Rating: 
Summary: Good points, but *extremely* repetitive.
Review: A lot of other reviewers have commented on this book based upon the propositions and assertions made in this book, so I won't comment here, except to say DeSoto's book is enlightening. That being said, this book is overly repetitive. DeSoto makes a good point, and backs it up in the first 50 pages. But then he takes those 50 pages and beats them over your head for the next 100 pages, and you can't help but feel battered by the repetition. He could have delved more deeply into American History and the personalities involved in making the historic decisions in American property systems, but, sadly, he does not.
Rating: 
Summary: Profound but De Soto's Insights Miss the Mark
Review: Insightful and written in a captivating style, Hernando De Soto in 'The Mystery of Capital' explains that poverty lingers in the third-world because of its failure to create a system of recognizing and organizing each citizen's property that will allow for it to be converted into dynamic capital that can produce wealth. For instance, in much of the third-world, if you don't have a legal address than you can't use your house as collateral for a loan to open a business. However, despite his accurate analysis of the third world's problems, he misses the mark in fully explaining why most western nations, particularly the United States, have been so successful in converting property into capital that produces wealth. As a result, this unfortunately weakens the effectiveness of his solutions he offers to developing-nations. He references the history of western nations and indicates that they once had conditions and problems similar to the third world. He states that over time, especially during the last 200 years, through an unconscious endeavor, these nations were able to weave together a system of laws and social contracts that allowed for property to be accounted for, and for people to be held accountable to their obligations. However, De Soto fails to explain why the framework for how this 'unconscious endeavor' was able to exist within the 'bell jar' of western nations. De Soto explains how western nations were able integrate their extralegal world, but he doesn't explain why this happened. He fails to identify what happened 200 years ago in western nations that allowed for a revolution in capital management. De Soto suggests that if governments only paid attention to the 'barking dogs' (a term he uses meaning that dogs know the extralegal boundaries of their owner's property), then they will be on their way to converting their nation's dead capital, which exists in the vast extralegal or non-legal realm of a nation, into vibrant, dynamic capital. His solution is essentially that a nation needs a strong central government that responds to the needs of the people and can responsibly orchestrate individual property rights. An entrepreneurial government, if you will, that both responds to the market demands of its citizens (expressed through the extralegal realm) and is 'conscious' about converting its dead capital. Here's where De Soto falls short. How does a government become centralized enough so that it can properly coordinate individual property rights and obligations, yet it not become so centralized so that it falls back into the tyranny it is resisting that will eventually impede on individual property rights and create an extralegal world that will produce more dead capital? Part of the answer is in the U.S. model of government (three branches and a federal system of states, counties, etc.), where the very infrastructure of government is localized, decentralized and organized. However, the main answer lies in what took place approximately 200 years ago within the United States that never happened before in human history and explains why this 'unconscious endeavor' to harness property into capital that produces wealth took place. The founders created a nation that recognized that individual rights were endowed by a higher power, a creator. This concept prohibits the government from assuming that it has a monopoly on property rights. The government recognizes that property rights are inalienable and that they come from a higher power, which is not the government itself. Accordingly, the government is a humble servant, not the ultimate master, which serves to protect individual property rights. Laws are created to insure that government or other individuals do not abrogate an individual's property rights. This explains the 'unconscious endeavor' that took place within the U.S. and in western nations to account for all property because ultimately it was about creating a system that secured individual rights in deference to a higher power. This is the critical piece missing in De Soto's analysis. The drive for converting dead capital into liquid capital isn't necessarily about converting all illegal property into legal property; it should first be about securing individual rights. Once this is established, it will be easier for all of the mechanisms to fall into place within a nation and systemically transform property into capital. The reason De Soto missed this is because he wanted to show that there are few differences between developing nations and the first world. For example, he discusses how most nations are entrepreneurial and that the histories of western nations are similar to the current conditions of the third world. Unfortunately in the process he overlooked what made the U.S. method of governing so radically revolutionary which was its recognition that individual rights need to be secured because they come, not from the government, but from a higher source.
Rating:
Summary: One of those rare seminal books
Review: DeSoto has uncovered the taken-for-granted truths about our (The West's)economic system in conjunction with the enormous difficulties faced by Third World countries. His starting point is that Capitalism requires its participants to have an address--an address where potential lenders can find the participant (1) to assess what they own and (2) to be able to sue and repossess for repayment. That sounds simple until you consider the millions of people living around Mexico City, Rio, and the like who are not registered with any "address" system. Those people have been living there for generations and have accumulated various forms of property--property that cannot be readily turned into capital, i.e., by getting a loan and mortgage, because they do not have a legal address. De Soto explores these issues as well as the solutions. He faces the fact that all legal systems are put into place to protect those who are putting them in place, not because they are venal prople but because that is the way of the world. Even the essential Uniform Commercial Code. He reminds us that the USA did not square away its property rights system until late in the 19th century. This book is an absolute classic. It also opens the eyes of capitalists to the ingredients of capitalism. What is capital, how can we be sure what our money is worth--these kind of unthought of concepts. It is "Wealth of Nations" type of break-through book.
