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

Soto Hernando De

Softcover

ISBN 10: 0552999237 ISBN 13: 9780552999236

Publisher: BLACK SWAN, 2001

Synopsis

Why does capitalism triumph in the West but fail almost everywhere else? Elegantly and with clarity de Soto revolutionises our understanding of what capital is and why it does not benefit five- sixths of mankind. He also proposes a solution: enabling the poor to turn the vast assets they possess into wealth.

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 the founder and President of the Institute of Liberty and Democracy (ILD) in Lima, Peru, regarded by The Economist as the second most important think-tank in the world. He has also been an economist for GATT (now WTO), CEO of one of Europe's largest engineering firms, and as a governor of Peru's Central Reserve Bank. As President Alberto Fujimori's Personal Representative and Principal Advisor, he initiated Peru's economic reforms and played a leading role in modernizing its economic and political system. In 1993 de Soto drew up and negotiated the strategic plan that reversed Fujimori's coup d'etat and returned the country to electoral democracy. He and ILD are currently working in Asia, the Middle East, and Latin America on the practical implementation of the measures for bringing the poor into the economic mainstream introduced in The Mystery of Capital. He was recently listed by Time magazine as one of the five leading Latin American innovators of the twentieth century. His previous book, The Other Path, was published in more than ten languages and was a number one bestseller throughout Latin America.

About this edition

• Publisher: BLACK SWAN
• Publication date: 2001
• ISBN 10: 0552999237
• ISBN 13: 9780552999236
• Binding: Paperback
• Number of pages: 288