1 of 1 people found the following review helpful
5.0 out of 5 stars Food For Thought
The last book I read by an economist was over thirty years ago. The book, Das Kapital by Karl Marx, pretty much did me in at wanting to read writings by an economist, so I wasn't sure what to expect when I began this text by Hernando De Soto. I was pleasantly surprised at both how readable it was and the simple power of what is being said. Having earned a Masters in...
Published on June 9 2002 by tagreacca
2.0 out of 5 stars Mediocre
I would have given 3 stars to this book but coming from a recognised economist as Hernando de Soto I give it only two. Although the book explains in what consists his proposal for the development of the third world, he repeats his idea too much through out the chapters. The examples and methods mentioned didn't satisfy my curiosity for his theory. The book looks more a...
Published on May 10 2002 by mcuba
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1 of 1 people found the following review helpful
5.0 out of 5 stars Food For Thought,
This review is from: The Mystery Of Capital Why Capitalism Succeeds In The West And Fails Everywhere Else (Hardcover)The last book I read by an economist was over thirty years ago. The book, Das Kapital by Karl Marx, pretty much did me in at wanting to read writings by an economist, so I wasn't sure what to expect when I began this text by Hernando De Soto. I was pleasantly surprised at both how readable it was and the simple power of what is being said. Having earned a Masters in Management with a specialty in International Development, I have to admit at being surprised that I could have missed something so basic as the need to legitimize underground economies, the value of property ownership, and the ability to leverage property ownership, thus creating capital and capital in turn being the life blood of capitalism.
My hat is off to Hernando De Soto and I recommend this book to anyone who cares about the problems of the other two thirds of the world. I especially want to recommend it to people involved in International Development. I have already contacted some of my grad school professors to alert them to this work. I believe that it has serious value in the academic world as a means to create talking points and challenge long held views. If you are looking for answers to one of our planet's more lingering problems (why well meaning International Development efforts continue to fail despite the billions of dollars we pour into them), read this book!
5.0 out of 5 stars The Formula For Growth,
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This review is from: The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (Paperback)This book will explain, why Western economic growth has been so strong. The book also sorts out, the reason why so many non-developed countries have economically lagged the West. It really boils down to one basic principle; private property.
In the developed Western World, citizens have legal protection and legal entitlement to their private property. The legal title enables the owner, to leverage their property into usable capital. The capital generated is then used, by various segments of the society. This is what propels economic growth, in the industrialized world.
This is in complete contrast, to the Third and former Communist World. In these countries, most citizens do not have access to private property laws. They may live in a house of their own construction, but they have no legal title on their home. This also shuts off a vital supply of capital, to the entire society. This shortage of available capital, acts as a drag on any potential economic growth.
De Soto also lists many other examples of economic barriers, in the developing world. He also offers several suggestions, to help transform these countries into growing economies.
This book brings home, the importance of private property and the rule of law. An issue that is largely forgotten, in many parts of the world. Private property laws are the dividing line between prosperity and living in an economic backwater. Until more people realize this fact, progress in the developing world will be impossible.
5.0 out of 5 stars Le chemin de Damas,
This review is from: The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (Paperback)Cet exposé de réalités et de magouilles économiques m'a ouvert les yeux sur les véritables principes qui condamnent une si grande proportion de l'humanité à la dépossession permanente et les laisse en proie à la corruption.
2.0 out of 5 stars Mediocre,
This review is from: The Mystery Of Capital Why Capitalism Succeeds In The West And Fails Everywhere Else (Hardcover)I would have given 3 stars to this book but coming from a recognised economist as Hernando de Soto I give it only two. Although the book explains in what consists his proposal for the development of the third world, he repeats his idea too much through out the chapters. The examples and methods mentioned didn't satisfy my curiosity for his theory. The book looks more a marketing scheme for selling his idea, which isn't a bad thing, but considering the seriousness of the theme, I would have expected a more professional layout.
After reading this book,go and buy The Myth of Development : Non-Viable Economies and National Survival in the 21st Century, written by Oswaldo de Rivero, a peruvian as Hernando de Soto. Although not advertised as The Mystery of Capital, it has a better book structure and an excellent analysis of the world's current situation and ways to solve it.
