ABSTRACT
This chapter proposes a reformulation of the Rights Hypothesis that retains the emphasis on security of property but substantially downgrades the importance of a formal legal system that provides effective enforcement of contract rights. An important school of thought in institutional economics holds that economic growth requires a legal order offering stable and predictable rights of property and contract because the absence of such rights discourages investment and specialization. The history of China’s post-Mao economic reform has provided interesting material against which to test the Rights Hypothesis. The Chinese example also sheds some interesting light on the question of whether economic development actually requires rights or simply predictability. Proponents of the Rights Hypothesis typically assume that there must be predictability for private economic actors, because they assume that economic development requires a market and that a market requires private actors.
