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


From The Industry Standard
"An increasingly important economist provides a fascinating lesson in why capitalism works by looking at the places where it doesn't."


Raleigh News & Observer, December 12, 2000
"It is one of the most provocative and potentially important works on development to appear in some time."


From Booklist
The author, president of an influential Peruvian think tank and a prominent Third World economist, sets out to solve the mystery of why some people in the world can create capital and others cannot. Outside the West, in countries as different as Russia and Peru, it is not religion, culture, or race issues that are blocking the spread of capitalism but the lack of a legal process for making property systems work. Implementing major legal change so as to establish a capitalist order involves changing peoples' beliefs, and de Soto contends this is a political rather than a^B legal responsibility. He believes such a change can be achieved if governments seriously focus upon the needs of their poor citizens for a legally integrated property system that can convert their work and savings into capital. Political action is necessary to ensure that government officials seriously accept the real disparity of living conditions among their people, adopt a social contract, and then overhaul their legal system. Mary Whaley
Copyright © American Library Association. All rights reserved


-The Times London
"Fastidious in its search for the facts but passionate in spirit and language...the blueprint for a new industrial revolution."


-Time
"A must-read among the globalization jet set."


BusinessWeek
"A provocative and elegantly written book."


Washington Post
"The Mystery of Capital makes a powerful case.... An important book."


-Lawrence Minard Forbes Global
"If a nonmathematician can win a Noble Prize in Economics, I nominate de Soto."


Kirkus Reviews (starred review)
"Stunningly conceived, compellingly argued, and impressively written."


The Times (London)
"The blueprint for a new industrial revolution."


The Times (London)
"Fastidious in its search for the facts but passionate in spirit and language...the blueprint for a new industrial revolution."


Time
"A must read among the globalization jet set."


The Economist
"The most intelligent book yet written about the current challenge of establishing capitalism in the developing world."


Book Description
"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 the question that, more than any other, is central to one of the most crucial problems 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 informal, extralegal ownership to a formal, unified legal property system. In the West we've forgotten that creating this system is what also allowed people everywhere to leverage property into wealth. This persuasive book revolutionizes our understanding of capital and points the way to a major transformation of the world economy.


Book Info
Contents include the mystery of capital, the five mysteries of capital, the mystery of political awareness, the missing lessons of U.S. history, and more. DLC: Capitalism.


About the Author
Hernando de Soto is President of the Institute for Liberty and Democracy (ILD), headquartered in Peru and regarded by The Economist as the second most important think-tank in the world. He was recently named one of the five leading Latin American innovators of the century by Time. As Personal Representative and Principal Advisor to the President of Peru, he initiated that country's economic and political reforms. His previous book, The Other Path: The Economic Answer to Terrorism, was a bestseller throughout Latin America as well as in Washington, D.C.

FROM THE PUBLISHER

"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 the question that, more than any other, is central to one of the most crucial problems 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 informal, extralegal ownership to a formal, unified legal property system. In the West we've forgotten that creating this system is what also allowed people everywhere to leverage property into wealth. This persuasive book revolutionizes our understanding of capital and points the way to a major transformation of the world economy.

Author Biography: Hernando de Soto is President of the Institute for Liberty and Democracy (ILD), headquartered in Peru and regarded by The Economist as the second most important think-tank in the world. He was recently named one of the five leading Latin American innovators of the century by Time. As Personal Representative and Principal Advisor to the President of Peru, he initiated that country's economic and political reforms. His previous book, The Other Path: The Economic Answer to Terrorism, was a bestseller throughout Latin America as well as in Washington, D.C. More information on de Soto and the ILD can be found at www.ild.org.pe.

FROM THE CRITICS

Economist

After reading this book, it is hard not to feel hopeful about the potential waiting to be tapped in poor countries.

Time

A must-read among the globalization jet set.

Business Week

A provocative and elegantly written book.

Milton Friedman

De Soto...offers politicians a project which can contribute to the welfare of their country and at the same time enhance their own political standing, a wonderful combination.

Washington Post