The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else

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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

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.

Customer Reviews:

Insightful.......2007-09-26

I thought this was a fantistic book. The author compares the sorry state of property rights in the third world today with identical problems in earlier periods of US history.

Rich countries are frequently blamed for the problems in poor countries but this book shows why that blame is misplaced. This book also shows why billions of dollars in foreign aid have not and can not eliminate third world poverty.

Clear, Precise, Cogent and Important Thoughts.......2007-09-12

Although De Soto is trumpeted in the halls of the Chicago School as a person directly in line with his ideological primogeniteurs, it is clear that De Soto is not an ideologue.

His main thesis is that property rights are one of the fundamental underpinnings of western capitalism. Property rights allow the smooth functioning of capital accumulation without the diversion of too many supernumerary laws and institutions, and form the base impedements that allow capital markets, lending institutions and wealth creation mechanisms to function smoothly. If property rights are not highly developed then the "friction" this creates in the movement of capital impedes growth. As a concrete example, people in Africa and much of Latin America and Asia live in hovels that do represent accumulations of capital, but because these hovels, many owned by squatters cannot be leveraged to create capital or cannot be lent against. They in effect at dead capital because their ownership is in limbo. Advanced societies have smooth functioning property laws and markets that allow the process of wealth creation.

All of this is simple and De Soto does chronicle, as well as he can the underlying condition of dead capital formation, historical development of property rights and solid policies for implementing more legal property controls in the third world.

De Soto is also profoundly motivated to move backward societies forward and feels the poverty profoundly. In this sense he is very much a thinking man's economist and not an ideologue.

The one thing I would state is that the concepts De Soto is propounding are simple in nature and scope. As such I think that De Soto does repeat himself from time to time. Also the historical developments of property rights in the US is a good example of how a country with essentially third-world property rights, emerged to relatively advanced property rights. But I do think that his historical scholarship suffers a little as an Economist outside of his area of interest.
The writing style, though good, is not so exciting at times and would do better with a bit more details on specific human examples. But that should not detract from its scholarship.

Important work.......2007-07-23

This book is a very important work in the area of the economics of property rights. De Soto emphasizes the importance of property rights for the development of developing countries.

Capitalism Triumphs in "Market" and Fails EveryWhere Else.......2007-07-04

Most reader comments on the "political" and "Policy" side of the book. They applause by embracing the idea of less government intervention, better legal protection, better property right and so on. But I will comment the Economic side of the book. The most important point in this book is that there is a lot of "dead capital" in under developing countries. My wonder to this point is that which mechanism generate so huge amount of "dead capital". From the content of De Soto book, it is sure that all these "dead capital" comes from "black/underground Market" or "Illegal Free Market". The "Illegal Free Market" generate 9.3 trillion dollar. Actually I think De Soto is still highly under estimate the value since De Soto does not include all the human capital estimation. I think De Soto agree Free Market is the real source of economic growth.
Also in De Soto analysis, capital is the fuel for economy growth while the Keynesian believe that both individual and government spending the fuel for economy growth. De Soto book does not directly compare this 2 different ways to go. But De Soto clearly show that Foreign loan or aid does no help since it only simulate spending only. From my understanding, De Soto recommends to use Market to replace the government to release the "dead capital". Government is only require to provide minimum effect to ensure that the contract is fulfilled.

Spot on!.......2007-06-24

It's been a while since I read the book. As a citizen and resident of a third world country I can vouch that what de Soto says is the absolute truth. I have also had a business in the USA and the difference is just staggering. The longest procedure in the USA for setting up my business was getting the sales tax permit and that took about two hours. A similar procedure in my country can take months.

I'm a bit amazed that some reviewers are commenting about the book being badly written. I don't have that recollection but then, it's been a while since I read it and I enjoyed it very, very much.

The Other Path: The Economic Answer to Terrorism

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Like Reading Throug Red Tape
Where de Soto started - a brave statement
A Devastating Critique of Centrally Planned Economies
Agreed -- would have been better first
De Soto as a modern day Adam Smith?