5.0 out of 5 stars A book by an economist,
This review is from: The Mystery Of Capital Why Capitalism Succeeds In The West And Fails Everywhere Else (Hardcover)The Mystery of Capital is recommended, among others, by no less than Milton Friedman, Ronald Coase, Margaret Thatcher, and William F. Buckley Jr. That's not why you should read the book. De Soto examines a necessary and misunderstood topic: why are poor countries poor? His arguments and insights make the book a necessary read for the economist, or other educated person.
The main point of The Mystery of Capital is that the seemingly intractable and hopeless situations in Third World countries is due in large part to one common problem: the issue of property rights. Macroeconomic policies make piecemeal improvements (or may improve nothing at all). Money is not the source of the wealth in a nation. Capital is the source of the wealth of nations! Facilitating the proper legal environment is an integral part of the creation and growth of capital, something First World nations had to develop, and something de Soto argues that Third World nations can develop.
The book gets a bit dry in the latter half, but is definitely worth the read. De Soto covers legal ramifications and reforms that will help build a bridge for "dead capital" to be converted to "live capital". The Mystery of Capital will be a surprise for some, because of de Soto's synopses here and there about what life is like for those who live in Third World countries, and the enormous amount of (untapped) wealth the people of Third World Nations possess.
De Soto is a decent economist, in part because he draws from so many disciplines and sources. He also did a prodigious amount of observation and collection of data (hardly an ivory tower academic). If you have an interest in developmental economics, law and economics, entrepreneurship, History of Thought, Economic History (especially that of the U.S.), or political science, among other areas, The Mystery of Capital is especially for you. I recommend the book to any social scientist - the book is so well done and relevant that you may find yourself developing an interest in any of the above!
8 of 9 people found the following review helpful
5.0 out of 5 stars This Ain't Your Father's Economics!,
This review is from: The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (Paperback)In the past five years I've read a shade under a thousand books, and this is easily the most important of them. In it, Peruvian economist de Soto sets out to do nothing less than explain why capitalism has worked in the West and been more or less a total disaster in the Third World and former Communist states. This has long been a pivotal question for anyone interested in the world beyond their own back yard, and there have been plenty of attempts to explain it before (often in terms of history, geography, culture, race, etc.). However, de Soto's is the most compelling and logically argued answer I've come across. But it's not just me. I don't generally quote other reviews, but my general reaction echoes the most respected policy journals, newspapers, and magazines, who tend to repeat the same words in their reviews:"revolutionary", "provocative", "extraordinary", "convincing", "stunning", "powerful", "thoughtful". Perhaps my favorite line comes from the Toronto Globe and Mail: "De Soto demolishes the entire edifice of postwar development economics, and replaces it with the answers bright young people everywhere have been demanding." Of course readers (especially those on the left) will have to swallow a few basic premises from the very beginning, such as "Capitalism stands alone as the only feasible way to rationally organize a modern economy" and "As all plausible alternatives to capitalism have now evaporated, we are finally in a position to study capital dispassionately and carefully." And most importantly, "Capital is the force that raises the productivity of labor and creates the wealth of nations.... it is the one thing that the poor countries of the world cannot seem to produce for themselves no matter how eagerly their people engage in all the other activities that characterize a capitalist economy." No matter how badly some of us may want to hold on to cherished ideals of collectivist economies, the reality is that at present these are only viable on a micro scale. For the moment, capitalism has won, and the only question is how to make it work to improve the lives of the bulk of the world. De Soto writes: "I do not view capitalism as a credo. Much more important to me are freedom, compassion for the poor, respect for the social contract, and equal opportunity. But for the moment, to achieve those 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."
According to De Soto, the problem outside the West is that while the poor have plenty of assets (land, homes, businesses), these assets lie overwhelmingly in the extralegal, informal realm. De Soto's on the ground research reveals that this is the result of an accelerated process of urbanization and population growth, coupled with the inability of legal systems to adapt to the reality of how people live. What has happened is that throughout the Third World, the costs of making assets legal (obtaining proper title to a house, registering a business, etc.), are so prohibitive both in terms of time and money, that the assets end up being what de Soto calls"dead capital." In the West, a web of financial and legal networks enable people to use their assets to create further wealth, through such tools as mortgages, publicly traded stocks, and the like. Outside the West, most people live and work outside the kind of invisible asset management infrastructure that we take for granted, and thus are unable to use their assets for the "representational purposes" we are able to. Thus the full set of capitalist tools are not available to them and it becomes incredibly hard to realize any kind of upward mobility.
