou Park initiative in downtown Athens, in an attempt to consolidate the experience gained and to draw policy recommendations for the success of such actions. In this endeavour, the paper employs Ostrom’s Socio-Ecological Systems (SES) framework to analyse the park as a commons and then, building upon this, proceeds to explore the credibility of the institution along the lines of the credibility thesis and its underlying theory, with particular reference to the Formal, Actual and Targeted (FAT) institutional framework. The paper concludes that Navarinou Park is a functional, long-standing and credible institution, successfully serving the manifold needs (recreational, environmental, social and political) and interests of the local population. Thus, in line with the Credibility Scales and Intervention (CSI) checklist, an advisable intervention would likely comprise a subtle blend of condoning and co-opting; governments to leave the daily praxis undisturbed while fostering a regime within which this praxis is permitted to flourish.

The credibility of illegal and informal construction: Assessing legalization policies in Serbia

This paper explores the legalization of mass illegal and informal construction (IIC) in Serbia (with particular reference to the city of Belgrade). It analyzes the credibility of the socialist and post-socialist institutional frameworks on IIC predicated upon the “credibility thesis” – an evolutionary understanding of institutions and their path-dependent development. In the empirical analysis, the measures of state policies were interpreted, assessed, and summarized in accordance with the Credibility Scales and Intervention (CSI) checklist. During the 1960s, a restrictive urban policy and the impossibility of the socialist model to provide affordable residential space due to fast urbanization, IIC consequently became an alternative method for meeting housing needs. In the 1990s, the socialist development model was transformed into one that was post-socialist. A new wave of IIC ensued due to the privatization of land-use and tenancy rights, and its vast scale has been a key driver for accommodating flows of immigrants after the break-up of the Socialist Federal Republic of Yugoslavia. During this period, the Serbian State stimulated policies that are more credible to facilitate, formalize, and condone IIC. It is concluded that IIC in Serbia cannot be fully averted while legalization policies have, to date, been unsuccessful and non-credible.

Institutional credibility and informal institutions: The case of extralegal land development in China

The credibility of informality has become a fertile frontier in the study of institutions as is evidenced by the Credibility Thesis and its applications. Whereas the preceding contribution by Liu and Zhang (this special issue) examined whether, and if so, under what preconditions informal institutions could be formalized, the current article assesses how informal institutions establish their credibility over time. Focusing on competing informal institutions in a developing context, this article explores the mechanisms through which informal rules cumulate their credibility while challenging the formal ones. This article identifies two fundamental mechanisms that contribute to the increasing credibility of informal rules. First, political bargaining lead to ineffective enforcement of formal institutions and low risk of violation of formal rules; Second, institutional challengers' competition for informal practices ironically facilitates their unorganized coordination and resolves their problems of collective action. The interactions of these two fundamental mechanisms help institutional challengers increase the scale of their informal practice and enhance the credibility of informal rules. This article employs the extralegal land development in Shenzhen, China, as an extreme case. Nearly half of the permanent residents in Shenzhen are living in extralegal houses built on state-owned land by villagers whose rural land has been nationalized by the government. The findings can shed light on the credibility of informal rules in other fields.

After form. The credibility thesis meets property theory

According to the credibility thesis (Ho, 2014 and 2016), property in land is determined by its functions. The form of property would follow its functions. But what type of form follows the functions of property? The article considers four meanings of the concept of ‘form of property:’ property in the Blackstonian sense as a mere shell for ownership (and its counterpart, property as social function); the sources of property law (fontes iuris) in international and domestic law; property as a highly formalized right in a legal system well-ordered by land cadastres and land registers (and its counterpart, informal land rights); and property as a standardized ‘bundle of rights’ (and its counterpart, polyrational or bespoke property). Since land rights, fulfilling their desired function, can be credible without full formalization or standardization, land policy must not consider dichotomies (such as ‘formal’ versus ‘informal’), but degrees of (in)formality or credibility.

Formalizing informal homes, a bad idea: The credibility thesis applied to China’s “extra-legal” housing

Discussions about informal housing in developing, emerging economies often revolve around the need for prohibition, privatization and formalization. Private title is seen as a guarantee against indiscriminate expropriation leading to tenure security, better access to utilities and mortgage, and higher investments. However, the argument that formalization and privatization out of necessity lead to better rights of otherwise “victimized slum-dwellers” can be questioned. In addition, prohibition of informal housing can marginalize socially weaker groups, while drawing on critical resources for enforcement. We argue that to avoid externalities, one first needs to probe into the perceived function of existing property rights before considering institutional form, irrespective whether formal or informal. China’s extra-legal housing − or “Small Property Rights’ Housing” (SPRH) − is a case-in-point. Extra-legal housing is estimated to account for one-third of the Chinese urban housing stock. In light of this scale, we maintain that extra-legal housing performs a vital function in providing social security, i.e. affordable housing for low(er) income groups. The argument is supported through a survey amongst 300 respondents in 7 medium and large-sized cities. The survey finds that − despite alleged tenure insecurity − SPRH rallies a high level of perceived credibility along three dimensions: economic, social and psychological. Our findings indicate that urban planning and housing policy should consider institutional differences in line with existing functions. In this case, based on the CSI Checklist (Credibility Scales and Intervention), maintaining status-quo or co-optation might be more sensible as credibility is perceived to be high.

