Rating: 
Summary: A must read, very educational and interesting
Review: Hernando DeSoto provides an interesting account on 3 levels of the sucesses and failures of the free enterprise system. On one hand he reveals the hidden wealth in the developing world, and the lack of vehicles for the possessors of this wealth, the average citizen of a country like Peru or Egypt or Ecuador to exploit their very own individual property. He points out how things that many take for granted, such as consumer mortgages, clear titles to property, and freedom to participate in the formal economy with the benefits of government recognition are not present or underdeveloped in much of the world. The stifling bureaucracy in so many countries makes it almost impossible for an average citizen to open even a modest business so commerce takes place on the black market, for even the most mundane of goods and services. A third aspect of his book is his examination of USA history and how the system of property rights evolved out of non-existence to the effective system we have today, comparing that to many developing countries. Most of Latin America is essentially where we were 120 or so years ago according to his research. Mr. DeSoto's point is that there is nothing wrong with Capitalism, it is a great system. It just is not really being properly implemented in most developing countries, and the poor are the ones who suffer. I agree, and even more so after his compelling case.
Rating: 
Summary: Breathing new life into dead capital...
Review: ...and it is also fair to say, bringing death to old, trite economic theories on poverty and blinkered, narrow, views about the Third World. THE MYSTERY OF CAPITAL has bolstered De Soto's reputation as an original and independent thinker on the causes of Third World poverty. This book was endorsed by Margaret Thatcher, Milton Friedman and the American Enterprise Institute (AEI) for its whole hearted support of the market economy. Lest anyone mistakenly think that as a Third world economist, he is slavishly, and typically, tied to the theory that poverty is due solely to colonialism and exploitation, and that he hankers for the good old days of socialism and economic revolutions; De Soto says plainly that "capitalism stands alone as the only feasible way to rationally organize a modern economy." The premise of this book then is based on a committment to the conservative, pro-market, open economic system that has long been the mantra of the West. This is in fact part of the mystery. How is it then, De Soto asks, that having adopted capitalism and pursued it with vigor and enthusiasm, the Third World nevertheless still remains poor. In identifying a cause De Soto disagrees with many of his conservative colleagues and we see his independent thinking. Many argue (David Landes, Samuel Huntington and Thomas Sowell for instance) that culture and religion play predominant roles in keeping the poor poor. De Soto says "I humbly suggest that before any brahmin who lives in a bell jar tries to convince us that succeeding at capitalism requires certain cultural traits, we should first try to see what happens when developing and former communist countries establish property rights systems that can create capital for every one." In dismissing the "culture is key" school of thought, De Soto puts forward his own theory. Property rights, and in particular, the ownership of capital, is the critical missing ingedient in the Third World.De Soto carefully lays out his argument with facts and figures. There is an estimated $9.3 trillion in capital potentially available in the Third World. The problem is that it is unowned. The poor have no legal title to the land and their homes, so they remain unable to use it as collateral. The poor exist in the informal economy and as such can not enter into any legal contracts with the mainstream economy. For the poor, their capital is dead. De Soto illustrates this with examples from the informal economies of his native Peru, Egypt and Haiti and develops on the point by comparing this situation with the early days of land settlement in the US when there were no property rights in existence. It is here where his argument falters slightly, because although property rights were not yet in existence in the US, small farmers and land holders were nevertheless able to secure credit. The US government accomodated early settlers. In the Third World De Soto shows the opposite is true and argues that governments and their bureaucracies are major impediments. This argument certainly puts him back in good stead with Western conservative thinking on the virtues of small government, but as a blanket approach to the Third World, it is a bit simplistic. Unfettered markets can certainly solve most economic problems, but they are not the panacea to all that ails the Third World. This book is a good read and an interesting examination of the informal economy in the Third World with a very original economic theory thrown in. It however probably remains impractical and impossible to implement. Who owns the land and how would the sale and redistribution be achieved? Further, any book that proposes a single solution to the intractable problem of global poverty has to be regarded as theoetical and does not really offer the answer.
Rating:
Summary: Out of the box
Review: It is an amazingly hopeful thing that the first major work of the twenty-first century should be entirely free of the dominant ideologies of the previous century (namely the notoriously flawed anthropological, historical and economic views of Marxism, and its counterweight, free-market Messianism.) De Soto, in contrast, gets to the heart of the matter with a simple and convincing account of the role of legally titled property in a functioning 'above-ground' economy. His 'roll up the sleeves and hit the streets ' style does well to contrast the absurd abstractum of most economic writing, which, especially in its Marxist version, has done more to hinder than alleviate the conditions of poverty. A hopeful premise and thorough argument, this book should offer a new and REALISTIC approach to the reality of the global economy.
