Rating: 
Summary: A blinding glimpse of (what should be but isn't) the obvious
Review: De Soto's premise is a simple one: the lack of formal property rights is killing economic growth in the third world. De Soto's research indicates that the poor in the Third world have amassed nearly $9.2 trillion in capital. Yet, it is all dead capital. Because no one can show ownership of it, it is impossible to buy or sell legally. As a result, it adds nothing to the capital stock available for economic expansion. At first glance this seems like a simplistic explanation. Besides, one is tempted to think, even if it is true, each of these poor individuals will only be able to have a few hundred, or at most, a few thousand dollars. That is, frankly, a shallow view. Entrepreneurialism is coming alive in these countries. A single person may not be able to mobilize much capital. But a family, or a group of families, might, in fact, be able to generate respectable sums by third-world standards. That capital could be used to raise money by mortgaging, renting, or any number of other capital-raising techniques. Some might insist that mortgage backing is not a significant part of the financial structure as we know it. But such an argument ignores the fact that, among small, entrepreneurial business, it IS a significant source of capitalization. Moreover, the fact that such capitalization is a minor portion of American Capital markets has no relevance to a society where it constitutes the major source of capital. In point of fact, such securities WERE a major part of American finance 200 years ago at the start of the industrial revolution. And it is from such small seeds that mighty oaks grow.
Rating: 
Summary: Must reading for every eighth grader
Review: I was very disapointed in the book. Everything Mr. DeSoto says is true, of course, and important. Further, it's not understood by many, including many in the west who should be interested and passionately involved. I was eager to read more, for instance, about the real impact of liberation theology and land redistribution (with protective limits on true title and transfer options) on the living standards of the poor. Unfortunately, the people who need to read this aren't interested in learning more about the importance of property rights and the rule of law because it's inconvenient to their worldview. Those who are interested have almost certainly thought and read enough about this subject to find Mr. DeSoto's book to be basic and tediously repetitive. Too bad.
Rating: 
Summary: Filling in the gap between theory and reality.
Review: The Mystery of Capital attempts to explain the reasons why a capitalist system has not favored all people in third world nations in the same degree. Although Hernando de Soto focuses primarily in urban areas, he explains that there are far too many, if not difficult, obstacles for most citizens of third world countries to truly benefit from a capitalistic system. He has research poor neighborhoods in third world nations, and has found plenty of dead capital that could be put to use for the benefit of all people in such nations, if only politicians and lawmakers realize the enormous potential. Apparently, the value of property and extralegal businesses are far greater than the aggregate value of decades of foreign direct investments into those third world countries researched. Such assets are considered dead capital because they have been obtained or developed extralegally. Buildings and businesses exist, but they were not properly registered with the corresponding authorities, and in most cases developed in Government-owned land. A seemingly vibrant extralegal economy goes unnoticed. Why? The level of bureaucracy is overbearing, and therefore it becomes expensive for most people to go through the necessary steps for property establishing a business. Hernando de Soto does not give you a definite method as to how to unlock "hidden capital", but it does give guidelines for developing a meaningful way to turn such unregistered assets into capital; the basis of a capitalistic system. He also offers some history as to how this kind of predicament was tackled by lawmakers in developed nations such as the United States and England. By using history, Hernando de Soto attempts to fill in the gap between theory and reality.
Rating: 
Summary: An intellectual swindle
Review: This book should be read but not swallowed. In my opinion, it contains some valuable research and analysis. However, ultimately it is an intellectual swindle. Here are the main points, as I see them: 1. Much of the Third World and the post-Communist world has been unable to make a successful transition into the modern economy. 2. In those countries, it is difficult to obtain permits to start new businesses. 3. In those countries, many people have dwellings for which they do not have legal title. 4. The absence of legal title makes the people's assets illiquid. 5. Governments often attempt to enforce a legal system for real estate, only to have the law collapse in the face of extra-legal squatting. To succeed, a legal system of property rights needs to build on the conventions that have developed around extra-legal squatting. 6. In the United States, this problem of extra-legal real estate ownership existed until nearly 1900, and it was solved by adapting the law to common practice. Fine. Do you see the swindle coming? De Soto is going to argue that the magic bullet to solve world poverty is to adapt property laws to give squatters better title to their dwellings. De Soto says that poor people have $9.3 trillion in illiquid assets. If they could borrow against these assets, as you can in the U.S. with home mortgages, they could start businesses and climb out of poverty. He says that this $9.3 trillion is much more than can be provided with foreign aid. Two problems with this: 1. Divide $9.3 trillion by the number of people involved, and you get an average of $2000 to $3000 of assets per capita. There are not many businesses you can start on that. 2. Even in the United States, home mortgages are NOT an important source of business finance. There is nothing wrong with making it easier for people to start businesses by making permits easier to obtain. There is nothing wrong with improving the liquidity of assets through more effective legal titles. But this is not a magic bullet.
Rating:
Summary: A timely insight...