Rating: 
Summary: interesting - though a bit dry
Review: in this book hernando de soto goes againts the conventional view of the socalled vicious circle of poverty which has been at the center of development economics for decades. in this he echoes the great economist peter bauer. de sotos argument is mainly that capital exists every where but that it is dead due to the lack of proper social institutions (private property). he shows empirically how people living in large parts of the world (the socalled third world) are not able to raise large bulks of capital and also that they are kept from being industrous due to goverment regulations. the bureucratic obstacles as well as the neccessary political connections makes it almost impossible for ordinary people to act as entrepreneurs on any large and visible scale (i.e. to the government). in his arguments de soto also ecchoes adam smith who always saw economic liberal policy (the end of privileges and the security of persons and property) as benefeting the poor rather than the rich. the influential economic elites are always politically connected and are not the ones most in need of legal protection of property (as the marxists always seem to think). i strongly reccomend reading p.t.bauers 'from subsistence to exchange' which is much more enjoyable and which contains a world of wisdom in a field of study that often is dictated by political correct social theories rather than sound arguments.
Rating:
Summary: Outstanding
Review: There are a short list of books which deserve 5's, and for Economics, Hernando de Soto's masterpiece tops it. De Soto's second (and far greater) book brings the reader into a world where businesses can't grow, governments can't raise taxes to provide basic services like roads, and people are left in poverty traps; all because of a single piece of paper - a property right. It glides the reader through the slums of Lima, Manila and Cairo, and shows how the inept and corrupt government have stifled growth through their long and expensive process of legally establishing property. One of de Soto's famous examples is his attempt to register a small business in Lima, but pledges not to bribe any of the government officials. Twice de Soto had to break his promise otherwise the experiment would not have continued, and the entire process took 10 months. In New York, it would have taken 4 hours. There are several examples of this. De Soto also opens some American history books to study how the US came from being a third world country in the early 19th century to a first world power; I'll give you a hint, property rights. I will not tell more of the story to ruin it for the readers. I give this book my highest recommendation
Rating:
Summary: The Answer to Global Poverty?
Review: The Mystery of Capital posits the theory that development of capitalist economies is a function of the ability to accurately record and protect the private ownership of property as a means of allowing that property to function as capital. Once the nature of ownership passes beyond just the realm of physical possession, property can be synthesized into non-physical forms that can be sold, rented or borrowed against to generate more economic activity. The problem in Developing Nations isn't a lack of property, but rather an inability to convert property into its most productive uses. The author includes numerous statistics to substantiate his hypothesis, but not so many that your eyes glaze over.
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Summary: Capitalism and compassion for the poor
Review: This book is one of the most influential contributions to development economics published in the last years. "The Mystery of Capitalism" emphasizes the local causes of botched development, rather than the external causes. This goes very much against the left-wing academic belief in the evil effects of globalization and the power of predatory multinational companies (as propounded, for example, in Naomi Klein's recent "Fences and Windows"). De Soto implies that the governments of developing countries are largely responsible for the sorry state of their economies. And he thinks that the impact of multilateral institutions (like the World Bank or the International Monetary Fund), multinational corporations, and charitable donors (including the development funds from Western governments) is limited. This can be construed to be an argument for reducing payments to developing nations. Which is also why De Soto is popular with the conservative establishment and found Maggie Thatcher and Richard Nixon among his early supporters in the 1980s. However, there is a twist to De Soto's argument in "The Mystery of Capital". He is not a laissez-faire economist who wants the economy to self-regulate itself. Quite the contrary - it is the government that has to take action and implement and enforce the legal structure. In his opinion, the government should even legalize the existing illegal property arrangements. In the end, he argues, this is just what was done in the United States to very positive effect in the past when U.S. law gradually integrated extralegal arrangements to bring about a peaceful order. De Soto is not a die-hard capitalist, and he does not view capitalism as a credo. Much more important for him are "freedom, compassion for the poor, respect for the social contract, and equal opportunity. But for the moment, to achieve these goals, capitalism is the only game in town. It is the only system we know that provides us with the tools required to create massive surplus value."(228) The big achievement of De Soto's work lies in demonstrating the value of a functioning legal system and good governance by actually calculating how much time and money is needed to set up a simple business in a developing country. In "The Mystery of Capitalism" De Soto puts a price tag on the potential economic prosperity that a country could enjoy if it had a working system of enforceable property laws. The legal system and its enforcement were so much taken for granted in developed Western economies that economists never calculated their value in terms of money. De Soto identifies the cost of red tape and ineffective laws. Then he goes on to try to calculate the untapped savings that lie frozen in illegal property: "The value of savings among the poor is, in fact, immense - forty times [!] all the foreign aid received throughout the world since 1945." Even though one might question some assumptions in the calculations, the dimensions of the untapped potential are mind-boggling. "The Mystery of Capital" illustrates that De Soto is a gifted writer and a charismatic salesman of his ideas. He makes such a forceful, cogent argument that his message threatens to blot out the voices of other economists who justly complain that property-titling alone will not bring prosperity to developing countries and that he is selling a simplistic universal solution to many different, often culturally specific, obstacles to capitalism. Not least because of the controversy it has created, "The Mystery of Capital" is a very important and influential book. It deserves the wide audience it has gained.