The Other Path: The Economic Answer to Terrorism
Hernando De Soto
Manufacturer: Perseus Books Group
ProductGroup: Book
Binding: Paperback

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ASIN: 0465016103
Release Date: 2002-09-03

Book Description

Of all the terrorist movements since World War II that had any realistic potential to form a national government, only one was decisively defeated on the battleground of ideas. Sendero Luminoso, the Shining Path, arose in Peru in 1980. It was distinguished by both the radicalism of its Maoist ideology and the viciousness of its tactics. An American diplomat, Bernard Aronson, called the Shining Path the most murderous guerilla group ever to operate in the Western Hemisphere and compared them to the Khmer Rouge. At one point this group commanded eighty thousand followers--two-thirds the size of Great Britain's standing army--and was the single largest political organization in the country.

The task of making the Shining Path politically irrelevant was accomplished primarily by ideological means. Hernando de Soto offered an alternative vision of Peru's poor. Rather than see them as the proletariat, he showed that they were in fact budding entrepreneurs whose greatest desire was not to bring down the market economy but to join it.

Customer Reviews:

Like Reading Throug Red Tape.......2006-02-02

Hernando De Soto's "The Other Path" is a much drier read than its follow up "The Mystery of Capital." I'm glad I read TMC first - it gave a global economic perspective that I could relate to and which interested me in reading more of the author's work. The Other Path is very detailed in its portrayal of Peruvian politics, the intricacies of laws governing property rights and transactions, and the evolution of businesses from extralegal to legal operations. While this very book was the tool used by the Peruvian government to successfully solve its terrorism problem in the 1980s, by legalizing the economic operations of the majority of its marginalized citizens, and while its message and methods are even more relevant in the current climate of global terrorism, the step-by-step detail makes it a tedious read and I couldn't get all the way through. I will, at some point, try again, but I'm glad I read The Mystery of Capital first.

Where de Soto started - a brave statement.......2004-08-21

I love the little jibe provided within the title of Hernando de Soto's "The Other Path." It's a poke at "The Shining Path" (Sendero Luminoso), the Maoist Peruvian terrorist organization that wreaked havoc on de Soto's homeland beginning in 1980. de Soto's attempt in this book is to show that the more effective struggle is to make capitalism more efficient. To those who know de Soto's work, the solutions are well known: build a system of laws that allow one's residents to buy, sell and value property rights; and reduce the complexities and banalities of starting a business.

If you've read de Soto's master work "The Mystery of Capitalism," then there is no new news here. In fact, "The Other Path" will look out-of-date with its yellowing statistics. So why the five stars? As a testament to de Soto's bravery. Think about the guts it took for him to research and publish this book in Peru during the tumultuous and frightening period there. What a statement.

A Devastating Critique of Centrally Planned Economies.......2003-10-01

The original version of this book was written in the mid-80's to offer the people and government of Peru specific suggestions to combat Sendero Luminoso by making it possible for ordinary people to have a productive and meaningful participation in the nation's economy. This new printing includes a preface written in 2002 that provides the context and history for non-Peruvian readers and gives some analysis of the successes of the suggested reforms under the Fujimori government.

The first part of the book is a detailed analysis of three sectors of the Peruvian economy: housing, transport, and trade (small manufacturing and retail primarily). In each of these, De Soto demonstrates how the barriers raised by regulation and legal process from both right and left wing governments in Peru have forced the majority of persons participating to do so in informal/illegal ways. The result is that formal activity bears the brunt of taxation and informals have little protection in terms of property rights, contractual instruments, and so on. The net result is that everyone is impoverished. This section of the book can be tough reading because of the amount of detail, but its necessary in order to understand the importance of the second half.

The second half suggests that the Peruvian situation is really the reemergence of mercantilism, not a market economy. De Soto then provides some suggestions to peacefully transitiont to a market economy, and convincing warnings that failure to do so will almost certainly result in a violent transition.

The points that De Soto makes are increasingly significant to non-Peruvians as societies like America have increasingly centralised economies. Ironically, the cover includes blurbs from both Presidents Bush and Clinton. One suspects that netiher of them actually read the book.

Agreed -- would have been better first.......2003-06-14

I agree that this book would have been more interesting if read before Mystery, but now the mystery is gone.

This is good stuff just the same.

Lots of good points that are useful in a classroom.

De Soto as a modern day Adam Smith?.......2003-06-07

In many ways, I am disappointed that I read this book after reading de Soto's other book, "The Mystery Of Capital". Both this and his other book largely contain the same ideas, but "The Other Path" focuses more intently on de Soto's experiences in Peru rather attempting to answer a very broad question. Because "The Other Path" focuses on squarely on Peru, it can more completely chronicle how his ideas have been used to better the lot of poor Peruvians, and have contributed to the defeat of Sendero Luminoso.