Tackling the uncertainty of spatial regulations in China: An institutional analysis of the “multi-plan combination”

To overcome the problems caused by the uncertainty of spatial regulations, a series of reforms have been proposed in China, although they are considered insufficient. In our study, we first analyse the inherent logic behind the spatial regulations in China from the perspective of two models (“interest politics” to “legal order”) and the context of the turn between these two models. The endogeneity and credibility thesis is adopted to explain why spatial regulation reforms that attempt to shift spatial regulation from “interest politics” to “legal order” are partial failures. This paper focuses on a case study of a "multi-plan combination" and argues that "multi-plan combinations" are spatial regulation reforms that changed “interest politics” in the current planning system to the “legal order” through uniform spatial regulation rules. The "multi-plan combination" reforms are not successful as the reform of “multi-plan combinations”, which are dominated by the Chinese central government and designed exogenously without endogeneity within governments and among the social public. Therefore, the reforms are ultimately empty institutions.

Institutional function versus form: The evolutionary credibility of land, housing and natural resources

This special issue addresses a critical question in the studies regarding land, housing, and natural resources: how does institutional form relate to performance? The question has spawned numerous studies that examine the (cor)relation between formal, private, and titled rights in relationship to development and growth. Contrarily, the contributions posit that the question lacks meaning as institutional Form follows from Function. This premise–known as the “Credibility Thesis”–entails that enduring institutions have been formed through endogenous evolution. As such, they are likely functionally adapted and, in effect, credible; otherwise, they would have changed, atrophied, or become extinct. Ergo, the speed of institutional change reflects credibility, and when informal or communal institutions apparently “persist”, it is not to be defined in terms of being inefficient, perverse, or “second-best”. Interventions such as titling and formalization that intend to alter enduring institutions should be performed with care and paying attention to their function. A crucial step towards achieving this is the execution of an “institutional archaeology”, to dissect institutional structures within spatio-temporally determined contexts and consider their credibility, as is done by the contributions here. The expounded theory is substantiated through a series of in-depth cases in different geographical and socio-economic settings. They range from construction land in urban China (as done by Clarke) to artisanal mining in Ghana (see Fold) as well as from informal settlements in India (see Zhang) to land-enclosed water rights in Bangladesh (Gomes and Hermans).

Institutional function and urbanization in Bangladesh: How peri-urban communities respond to changing environments

Urbanization processes are characterized by rapid change. The peri-urban context represents such a transition zone during urbanization. Here, change creates new realities and new demands, for which existing institutions may no longer suffice. Yet institutions do not change easily, as they typically exist to provide stability and predictability during social interactions. It poses a challenge for peri-urban actors looking for ways to manage their needs within this changing context. In peri-urban Khulna in Bangladesh, this refers to drinking water access. Our research examines how actors in two peri-urban communities in Khulna responded to changes in drinking water access via institutional mechanisms.We do so using the credibility thesis as the starting point, complemented with theories from the field of institutional economics. We expect that system change will lead to institutional change based on (1) actors’ evaluations of institutional function and credibility, (2) a process of satisficing, whereby the costs, resources, and benefits of institutional change are considered in selecting an alternative that produces a satisfactory outcome, (3) whereby the nested structure of institutions strongly influences associated costs and resources available to actors to affect institutional change. The analysis is undertaken using the Institutional Analysis and Development framework. Case study findings offers insight into institutional function in peri-urban contexts. It demonstrates the difficulty of achieving institutional change and highlights the role of the informal context in peri-urban areas. Our paper shows the added value of understanding the institutional context during urban transitions and offers insight into the design of empirical studies on institutional change.

Grounding institutions through informal practice: Credibility in artisanal mining of aggregates, Ghana

Artisanal mining is mainly carried out as an informal activity without a mining license, the payment of public fees or compliance with environmental and labour regulations. Although artisanal mining persists in most African countries, efforts by public authorities to formalize such activities have encountered numerous problems. This paper uses the Credibility Thesis to explain the persistence of the artisanal mining of aggregates in the Accra metropolitan area in Ghana. Aggregates are used in the construction of houses, and several artisanal quarries supply the highly fluctuating and unpredictable demand from individual house-owners. We identify complex but relatively stable endogenous ways of organising artisanal production and marketing in five quarries at different stages of consolidation and liquidation: sites are initially exploited but then gradually transformed into waste dumps or new residential areas by landowners as part of an expanding urbanization process. Artisanal miners are evicted, but as demand continues and alternative supplies are not present, new sites are opened, only to go through a similar sequence. However, practices are replicated, and credible (informal) institutions are transferred through time and space due to their functional endurance.