Rating: 
Summary: Right but not convincing enough
Review: De Soto sheds a totally new light on third world and under developpement. But as his first book (The Other Path) was full of concrete examples and took us by the hand into Peru's slums, it is not the case of the Mystery of Capital. De Soto repeats again and again his thesis, like a mantra. But he remains far to general and forgets completely to show us how things work in the field. It thus lacks thee convincing power of The Other Path. It's a shame, as De Soto is certainly right and certainly possesses all the data needed to prove it.
Rating:
Summary: Fascinating Perspective
Review: Mr. Hernando de Soto has hit the nail where it hurts! His book is full of interesting ideas and innovative approaches to making capitalism as a system a down to Earth issue and the idea of capital as the main tool of capitalism easy to grasp. It is worth to read this book, although I personally disagree with seeing capitalism in isolation, and the world as just an economic entity. Political and economical pressure, the appointment of governments through coups de etat, military invasions, media control, lack of or bad education, and other maneuvers make capitalism something more than the accumulation of capital. I would also recommend to read "History of the Future that Belongs to Us" by Joherdi Hernandez and Ottilia Robers, which presents a more integral version of how Western societies evolved, includes an analysis of today's world and offers practical ideas for our future as societies.
Rating:
Summary: Lucid, wonkish and not as right-wing as the cover suggests
Review: I have to say that, when this book arrived, I was a little worried by the praise on the book-jacket. The publishers assembled a who's who of doctrinaire first-world conservatives to praise this book, from Maggie Thatcher and Milton Friedman to (gasp!) William F. Buckley, Jr. With a fair bit of trepidation, I settled down to read it wondering if I hadn't accidently bought some rambling right-wing screed. I was pleasantly surprised. De Soto is too much of an academic and a wonk to make a suitable pamphleteer. Sure, his emphasis on the role of property tends to put him to the right side of the spectrum, but this is a guy who cites Ferdinand Braudel and Karl Marx just as easily as Adam Smith. His concern is for the poor of the world and what can be done practically to improve their conditions, rather than with some preconceived ideological stance. His prose is lucid, his research is impressive, his recommendations intuitive and his whole approach quite refreshing. His scholarship exhudes intellectual stature, and one can only hope that his views gain wider currency in development circles. As a final note, de Soto ran for President of Peru earlier this year and got like 2% of the vote, proving once more than policy-nerds make bad politicians. On the other hand, both candidates in the run-off have speculated that they might give him a high-level cabinet job if they win, which would give him an interesting opportunity to put his rhetoric into action.
Rating:
Summary: Very nice reading
Review: I am rather new to the field of economics and I really enjoyed reading this book. It provides some fascinating insights into the meaning of property rights and lesgilation as predecessor or successor of citizens' actions. The book is however sometimes repetitive and lengthy. The main ideas could have been communicated more briefly. Overall, a great reading for anyone interested in macroeconomics and development
Rating:
Summary: the risky ambiguity of property rights
Review: This is an important book if it encourages economists and policy makers to look again at the resources the poor of the world already have at their disposal - far more than ever received in aid payments. However there is a real problem with de Soto's insistance that formal property rights will give the poor access to their 'dead' capital. When the property rights of the poor are formalised they are usually taken away and given to the rich. De Soto can give no guarantee that this will not happen again. In Churchill's words, the price of freedom is eternal vigilance. There is an ambiguity in de Soto's rhetoric on this point. He writes: 'In Haiti, for instance, no one believed we would find documents fixing representations of property rights. Haiti is one of the world's poorest countries; 55 per cent of the population is illiterate. Nevertheless, after an intensive survey of Haiti's urban areas, we did not find a single extralegal plot of land, shack or building whose owner did not have at least one document to defend his right - even his 'squatting rights'. (p. 167) This would be reassuring were it not a contradiction of his earlier point about Haiti and its problem of 'dead' capital; 'In Haiti... according to our surveys, 68 per cent of city-dwellers and 97 per cent of people living in the countryside live in housing to which nobody has clear legal title' (p. 26). When it suits de Soto's argument, Haitian squatters 'own' their land; when it doesn't suit him, they don't. While this ambiguity is merely problematic for de Soto's argument, one can only imagine what the eagle-eyed legal representatives of rich property developers might do with it.