Book Description

For the first time, a book that tells the truth about Hernando de Soto's legendary expedition across what would become the United States, where he squandered a fortune in gold won in the conquest of Peru, and drove himself slowly mad searching for a second Inca empire. Maps and line drawings.

Customer Reviews:

Excellent biography of a man consumed by ambition.......2006-01-22

David Duncan has written a full and detailed account of the life of Hernando De Soto, and although the Florida expedition that consumed the last few years of his life is what he is best (only?) remembered for, it's interesting to see the man during his earlier life and how it made him what he was. Born in Spain in 1500, little is known about his childhood. He went to Panama as a teenaged soldier and rose quickly through the ranks, becoming a leader in the conquest of Nicaragua. One chronicler has stated that De Soto (Duncan drops the De when giving his name, but it's so uncustomary that it looks and sounds unnatural) had great skill in "slaying Indians." He went with Pizarro to Peru to conquer the Incas and then returned to Spain a very wealthy man. From Charles V he was able to get the governorship of Cuba and the right to claim Florida. With 600 men he landed in Florida somewhere near Tampa Bay and began his conquest of what would later become the southeastern area of the US.

De Soto's methods were brutal (thus the word "Savage" in the book's title), though typical of the Spanish conquistadores. Natives were either a means to material riches or would be slaughtered; best would be first the one, then the other. Anyway, the expedition wandered north through Florida to the panhandle (Tallahassee is the only sure place anyone knows with certainty that De Soto actually visited, thanks to archeological finds made a few blocks from the state house) and then through the heart of Georgia and South Carolina, west through North Carolina, south through Alabama to near Montgomery, then west again through Mississippi, where on May 8, 1541, he "discovered" the Mississippi River, perhaps just west of present-day Walls or near Friars Point (the mouth of the river had actually been discovered and mapped by unnamed sailors decades earlier). For the next year the expedition roamed through Arkansas before turning back to the Mississippi, where De Soto died (perhaps poisoned, though Duncan admits the evidence is skimpy to non-existent) on May 21, 1542, and was entombed in the river. (In a half-page epilogue, Duncan brings the expedition, reduced by then to 300 men, safely to Mexico 18 months later.)

The tragedy of this expedition, as Duncan makes clear, is not that the "material riches" so long sought after were never found, but that so many "real riches" (the rich, fertile land in particular) went unappreciated. Duncan believes that De Soto wasn't interested in gold by then anyway (he was already fabulously wealthy); what really drove him was an insatiable ambition to be the greatest conquistador of them all. Duncan's biography is interesting and vibrant, and offers the reader a clear picture of the man and his times. The research is thorough and wide-ranging and includes official documents and first-hand accounts. Duncan sees De Soto as neither a hero nor a villain, only a man consumed by the need to succeed. And in that he certainly wasn't a unique individual in the annals of history. Highly recommended.

Fascinating but ends abruptly.......2005-07-10

An interesting book that firmly pushes the idea that Soto was a murderous butcher intent on destroying whatever and whomever was in his was as he sought gold in the New World.

David Ewing Duncan takes us from South America to Spain and finally North America with Soto leading the way at all times. We're with Soto and his men as the entrada into Florida starts well but ends, three years later, with the remaining men scurrying off to Mexico after a decidedly unpleasant time spent in the Southeastern USA.

A little more about what happened after Soto's death would have gone a long way. Not bad, though.

disturbing history.......2004-03-05

This book is a biography of the life of Hernando de Soto That is a point which sometimes is disappointing because we often have to leave some exciting events in history as de Soto departs to other places. This is exceptionally true at the end of the book. In between the beginning and end is some very disturbing truths about the conquistadores's savage treatment of the native Americans they encountered in the New World. Author Duncan deserves credit for telling it like it is while knowing that his subject becomes less and less of a heroic figure with every ghastly detail. It is still hard to fathom the incredible destruction of the Incan empire by the small force of Pizarro's men.

The author spends a fair amount of time evaluating the available evidence which is helpful. The second half of the book is an excellent view of SouthEast America that our own immigrant culture knows little about; partly because de Soto's men had so severely impacted it that it was essentially gone when our ancesters first encountered it.