One of the key sections of the book is "The Missing Lessons of U.S. History", in which de Soto demonstrates how the US faced the exact same challenge several hundred years ago. The difference is that the legal system was flexible enough over a century and a half to realign itself with the reality being created on the ground by an energetic citizenry. However, it occurred over the long-term and long ago, and has thus been forgotten by history. What de Soto says needs to be understood is that the less developed nations of today are trying to accomplish the same thing over a much shorter time and with much greater populations, and without a clear understanding of how the West managed to do it. The ultimate challenge is raising the social awareness and political backing necessary to implement major legal change in the face of resistance from an entrenched bureaucracy and elites who benefit from the status quo. This is a daunting and provocative challenge-but not impossible.
Of course, all of the above is greatly simplified, so anyone interested in the state of the world should read it for themselves. De Soto's writing is remarkably clear (especially for an economist), and no background in economics or law is needed to follow his argument. There is a little repetition here and there, but always in the service of making sure the reader doesn't miss the big picture. In the end, whether you agree with his thesis or not, I guarantee it'll challenge your preconceived notions about global capitalism.
1 of 2 people found the following review helpful
2.0 out of 5 stars Want to know why the 3rd World is poor?,
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1 of 1 people found the following review helpful
3.0 out of 5 stars De Soto: Savant or Charlatan?,
De Soto's main arguement is that Third World countries already possess sufficient capital for development. The problem is that these resources are trapped in the static, informal economy and can therefore not be productively harnessed because the legal system and property rights are underdeveloped. Without the stability engenered by proper record-keeping and bereft of the concomitant social attitudes that make capitalism work, therefore, underdeveloped countries are perpetually consigned to poverty.
While de Soto is certainly correct in underscoring how property rights and legal infrastructure are formative in development, however, he fails to adaquately demonstrate how these imperatives can be established in countries where they are lacking. His prescriptions for addressing these legal and attitudinal deficits are cursory and, at times, quixotic. Legal rights in the West were painstakingly established through the crucbile of feudal power dispersion and can not simply be exported to developing countries -- a point belied by de Doto's rather simplisitc diagnosis.
Nevertheless, de Soto delivers an important and timely arguement which moves beyond the shrill and vociferous capitalism-bashing expounded by the conventional left. He advocates more capitalism, not less, though he is correctly nuanced in identifying that it must be managed. Though there are some peccadilloes in his arguement, de Soto should be comended for changing the dynamic of the debate.
2 of 3 people found the following review helpful
5.0 out of 5 stars One of the single best books on Economics I've read,
Books like this can give hope to the pessimist, that it is possible to end serious poverty in the world. Relative poverty will always exist, but the civilization-destabilizing poverty that exists in the Arab world, in Latin America, *can* be cured if Gov'ts would just put in place a system that allows capital (ie entreprenuers) to grow from the natural resources within the country. Replace Socialism w/ Rule of Law. I hope every member of the Iraqi CPA has read this book and heeded its lessons...
4.0 out of 5 stars DeSoto's theories may also be a forecast for the West,
DeSoto's theory ' that the formalization of ownership of property is what makes possible the use of the property as capital lucidly explains why capitalism works in the west, but not in other property- and resource-rich societies; and why Marxism must fail.
But DeSoto's theory also contains a warning for the West: as we increasingly forsake objective law for subjective law (think of Human Rights Tribunals in Canada, and their application of law according to (in the words of one former Supreme Court Justice) "the feelings of the victim", we are also losing the standard that undergirds universal objectification of property ' which has been, according to DeSoto, the fountainhead of Western wealth-creation.
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The Mystery Of Capital Why Capitalism Succeeds In The West And Fails Everywhere Else by Hernando De Soto (Hardcover - Sept. 6 2000)
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