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

really liked it 4.00  ·  Rating details ·  3,723 ratings  ·  305 reviews
"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 ...more
Paperback, 288 pages
Published July 9th 2003 by Basic Books (first published January 1st 2000)
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Mar 09, 2010 rated it it was ok
More than most conservatives, Hernando De Soto understands that, even with the death of Cold War socialism, the “advocates for capitalism are intellectually on the retreat” (209). “The hour of capitalism’s greatest triumph is its hour of crisis.” Perhaps this explains the recent rise in panicked defenses of free markets, though most of these defenses simply regurgitate Reagan-era arguments with no realization of how the debate has shifted and deepened. De Soto observes, “for those who have not n ...more
Dec 21, 2008 rated it it was amazing
Written by a Peruvian author, this book is wonderfully enlightening for anyone interested in issues of 3rd World economic development.

De Soto's central thesis is quite simple: you can't solve the problem of stagnant, poverty-stricken economies unless you figure out how to make credit available so that people can start and operate businesses. But you can't get credit if you have no assets to secure it with. And you have no significant assets you can call your own if you can't establish title to
Dec 16, 2018 rated it it was amazing
Shelves: economics
Given the immense value of savings, the dogged perseverance, thrift, and ingenuity of the people in developing countries, why have they continued to lag behind economically? This books answers that question by exposing the lack of property rights in the developing world. Most assets in the developing world are dead capital, and 80% of the world is undercapitalized.

Discusses the rapid expansion of extralegal sector, the conceptual universe of capital,
legal property as the key to surplus value (s
Jan 09, 2008 rated it it was amazing
Recommended to Seth by: My brother
Best Economic Development book I ever read. It's thought provoking and it resonates. Third World poverty could dramatically shrink if property owners had a legitimate claim to their real property. I thought micro lending was the answer to most of Latin America's problems (it still is a partial answer), however, De Soto convinces me that most of the Third World already owns enough property to leverage themselves out of poverty if only formal property and legal systems could legitimize their prope ...more
Vicky Sherwood
Aug 17, 2007 rated it really liked it
everything your soc prof fails to consider
Jul 02, 2009 rated it really liked it
Shelves: economics, nonfiction
This book explains the importance of property rights to the success of capitalist systems. In order for a society to use its assets to their fullest potential, it needs a legal system that transforms wealth into "living capital." "Living capital" can be leveraged to create further wealth: for example, in the U.S. most new enterprises are funded by mortgages on the entrepreneur’s home. But in a society that does not clearly define and protect ownership, such strategies are impossible.
This explain
"Capitalism stands alone as the only feasible way to rationally organize a modern economy."

Sitting here marinating in late-stage capitalism, it is difficult not to approach a book with this statement in the first paragraph with a bit of suspicion and contempt. HOWEVER:

- In order to move away from capitalism and fight for something better, you need to understand capitalism.
- This book will help you understand capitalism. I definitely learned a lot. It is also organized well and fairly engaging.
Oct 02, 2008 rated it it was ok
De Soto has a point, namely that the biggest reason for the continued laggardness of people in developing countries to "catch up" with those in the developed world lies in the convoluted local legal structures that favor those with the power, money, influence, and the wherewithal to navigate their way through the system. As in it is cheaper and easier to just stay outside of the legal system altogether and cobble together an implicit, grassroots alternative to it. Hence the overwhelming majority ...more
Sep 24, 2014 rated it really liked it
Shelves: economics
A wonderfully argued book on the advantages that we westerners have over much of the rest of the world in firmly established, transferable, and accountable property rights. de Soto slashes away at the cultural arguments that many authors make in celebration of the west (I'm thinking of Niall Ferguson here), and instead focuses on the structures that allow for individuals to build up credit through the acquisition of property. It is this which enables risk taking and, and debt creation allowing f ...more
Mar 24, 2007 rated it really liked it
This book puts forward the stunning notion that one of the things that keeps poor countries poor is that they have most of their value locked up in defunct land, which is tended (but not owned) by squatters and people who don't have titles to it. DeSoto's idea is that land reform in these countries would end up allowing the poor to buy, sell, and borrow the things they already have. All it would really take is streamlining title acquisition and land-use laws.

