The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else - Softcover

Hernando De Soto

Softcover

ISBN 10: 0465016154 ISBN 13: 9780465016150

Publisher: Basic Books, 2003

Synopsis

A renowned economist's classic book on capitalism in the developing world, showing how property rights are the key to overcoming poverty
"The hour of capitalism's greatest triumph," writes Hernando de Soto, "is, in the eyes of four-fifths of humanity, its hour of crisis." In The Mystery of Capital, the world-famous Peruvian economist takes up one of the most pressing questions the world faces today: Why do some countries succeed at capitalism while others fail?
In strong opposition to the popular view that success is determined by cultural differences, de Soto finds that it actually has everything to do with the legal structure of property and property rights. Every developed nation in the world at one time went through the transformation from predominantly extralegal property arrangements, such as squatting on large estates, to a formal, unified legal property system. In the West we've forgotten that creating this system is what allowed people everywhere to leverage property into wealth. This persuasive book revolutionized our understanding of capital and points the way to a major transformation of the world economy.

About this title

Review:

It's become clear by now the fall of the Berlin Wall and the collapse of communism in most places around the globe hasn't ushered in an unequivocal flowering of capitalism in the developing and postcommunist world. Western thinkers have blamed this on everything from these countries' lack of sellable assets to their inherently non-entrepreneurial "mindset." In this book, the renowned Peruvian economist and adviser to presidents and prime ministers Hernando de Soto proposes and argues another reason: it's not that poor, postcommunist countries don't have the assets to make capitalism flourish. As de Soto points out by way of example, in Egypt, the wealth the poor have accumulated is worth 55 times as much as the sum of all direct foreign investment ever recorded there, including that spent on building the Suez Canal and the Aswan Dam.

No, the real problem is that such countries have yet to establish and normalize the invisible network of laws that turns assets from "dead" into "liquid" capital. In the West, standardized laws allow us to mortgage a house to raise money for a new venture, permit the worth of a company to be broken up into so many publicly tradable stocks, and make it possible to govern and appraise property with agreed-upon rules that hold across neighborhoods, towns, or regions. This invisible infrastructure of "asset management"--so taken for granted in the West, even though it has only fully existed in the United States for the past 100 years--is the missing ingredient to success with capitalism, insists de Soto. But even though that link is primarily a legal one, he argues that the process of making it a normalized component of a society is more a political--or attitude-changing--challenge than anything else.

With a fleet of researchers, de Soto has sought out detailed evidence from struggling economies around the world to back up his claims. The result is a fascinating and solidly supported look at the one component that's holding much of the world back from developing healthy free markets. --Timothy Murphy

About the Author:

Hernando de Soto is President of the Institute for Liberty and Democracy, headquartered in Lima, Peru. Named one of the leading innovators in the world by Time and Forbes magazines, he now carries out property reform programs for heads of state in some 20 countries worldwide. His work was called "the most promising anti-poverty initiative in the world" by former President Bill Clinton and "a clear and promising alternative to economic stagnation" by former President George H. W. Bush. He is also author of The Other Path.

About this edition

• Publisher: Basic Books
• Publication date: 2003
• ISBN 10: 0465016154
• ISBN 13: 9780465016150
• Binding: Paperback
• Number of pages: 288