Review: After reading the 'Mystery of Capital', I found the book very insightful. So many Americans take for granted the most efficient economy on earth that they overlook the problems of the third world. De Soto points out the catastrophic result of living where personal property rights are not consistently guaranteed, and may not be used as collateral for loans to start businesses. The 'letdown' is the failure of De Soto to deal with the issue of western countries to fight for the expansion of such rights for short-term gains. The west benefits from the 'cheap labor' because quite simply, desperate people do desperate things for money. Nevermind the long-term benefit of a properous global community. De Soto also somewhat glosses over government corruption. In my opinion the subtitle '...why capitalism triumphs in the west and fails everywhere else' implies capitalism doesn't work. Capitalism works EVERYWHERE it's allowed to. "Why capitalism triumphs in the west, while governments stifle it everywhere else" would be a more appropriate title. Paul
Rating:
Summary: Worth reading, but has minor flaws
Review: The book is definately worth reading. It basically points out that a legal system that values private property rights is essential for entrepreneurs to use that value to create or expand businesses. He argues the point persusavily and give concrete example from origial research. If a person is unfamiliar with ideas, this would be a good primer for the subject. The only drawback is that he take a tone that he has made an amzing discovery that no one else has ever figured out. This same thing has been proposed by (for example) Landes in the Wealth and Poverty of Nations and in the collection: Culture Matters, both recently. Looking further back into the past, however, F. Hayek discussed this issue in many books as far back as the 30's and it is not so far from ideas explored by Weber at the turn of the century. I think it would have been a better book if he had pointed readers into ways of exploring the ideas instead of acting like he was the first to discover the concepts. He does present the concepts well and the book is definately worth reading.
Rating:
Summary: Want to know why the 3rd World is poor?
Review: Don't be misled by De Soto's rhetoric; he attempts to paint a picture of the third world that ignores the ongoing exploitation of those countries by the first world. Understanding the plight of some of these nations requires delving into their history and critically examining their trade, diplomatic, and military relations with the developed countries. For an analysis which takes these factors into account instead of ignoring them, check out "Year 501: The Conquest Continues" by Chomsky.
Rating:
Summary: Great
Review: Book reflects a great grasp of economics and the ability to explain same
Rating:
Summary: Two Cheers for de Soto
Review: Attempts to explain why the 3rd world (and the 2nd world, now that communism has largely collapsed) is different from the developed world tend to fall between two poles. At one end are those who seek an Archimedean point--a single underlying cause which, once grasped, will allow us to quickly move developing countries up the socio-economic ladder. Such explanations have the virtue of being useful to people who actually work in 'development', because they convince us that we know how to produce fundamental change. But they run the risk of oversimplifying and, if taken as a guide to policy, of raising expectations only to see them dashed by the complexities and historical quirkiness of the real world. At the other pole are holistic, multifaceted explanations, taking into account history, culture, economics, religion--the whole nine yards. Such accounts may be more intellectually satisfying, but often lead to frustration by convincing us that the problems are too complicated, too resistant to quick fixes, for practical solutions. The Mystery of Capital falls for the most part in the first camp. It's author, Hernando de Soto, is one of the 3rd World's most dedicated and intelligent reformers. He wants desperately to do something to help the poor, and has been heroically influential--and successful--in arguing against the failed statist solutions long in vogue in Latin America. Now he wants to move beyond criticism to a positive agenda for change. De Soto's impeccably pro-capitalist credentials make his initial criticism especially convincing: actual capitalism in most of the world is restricted to a small elite, while most remain on the outside looking in. The question is whether de Soto's solution is equally convincing. He does not believe poverty is due to the evil intentions of capitalists or capitalist countries (though he acknowledges that powerful interests in developing countries do not want to make the system more inclusive--a subject which could use more discussion). Nor is it because of culture or any inherent faults in the poor, or in poor countries. No, the real problem lies in a kind of intellectual or historical blindness, which has kept everyone from seeing what the real source of wealth is: real property, or more exactly well-defined and socially accepted property rights. Once a society has this, it has the secret of capital, since these assets can then be used to generate loans, credit, insurance, liabilities and the whole apparatus of capitalism. It is hard to argue, looking at the real experience of the undeveloped or maldeveloped world, that the lack of property rights is not a huge impediment to economic growth. De Soto and his team have done tremendous work in documenting exactly how this holds back and frustrates the poor and disenfranchised. But it is equally hard to believe that this is the key or only reason. More accurately, it seems--from de Soto's own account of what is required--that having property rights is a sort of 'meta-cause'. It depends on such a host of other developments in the economy, in society, in the political system (where access historically often depended on property, limited to a few), in the legal system, in the informal norms and mores, that it is hardly practical to point to it as 'the solution' to 3rd world poverty. For this reason, it seems unlikely that simply pointing out that developed countries have complex systems of property rights, though useful, will be enough to allow for the development of similar systems in the developing world. If de Soto is right, why is China developing so fast, without anything like the formal, all-encompassing property system he thinks is essential? Why did European economic development begin to outpace the rest of the world centuries before the property systems which, he points out, in most Western countries were only arrived at within the last 100 years? As a recipe for action, The Mystery of Capital is excellent in pointing to a dimension of development that has been neglected, and for its path-breaking research on the ground, discovering what it takes to bring the newly urbanized poor into the modern economy. But as a satisfying account of what ultimately causes poverty and why some countries are rich and others are not, it falls short. For this, one should go to books like David Landes' The Wealth and Poverty of Nations, or Jared Diamond's Guns, Germs and Steel.
Rating:
Summary: Brilliant Analysis
Review: In The Mystery of Capital, de Soto has gotten to the roots of why capitalism has developed into an effective system in the West: a system of official property ownership that was accessible to the average citizen. Using that understanding, he has developed a clear solution to problems in the Third World. Unlike many other solutions to poverty, de Soto's is rooted in the understanding that poor people control assets, and that official recognition of those assets can change their economic status. De Soto's brilliant analysis of how property ownership developed in the United States shows how this can work. As someone who worked in social change programs in the US for years, I am overwhelmed with the clarity, the simplicity and the pragmatic nature of de Soto's approach. Application of his principles can make effective, practical change.
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