Before Hernando de Soto’s The Other Path: The Emergence of Property Rights as a Housing Solution in the Shadow of the Cuban Revolution

In 1986, Hernando de Soto and his thinktank published El Otro Sendero (The Other Path), a ground-breaking book promoting institutional reform and property rights as a linchpin of spreading capitalism and democracy. The Other Path was acclaimed by Ronald Reagan and led the United States to support wide-scale property reform in the developing world. This essay, a chapter in a future book on property rights initiatives in Peru supported by the United States in the late twentieth century, offers historical context by examining how, foreshadowing the Reagan era, property rights emerged as a crucial centerpiece of Cold War politics in the 1950s and 60s, after the Cuban Revolution. In 1961, Peru became the first Latin American country to enact a law giving a path to property titles in the squatter communities of its urban peripheries, a decade ahead of other Latin American countries.

The essay asserts that granting property rights to squatters became a central political solution to a housing crisis stemming from accelerating urbanization in the post World War II period. In the decade 1954-1963, Peruvian policy was shaped by a rare convergence among conservative Peruvian politicians led by Pedro Beltrán, U.S. housing administrators, left-wing sociologists, and anarchist architects and urban planners. These varied officials, practitioners, and scholars avoided U.S.-style slum clearance and public housing and coalesced around a response to the escalating rural migration in the 1950s that involved 1) property rights and 2) “aided self-built housing,” that is, a housing policy where urban migrants would build their own homes, however rudimentary and incomplete, ideally with government technical assistance. Aided self-built housing—in effect, informal and irregular housing—became the central housing policy of the Peruvian government and the foreign policy of the United States in Latin America. This essay also examines a 1962 Chase Manhattan Bank national conference on “Housing in Latin America,” which focused on how the U.S. private sector might deploy millions of JFK’s Alliance for Progress funding. The conference participants rejected the idea that mortgage credit was viable in squatter settlements, and suggested that the U.S. private sector focus on supplying cheap building materials for housing that the squatters would build themselves. With the Cold War as a backdrop, conferring formal property rights to squatters, combined with self-building, was a conservative solution to the global housing crisis in contrast to more expensive social welfare programs and building public housing.