CONCEPT
Six Effects of Formal Property Systems
De Soto's analytical catalog of the functions that representational infrastructure performs — each with a direct analog in what the AI economy's extralegal builders lack.
In The Mystery of Capital, de Soto identified six specific effects that a formal property system produces: fixing the economic potential of assets, integrating dispersed information into a single system, making people accountable, making assets fungible, networking people, and protecting transactions. Each effect is performed not by the asset itself but by the representational wrapper that formal institutions construct around the asset. The framework became the analytical foundation for understanding why representational infrastructure is constitutive rather than decorative — why a titled house performs economic functions that an identical untitled house cannot. The six effects map with precision onto the infrastructure gap that separates extralegal AI builders from capital generation.
In The You On AI Field Guide
De Soto's six effects emerged from comparative analysis of formal property systems across developed economies. His research team examined what the systems actually did — what transactions they enabled, what information they integrated, what accountabilities they created — rather than accepting the systems