"Capital formation," the accumulation of funds that allow persons, companies, and economies to invest and grow, is a process that accompanies years of work and production and saving.
It's a process, not an event; it rarely happens overnight or at the stroke of a pen.
Except in Cuba, yesterday.
By allowing the purchase and sale of residential property effective November 10, the socialist state transformed the nature of that property. Before, a home was an asset to use and to pass on to heirs. Now it can be made liquid.
The result, at the family level, is instant capital formation; the creation of wealth through the creation of a new legal use for assets to which Cuban families hold clear title.
This is a historic step for socialist Cuba and a new landmark in the reform process led by Raul Castro.
The government has created a vast new stock of capital in private hands that will be used for private ends in a new market that will be driven by decisions of private parties. Moreover, this market will see an inflow of capital from Cubans abroad who will help relatives buy homes. To help this market work, the National Housing Institute is now cut out of the transaction process, something that makes Cubans smile.
It's now clear that when Raul Castro talks about "structural change," he means it. Yesterday's action gives meaning to that Marxist term that even capitalists can grasp.
The debate over the scope and pace of the reform process will continue, vigorously in Cuba and amid an intensifying blizzard of nonsense in Miami. But the question of the government's willingness to end burdensome controls and allow major expansions of private activity is now settled.
Yesterday's action constitutes an important human rights improvement because it transforms the nature of property rights and ends a prohibition on normal, beneficial transactions that affected all Cuban families. It also ends an odious aspect of Cuban immigration law: the requirement that emigrants (under the salida definitiva category, itself a good candidate for abolition) forfeit their property to the government.
All in all, a good day for Cuba and for the Cuban people.
Here are earlier items on the housing policy announcement last summer, on the convoluted permuta market that will now pass into history, and on the Miami politics.