The story of de Soto is essentially the tragedy of a dynamic life cut short, of a quest that fell short, and of a discovery of wealth that went overlooked. De Soto's focus on gold caused him to overlook a world that would surpass the importance of "wealthier" parts of the New World. Unfortunately, the book ends with the death of de Soto in present-day Arkansas. By giving us a single paragraph to tell what happened to his men after that, we come away feeling as stranded and lost as they were.

Young author produces a masterpiece.......2003-01-18

Although Hernando De Soto: A Savage Conquest in the Americas is a biography, it reveals as much about the hideous cruelty the Spanish inflicted upon indigenous peoples as it does about the great conquistadors. In doing so, author David Ewing Duncan allows the reader to balance the triumphs of Soto with the vast human destruction he left in his wake. Neither an apologia nor a polemic, this book stays close to the facts and represents the best in popular history.

Meticulously researched and beautifully written, De Soto unfolds like a riveting novel as it follows the explorer from his impoverished youth to his anti-climatic death near the Mississippi River. To anyone interested in the European conquest of the Americas (or in the decimation of the Indians and their cultures) this book is a must read.

In addition to Soto, the author chronicles the achievements and savageries of such other notables as Cortez, Pizarro, Balboa, and Coronado. The book cleverly references and analyzes the works of American and Spanish historians, including those who were present as the conquerors murdered, raped, pillaged, enslaved, proselytized and bravely explored in South, Central and North America. Where there is a disparity in the record Duncan examines the conflict and suggests the account he considers the more reliable. At times the contemporary American Soto enthusiasts and the Spanish historians who are referenced throughout the book prove almost as intriguing as their subject matter.

Given the tremendous undertaking this work represents, Duncan manages to produce a highly readable and lively book. Even if the author can't help but reveal his personal revulsion at Soto's blatant inhumanity, Duncan also is objective enough to acknowledge flashes of true heroism and bravery. The Soto that the author presents is a historic Indiana Jones figure who descends into a Conrad-like Heart of Darkness.

The book cleverly incorporates maps, charts, paintings, and other graphics into the text. Further, although it may be tempting to skip the footnotes due to the length of the text, the reader is well advised not to do so. Buried in these footnotes are clever thoughts, insights and explanations.

This book richly deserves five stars and a second look by anyone who skipped it when it was first released.

a very fine young writer.......2000-04-06

I came to this book because I enjoyed the author's other work: Calendar is a fascinating read, and From Cape to Cairo is really compelling. When I started this biography of Soto, I was surprised about the academicness of the work--lots of footnotes, for example. But as I read on, I found the same qualities which make reading Duncan's other works such a joyful experience present here. Though Soto may not be a "fun" topic, Duncan's prose is a great pleasure. And, as always, I learned a lot.

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De Soto and the Conquistadors
Theodore Maynard
Manufacturer: Ams Pr Inc
ProductGroup: Book
Binding: Hardcover

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ASIN: 0404042791

The Hernando de Soto Expedition: History, Historiography, and "Discovery" in the Southeast

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The Hernando de Soto Expedition: History, Historiography, and "Discovery" in the Southeast

Manufacturer: University of Nebraska Press
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Binding: Paperback

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ASIN: 0803271220

Book Description

From 1539 to 1542 Hernando de Soto and several hundred armed men cut a path of destruction and disease across the Southeast from Florida to the Mississippi River. The eighteen contributors to this volume—anthropologists, ethnohistorians, and literary critics—investigate broad cultural and literary aspects of the resulting social and demographic collapse or radical transformation of many Native societies and the gradual opening of the Southeast to European colonization.

A world explorer: Hernando De Soto (World explorer books)

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A world explorer: Hernando De Soto (World explorer books)
Elizabeth Rider Montgomery
Manufacturer: Garrard Pub. Co
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Binding: Unknown Binding

Knights of Spain, Warriors of the Sun: Hernando De Soto and the South's Ancient Chiefdoms

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De Soto Revealed
Warrior's of the Sun, a great read
Epic
The Definitive Book on de Soto
Excellent Look at the Forgotten Conquest

Knights of Spain, Warriors of the Sun: Hernando De Soto and the South's Ancient Chiefdoms
Charles M. Hudson
Manufacturer: University of Georgia Press
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Binding: Paperback

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ASIN: 0820320625

Customer Reviews:

De Soto Revealed.......2006-11-14

I found this book to be an excellent read. I could almost hear the clanking of armor and smell the smoke of the Indian village cooking fires. I would recommend this book to anyone who has an interest in early Southeastern Indian culture as-well-as sixtenth century Spanish conquest.

