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.
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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.
Table of Contents
Chapter One: The Five Mysteries of Capital
Chapter Two: The Mystery of Missing Information
Chapter Three: The Mystery of Capital
Chapter Four: The Mystery of Political Awareness
Chapter Five: The Missing Lessons of U. S. History
Chapter Six: The Mystery of Legal Failure
Chapter Seven: By Way of Concluion
What People are Saying About This
A very great book...powerful and completely convincing. It will have a salutary effect on the views held on economic development. (Ronald Coase, Nobel Laureate in Economics)
Fresh thinking is rare - this book has the capacity to transform economies . . .. (Lord David Owen, Former Foreign Secretary of the United Kingdom, European Union Chairman of the International Conference on the Former Yugoslavia)
This book changes our understanding of where capital comes from. The consequences could be world-shattering. (William F. Buckley Jr., Founder-Editor of the National Review)
Following on his extraordinary and highly original book The Other Path... this book, too, is another tour de force. (Jeane Kirkpatrick, Former U.S. Ambassador to the United Nations)
A crucial contribution. A new proposal for change that is valid for the whole world. (Javier Perez de Cuellar, Former Secretary of the United Nations)
It should be compulsory reading for all in charge of the 'Wealth of Nations. (Lady Margaret Thatcher, Former Prime Minister of the United Kingdom)
. . . one of the few new and genuinely promising approaches to overcoming poverty to come along in a very long time.(Francis Fukuyama, author of The End of History and The Last Man)
For policy-makers, international investors, and those who care about the challenges of developing countries. . .
Most Helpful Customer Reviews
Belonging to a developing nation, can hardly not agree. Very good book. Perhaps what the author proposes is the first step towards a developed nation.
Makes understanding economic problems in the Second and Third Worlds (sorry, still the best shorthand descriptions available!), this book is a must read. And, altho' wrriten 12 years ago, explains the current problems with foreclosures- the inability to properly record transfers of property after the Crash of '08.Short, pointed and easy to follow.
I have been hearing about this book for at least 5 years, and it was supposed to be an amazing, viewpoint-changing experience, so I figured that I should probably get around to reading it. I can't say that it radically changed my views of capitalism in respect to other competing economic systems, but the author does do an excellent job of explaining exactly why the 3rd world always seems to miss out on capitalistic expansions. While 'the West' keeps getting richer, other people miss out and stay relatively poor. Why is this? Are they stupid? Are they lazy? No, they aren't stupid and they aren't lazy. The problem is that everyone seems to have forgotten that capitalsim is all about capital (hence the name). And in the 3rd world, most people are not allowed to develop capital because they don't own official property. Why? I liked the flow chart that showed how it would take literally 18 years to follow all the legal channels to buy property legally in Haiti. It is so ridiculous, that nobody outside of the system bothers trying to get on the inside, so they just squat on land and 'own' it in this fashion. Because they lack legal title, however, they can't use that land or house as collateral for a loan, a basic thing Americans like me take for granted. I must say that I had never thought about it before, but it totally makes sense. My only problem with this book is that it felt too long. It's only about 230 pages sans end notes and index, so it isn't physically that long, but it really only takes the author about 150 pages to make his point, and the rest of the book is him hammering the same point over and over and over again. It gets tedious, but this is still an important book for everyone who cares about helping the poor attain the benefits of the global economic system.
While the world's leaders struggle to find answers to the problems of poverty and ponder ways to administer aid monies effectively, Mr DeSoto offers some refreshingly basic ideas. First and foremost, simplify titles to land ownership. If a person has clear title to their land, they can borrow against it. Something we take for granted in the US, clear title is a rarity in the developing world. Secondly, streamline the process of registering your business. Most of the developing world operates illegally because it takes an inordinate amount of resources, both in hours and in dollars, to go through the process of registering a business. Simple ideas, sensational output. A must read for international policy afficianados.