I haven't really read much criticism
Douglas Wilson
Oct 27, 2009 rated it it was amazing  ·  review of another edition
What an eye-opening book this one was! Everyone who has a heart for the globally poor needs to read it. Along with everyone who pretends to have a heart for the poor.
Shannon Appelcline
Sep 24, 2019 rated it liked it
Shelves: non-fiction
This book presents the fascinating premise that capitalism only works due to abstract representations (and protections) for property. It's intriguing and well-argued. Unfortunately, it also gets a bit repetitive, restating some of the same ideas multiple times. So, neat stuff, but it outstays its welcome. ...more
Sep 14, 2020 rated it it was amazing
De Soto makes a convincing argument that the Third World stays poor because most economic activity happens in the extralegal sector, and the majority of people are denied access to the formal property system. This is very much the case in my country, even 20 years after this book was written.

A very important book. I wish lawmakers in my country would read it.
Nov 04, 2008 rated it it was amazing
Recommends it for: anyone
Recommended to Hotspur by: National Public Radio
Shelves: nf-essays
An amazing book that investigates the power of informal economic infrastructures. Latin America had a higher per capita income than North America in 1789. What happened? Why did capitalism take root in North America and why did it fail elsewhere? Now that Capitalism's big rival is for intents vanquished, the capitalist society is the only viable option for economic growth left for the developing countries. DeSoto's brilliant work examines the impediments to economic growth in the developing worl ...more
Miro Nguyen
Jul 14, 2013 rated it it was amazing
Shelves: economics
A must read book to understand how western countries are so successful, pointing out a way to help developing countries, not just copying blindly, have to understand the roots. A true manifestation of how brilliant human beings are.
Christopher Bauer
Jan 28, 2015 rated it did not like it
Very important work explaining the role of property rights and fungibility in the lives of the poor. Haiti is demonstrated as having something like 600 bureaucratic steps to creating a business.
Matthew Raketti
Aug 13, 2014 rated it it was amazing
November 20, 2014
My reactions to reading Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else by Hernando de Soto originally written for a Readings in Legal Thought Seminar with Judge D. Ginsburg of the U.S. D.C. Circuit Court of Appeals; Readings in Legal Thought – George Mason University School of Law

In the course of my learning I have, on rare occasion, had the good fortune to read texts that affect something of a paradigm shift in how I think about the world. Whi
Kristen Cray
Aug 10, 2017 rated it it was amazing
What a refreshing discussion about capitalism from someone who's taken a chill pill. Criticism of conservatives and leftists alike - yum. Stresses the importance of government-enforced private property rights, as well as the power of social contract. Very repetitive, but he does have the experience and numbers to validate his research. ...more
Sep 17, 2019 rated it really liked it
Insightful, creative and novel thinking about why the developing world struggles so much to attain prosperity. An important book for anyone confronting questions of global poverty and development.
Nov 03, 2019 rated it liked it
The central concept in this book is - It is essential to have formal integrated property system backed by sound legal setup to fully utilise potential of assets in economic system. It is this property system which converts assets into capital and runs the wheels of capitalism.
Unfortunately in today's underdeveloped and developing countries; due to high cost of getting into formal setup; many people have been running their businesses in extra-legal manner which restricts their ability to convert
Tony Cohen
May 18, 2007 rated it really liked it
A strong and insightful book, doing well to smash one of the tired old shibboleths (non-white people just can't 'get' capitalism) by instead offering a strong rational reason why they currently are unable to do so: property rights.