The credibility of slums: Informal housing and urban governance in India

A major challenge facing Indian cities is the expansion of informal housing beyond state control or regulation. In Mumbai, the financial capital of India, forty-two percent of the population lives in slums. What explains the proliferation and persistence of slums in Mumbai despite their ill-protected property rights and poor quality of living? Applying the Credibility Thesis to the study of urban informality, the paper argues that slums persist because they fulfill certain functions and, therefore, are credible. It will be ascertained that, slums in Mumbai provide alternative housing and economic opportunities for city residents as well as serving as “vote banks” in electoral politics. Slum redevelopment in Mumbai is slow and fraught with contention, largely because the government neglects the high credibility of slums. As a reflection on the function rather than merely the form of slums, this paper challenges the dichotomy between the formal and the informal, and sheds new light on the role of the state in the production and governance of urban informality.

An endogenous theory of property rights: opening the black box of institutions

From a neo-liberal paradigm, secure, formal and private property rights are crucial to foster sustained development. From this follows that institutions that fail to respond to shifting socio-economic opportunities are pushed to new arrangements. The enigma is posed by developments on the ground. Why would the removal of authoritarian institutions during the Arab Spring or Iraq war not increase market efficiency but rather cause the reverse, while China and India, despite persisting insecure, informal and common institutions, featured sustained growth? This collection posits that understanding these paradoxes requires a refocusing from form to function, detached from normative assumptions about institutional appearance. In so doing, three things are accomplished. First, starting from case studies on land, it is ascertained that the argument can be meaningfully extended to labor, capital and beyond. Second, the argument validates the ‘credibility thesis’ – that is, once institutions persist, they fulfill a function. Third, the collection studies ‘development, broadly construed’, by including the modes of production and beyond, the rural and urban, the developed and developing. This is why it reviews property rights from China to India, and from Mexico to Malaysia, covering issues such as customary rights, mining and pastoralism, but also state-owned banks, trade unions and notaries.

Rethinking labour market institutions in Indian industry: forms, functions and socio-historical contexts

The emerging literature on institutional functionalism opens opportunities for historically and socially sensitive analysis of institutions, especially if it is complemented by a material understanding of institutions and their location within the wider social structure. This paper engages constructively with the ‘credibility’ thesis in institutional economics by developing an alternative materialist conception of labour market institutions (LMIs), and applies it to the debates on the Indian industry. Empirical observations collected from field research in various industrial sites in India show that changes to institutional forms have almost always involved labour unrest and conflict, but not always in accordance with the alleged form–function relations. The credibility thesis opens a way for debates on LMIs to move away from the central focus on their forms by evaluating the extent to which institutions are contested within specific socio-historical contexts. Also, the alternative conception suggests that labour, capital and the state may have perspectives on functions of LMIs that may not always coincide, which relate to different types of development. This is of particular interest in the context of India where the on-going policy debates on labour market reforms have primarily focused on ‘form’ variables. The implication is that the ongoing debates in India focusing on policies that attempt to engineer changes to forms of LMIs may be misguided and ineffective.

Assessing evictions and expropriations in China: Efficiency, credibility and rights

Examining three possible ways of interpreting China⿿s laws on expropriation and eviction, I argue in this paper that a persuasive evaluative assessment of China⿿s property regime needs to examine the impact of forced evictions not only on property rights but also on basic rights such as the human right to be protected from forced evictions, and the problem of access to justice in cases of contentious evictions. Some (neo-liberal) arguments for secure property rights, while popular, are based on a simplistic understanding of rights, because they reduce the value of rights to their assumed utility. The ⿿credibility⿿ thesis advanced by Peter Ho can be used to assess evictions under China⿿s property rights and land tenure system, but according to the view taken here, a truly credible system must protect basic rights.

Credibility and class in the evolution of public banks: the case of Turkey

In Turkey, three large and decades-old public banks control about a third of the banking sector. These banks were functional to capitalist industrialization in the postwar era and have evolved spontaneously in ways supportive of neoliberalism. These same banks played a key role in stabilizing Turkey amidst the 2008–2009 global crisis. This gives rise to the seeming contradiction of public banks supporting otherwise neoliberal development strategies. The literature around banking and development has largely failed to capture this dynamic, being instead focused on the economics of public versus private banks. As such, the debate has difficulty capturing the multifaceted and conflicting functions of specific banking institutions. By contrast, we suggest that neither private nor public banks are innately superior – rather, it depends. We engage this problematic through the special issue’s debate on institutional function and credibility and the case study of Turkey. As Miyamura’s article in this volume has made an important contribution to the validation of the Credibility Thesis by zooming in on ‘labor’, so will this paper continue the endogenous analysis of the modes of production by focusing on ‘capital’, with its particular reference to state-owned banks in Turkey. From a historical materialist framework, therefore, we argue that Turkey’s public banks have evolved spontaneously, and often unintentionally so, in ways supportive of capitalist development. Turkey’s public banks thus prevail as credible because their institutionalized social content has changed in complex, class-based, and contradictory ways functional to capitalist reproduction. Such credibility is determined not by ownership form nor achieved by intentional, unmediated design, but has evolved historically within different phases of capitalism. Indeed, as financial capitalism intensifies in Turkey, the public banks have become increasingly important to neoliberal reproduction, hence also giving rise to the problem of alternatives.