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Summary: Rethinking the challenges of the developing world
Review: Hernando de Soto has produced a great book that should supplement anyone's reading list on economic development. His thesis is that developing countries have failed to produce capital, which is the driving force of economic activity and surplus. At the center of this failure is the inability to establish clear ownership of property and to produce a unified system for the exchange and fungibility of property. For one, Mr. de Soto has provided data on developing countries (collected by his own team on the ground). According to his numbers, the value of the real estate held but not legally owned by the poor in the Third World and ex-communist nations reaches $9.3 trillion. In general, the extralegal sector accounts for about 50 to 70 percent of the workforce in developing countries and from one-fifth to two-thirds of economic output. Alone, these numbers point to a staggering underground economy that does not get accounted for by official statistics. The statistical lag is only part of his story. The essence of Mr. de Soto's argument is that countries need to think of capital (property in this case) in its value-generating rather that physical form. Establishing who owns what is not simply an engineering or mapmaking task; it is a legal job that unifies informal property arrangements into an official legal code. This legal and political challenge is what much of this book is about, and much of what Mr. de Soto's think-tank does. More importantly, Mr. de Soto has offered a unifying thesis to deal with the topic of economic development: the conversion of "dead capital" that cannot generate surplus value into live capital that can galvanize an economy. Rightly, Mr. de Soto argues that this conversion is essential as to bring capitalist benefits to those who are now disenfranchised.
Rating:
Summary: so this is why
Review: I found this interesting little bit: "Using economic data from fifty-two countries from 1960 to 1980, Samar K. Datta and Jefferey B. Nugent have shown that for every percentage point increase in the number of lawyers in the labor force (from, say, 0.5 to 1.5 percent), economic growth is reduced by 4.76 to 3.68 percent-thus showing that economic growth is inversely related to the prudence of lawyers.19" p. 199 and shared it with a few lawyers -- with no response. The main point of this book is that 3rd world countries have not been able to become 1st world capitalists nations because they do not have a sound, legitimate, agreed upon registration system to account for property. Those who are essentially doing business on the black market own a great deal of wealth but cannot capitalize on it to increase their wealth because it is illegitimate. In many communities there are conflicting authorities and property is still viewed as family or community wealth not to be sold or transferred to people outside the family or community. A review of how the US slowly evolved a strong property registration system shows that it was a hard fought battle over many years among many disputants. The same thing is in store in developing countries today. What might help is the recognition by the property owning classes that the overall wealth of their countries would improve drastically if they legitimized those who are de facto using property as the rightful owners: that is surrender their property rights to the squatters and black market business enterprises. For some small businesses it takes over two years full time work and capital to go through 700 steps to get a small business license.
Rating:
Summary: Very good, but comes just shy of its claim
Review: I picked up Hernando DeSoto's book shortly after a trip to South America, and a staunch recommendation in "The Economist", and I found it to be a very well written, thought provoking book with very good ideas on "capitalizing the poor" and thus allowing the third world to generate wealth. Much of what he said resounded very well with me and my first hand experiences in Peru and he has convinced me that his proposals are very much win-win proposals for all involved. However, he has failed to convince me that he has discovered the linchpin of capitalism that would live up to the title "Why Capitalism Triumphs in the West and Fails Everywhere Else." Is property ownership the critical reason for capitalism's success in the West? One could argue that there are other obstacles to the development of capitalism in the third world, possibly including political corruption and internal strife. These reasons in turn might have stifled both the capitalization of the poor and the countries development. Nevertheless, these reasons do not detract from what is a great work, and I still contend that this book is a must-read for anyone interested in the Third World.
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