The author, and a horde of assistants, estimated the value of third world dead capital at 10 trillion dollars. Dead capital consists of real, tangible assets, that do not exist in an integrated, 'fungible' sense due to the lack of legal property rights. Without legal d
Feb 16, 2013 rated it really liked it
Shelves: economics
This book makes only one point: countries need robust, accessible-to-all property systems to succeed at free-market capitalism. This is, of course, the answer to the question in the book's provocative subtitle. But the book's singular focus does not hinder it from being thorough or effective: de Soto draws from both personal experiences working on extralegal property systems in Peru and a wide range of historical and economic sources. Quoted include economists, legal experts, politicians, histor ...more
Kudakwashe Manjonjo
Dec 30, 2018 rated it really liked it
The Mystery of Capital by Hernando De Soto- Review
How to drive the masses out of poverty is an issue that has affected intellectuals, poets, academics,
politicians and anyone who cares about their neighbour for millennia. The growth of capitalism over the
last 500 years, especially in the era of globalization is what De Soto has tried to explain as to why it has
only happened in the West and not the rest of the world. He brings it down to analysing property as a
key litmus. Using a local peri-ur
Sanford Forte
Oct 11, 2014 rated it it was amazing
This is an important book; perhaps one of the most important books written about economic development and capitalism in the last few decades.

Anyone who studies or has an interest in how Capitalism works (or could work) in developing economies - and, what optimal preconditions are necessary for the success of Capitalism, will profit from reading this book.

Hernando de Soto is a Peruvian economist whose research clearly shows that coordinated, legally-encoded, well-understood-and-agreed on rights
Cambridge Programme for Sustainability Leadership
One of Cambridge Sustainability's Top 50 Books for Sustainability, as voted for by our alumni network of over 3,000 senior leaders from around the world. To find out more, click here.

The Mystery of Capital argues that capital is the engine of a market economy and that property rights - namely, the ability to have secure title over land and housing - provide the mechanism. De Soto notes that, more than a decade after the fall of Marxism, the expected capitalist revolution has not occurred. Capita
Scott Goddard
Dec 17, 2014 rated it liked it
Property rights, de Soto posits, are the sine qua non to achieve economic development. For this reason, countries that are bereft of such arrangements - namely developing and socialist-leaning nations - have not experienced rapid growth in spite of embracing the free-market. The function or rather, functions, of property rights is/are multifarious; they serve the purpose of improving civil order and mitigating crime, allowing individuals to borrow through credit intermediation, and making the pr ...more
Michael Connolly
Jul 22, 2012 rated it liked it
Shelves: economics, reviewed
The author identifies two of the main obstacles to economic development in Latin America: (a) the lack of government records giving poor people official ownership of their home and work buildings, and (b) the large amount of red tape required to start a business. The English-speaking part of the Americas has the advantage of the history of English common law and its extension of the right to own property from the nobility to the commoners. Property in Latin America is owned mainly by the descend ...more
Charles Allan
Jan 15, 2013 rated it it was amazing
Shelves: economics
Here's an argument for individual rights, openness and equality before the law:

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

De Soto is a Peruvian economist that tackles one of the oldest mysteries: how can societies unlock their human potential? The answer, as he argues, lies in individual rights and a predictable, open legal system. Which the third world poor lack.

But how do you establish such a thing? De Soto's central idea is that the
Mar 31, 2015 rated it really liked it
I'll admit. I didn't completely finish this book. The first few chapters summarized the overall theory, which I found fascinating, but I got bored with all the detailed economics in the last 3/4 of the book and felt ready to move on.

The general theme of this book is that 3rd world/post-Communist countries are in fact extremely wealthy (they have a lot of things), but because they don't have the legal framework to make property ownership and the representation/transferring of assets possible, it
Aug 23, 2015 rated it liked it
I'm very sympathetic to his argument, and his clarion call to action in the last section was very important. However, the book was simply too long. Over and over and over again he harps on the fact that poor people don't have any assets. Well, that's obvious. Or, at least, any legal protection for the assets they do have. Again, right-o. His proposed solutions would be a step in the right direction, no doubt. However, I can't help but think that he ignores the critical role that an effective jud ...more
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“The past is many nations' present.” 3 likes
“In Haiti, untitled rural and urban real estate holdings are together worth some 5.2 billion. To put that sum in context, it is four times the total of all the assets of all the legally operating companies in Haiti, nine times the value of all assets owned by the government, and 158 times the value of all foreign direct investment in Haiti's recorded history to 1995.” 3 likes
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