Warrior's of the Sun, a great read.......2006-11-03

I enjoyed this book immensely. As a guy who can take something as dry as "Darwin's Origin of Species" to the beach for the weekend, this is a real page turner. The author does a wonderful job of assembling journal entries along with well documented historical data, into an enjoyable read for the interested lay person. It reminds me somewhat of "Undaunted Courage" by Stephen Ambrose in both its well documented historical accuracy, and attention to readability by the consuming public. I bought this book mainly out of a life long interest in Southeastern Indian culture, and an interest in the terrain of the region before European settlement. The book delivered in spades on both accounts. I am surprised Hollywood has left this story alone. There is enough violence, death, greed, deceit and sex for 5 movies in Desoto's story.

K Cook

Epic.......2006-11-03

I probably first read or heard about de Soto in high school, but until recently he was just a name, one of dozens of Spanish Conquistadors. Then in 2002 while traveling through the Tampa, FL area I came across a National Park commemoration where he first landed on a 4,000 mile 3-year trek through North America. Being there in person my imagination was fired and I've been fascinated by de Soto's journey ever since. I can still smell the salt air, hear the surf and see the Spanish horsemen moving through the shadows of the red mangrove forest. In terms of discovery and epic adventure de Soto equals the story of Lewis and Clark.

This is the single best book available about de Soto, representing 20 years of research and incorporating the latest in archaeological evidence. The route is historically a subject of great controversy, each state has commemorative trails and sites that occasionally change with new scholarship.

The books is a masterpiece incorporating details from many layers to create a highly textured and easily imagined vision of the Spainards and Indians. Hudson is an anthropologist and takes a multi-disiplinary approach which creates a much richer work than a straight historical narrative. Hudson used a "braided narrative", inter-twining the chronological history of events with the latest anthropological evidence - the effect works well.

The Definitive Book on de Soto .......2006-07-16

This is probably the most authoritative and best written book about Spanish conquistador Hernando de Soto and the Indians he met during his famous expedition to the United States, 1539-1543. The author spent decades resolving the mysteries of de Soto's 4,000 mile route from Florida to the Carolinas, and across the Mississippi to Texas. He relies heavily on archaeological investigations to identify and describe the Indian nations de Soto met during his odyssey.

Never did so many men march so far for so little treasure. De Soto and half of his 600 men didn't survive their long march. The importance of the expedition is that it was our first and only glimpse at the Indian societies that de Soto met, fought, and often destroyed during his sojurn. Often, the few prejudiced and ill-informed words of the scribbing chroniclers accompanying de Soto are the only information we have of these complex, numerous, and populous nations. By the time the white man returned to this area a century or more later the large Indian societies had disappeared, destoyed by European diseases possibly spread (inadvertantly) by de Soto himself.

Hudson does a brilliant job examining every step of the de Soto expedition and extracting every possible fact out of mountains of obscure, contradictory information. The author knows his subject and tells his story well. Many illustrations and good maps augment the text. "Knights of Spain" is one of those few, outstanding books that have a permanent place on my bookshelf.

Smallchief

Excellent Look at the Forgotten Conquest.......2004-01-05

Charles Hudson is one of the greatest authors on the Nations of the Southeastern States, and in this book he turns his attentions towards their early contacts with the Spanish conquistadors in the mid-1500s. The first chapter of the book is nice, giving historical backgrounds and cultural details concerning both the Spanish (who had recently unified their country and having driven the Muslims and Jews out, were eager for more conquests) and the Mound Builders (who were in fact several highly developed civilizations throughout the Southeast).

He then goes on to a very detailed examination of Hernando de Soto. He is examined, and we are given insight into every aspect of his expedition from his arrival in Florida all the way up to the end. The book is read in a linear fashion, making the story much easier to follow and the book focuses on specific places, villages and Nations that de Soto encountered. More than anything, his expedition had a negative impact on the Southeastern civilizations, gradually weakening them through disease, depletions of food and outright murder, rape and kidnappings. This would have such an impact that old Nations eroded away and gave rise to new Nations. Those that encountered the British and Americans later, such as the Five Civilized Nations (Cherokee, Seminole, Creek, Choctaw and Chickasaw), Powhatan Confederation and Tuscarora, were vastly different from their ancestors.

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