Rating:
Summary: Fatally Flawed Sequel to a True Classic
Review: At long last, Hernando de Soto has provided us with a sequel to his unparalleled tour-de-force The Other Path, which in merciless detail and with cool analysis described the appalling situation facing the poor in the Third World, who in fact have to fight an uphill battle against their own governments, with the only help they get from the West being trickle-down handouts. For, De Soto revealed, it was not the lack of energy or entrepreneurial capacity nor an invincible popular stupidity that produced the poverty in the Third World but governments, both national and foreign, that refused to recognize in their own citizens the spirit of entrepreneurship, their efforts to better themselves, their savings, their accumulated property, but rather wrote them off as shantytown riff-raff whose only hope was birth control. De Soto tore the lid off of this world and forever changed how we look at the poor there. And now he has published the further development of that book, purporting to provide a philosophical foundation for the phenomenon of capital, telling us again why it is the poor's last best hope, on the material plane, for the future. The great merit of this book is De Soto's philosophical elaboration of the way fixed, established, secure property rights pave the way for the development of capital proper, that is, property as the means of obtaining credit in order to generate further investment. Property thus generates a multiplier effect that produces compound economic growth. This function of property was recognized most thoroughly by Marx, De Soto argues, and provided the basis for the Marxist critique of capitalism. But, De Soto says, Marx had it exactly backwards: it is precisely this function, succinctly captured in the term capitalism, that has proved the salvation of the lower classes of society. For when they too are able to have their property recognized before the law, they too can enter into the capitalist equation and benefit from material prosperity. This is a lesson that was learned in the West during the Industrial Revolution, and a lesson that must be learned in the Third World today. For the same kind of revolution is occurring there that occurred in the West a century ago. But there is more. De Soto claims to teach us a great lesson in this book, above and beyond what he presented in The Other Path; and that is that extralegality, the informal sector of unrecognised property and its accompanying do-it-yourself judicial institutions, is a universal phenomenon which was only overcome in the West in the 19th century.... So De Soto argues that it was the customary-law orientation of pre-modern European society that lay at the heart of the problem of extralegality, and that overcoming this customary-law approach, as was accomplished in the 19th century in continental Europe through the codification of the private law, is the key to solving the problem of extralegality in the Third World today, and thus unleashing there a capitalist revolution that will sustain economic growth and bring Third World economies into line with the West. But is De Soto fair in blaming customary law for extralegality and informality? De Soto's argument hinges on equating the integration of property systems with the establishment of unified law codes. These two are, however, far from being identical. In fact, the one - an integrated property system - can exist quite independently of the other - a unified, centrally administered legal system. The one provides information about property that can be accessed centrally. The other provides protection of property. Information and protection are not the same, although protection - security - of property does provide the basis for valid information about property. Without security of property, there can be no accurate information about property, because ownership, the source of information about property, is not established. But what does this have to do with extralegality? Security of property is not the discovery of the last hundred or two hundred years; yet it is this, or the lack thereof, that has created the situation of extralegality in the Third World. Owners cannot get recognition of their property before the law and before the courts of their own country: this is the problem. The problem is not that owners cannot get their properties properly advertised, or that they cannot adequately publish information about their property to potential buyers. But it is precisely these two categories that De Soto runs together in his argument. Thus, the "extralegality" De Soto criticizes in the Western past is not the extralegality currently being experienced in the Third World. In fact it is not extralegality at all. It is another form of legality, that of customary law rather than centralized legislation. But De Soto never makes that distinction. He simply argues that because there was no centralized legislation and codified law, then there was extralegality. But that is a far cry from systems of law in which property rights are made into high hurdles that only the well-heeled and well-placed can take advantage of; in which great swathes of the population are excluded from the legal system altogether. That is the kind of exclusionary legal order that typifies the Third World, that makes extralegality a necessity for survival, and it is the product not of custom but of legislation and codification and law codes.
Rating:
Summary: A Seminal work
Review: I recently finished "Mystery of Capital". It is fascinating and a seminal book in understanding 3rd world economies and my own American economy. I wish I had read it just prior to a recent visit to Cuba. I would have seen everything with different eyes. What I considered "hustling" of tourists is really very basic entrepreneurship in a country with few opportunities. I did not appreciate the skill and drive exhibited by the Cubans (and other third world populations) until I reflected on it after finishing Mr. DeSoto's book. If the reforms suggested by Mr. DeSoto and ILD are adopted, America could well become the new third world member. Once the hard working people of the third world have access to capital, their potentials for economic growth defy my imagination. A fine, fine achievement. jjm
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