Reviews for The mystery of capital

The average rating for The mystery of capital based on 2 reviews is 3.5 stars.

Review # 1 was written on 2010-03-09 00:00:00 Donald Erdman Ii 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 noticed, the arsenal of anticapitalism and antiglobalization is building up. Today, there are serious statistics that provide the anticapitalists with just the ammunition they need to argue that capitalism is a transfer of property from poorer to richer countries" (214). So right. De Soto's book, basically, has just one point throughout that he reiterates in several ways: that capitalism isn't working in non-Western countries because, though they have wealth, they lack legally enforceable property rights. Obviously there's truth here. Free marketers have been saying this for decades. And, to his credit, de Soto dismisses typical conservative explanations of poverty that blame poverty primarily on the poor - low I.Q.s, laziness, lack of entrepreneurial spirit. He just keeps pointing to a lack of clear property rights. But the counterexamples to his claim are easy. If clear property rights are so central, then why is there still serious poverty in countries, like the U.S. and Britain, with systems of clear property rights? It seems he'd have to revert to those old cultural explanations in those cases. Going the other direction, clear property rights haven't seemed all that necessary in generating great wealth. The West started growing rich - take British, Dutch, and Spanish colonialism - long before any country had a clear system of property rights (in fact, such rights would have greatly hindered early wealth accumulation). This is due to the fact that great wealth has historically come from state interventions over centuries. That's simply the plain history of capitalism starting from Henry VIII's "redistributions" to the Bush-Obama bailouts. Great wealth has always depended on a very intrusive state. Strategically, de Soto's prescriptions will fail because of his Pollyanna conservatism. He actually thinks this debate is about ideas. He thinks people just need to wake up and hear the stats and facts about clear property rights and then "the government will be in a position to move the whole issue of poverty dramatically into its agenda for economic growth" (191). I couldn't believe a grown man wrote that line. He goes farther: his reformers can "use facts and figures to win over vested interests. The elites must support reform not out of patriotism or altruism but because it will enlarge their pocketbooks" (191). Enlarging pocketbooks more than by state interventions on their behalf? The elites didn't exclude people from property and make complicated bureaucracies absent-mindedly. There's a long, documented history of vested interests protecting themselves by laws and bureaucracies and special privileges (just one example, check Naomi Klein's Shock Doctrine). Near the end of the book, de Soto says, "the goal of formal property is to put capital in the hands of the whole nation" (205). But capitalist nations have always gone to great lengths to do just the opposite. Why change something that works so well for the powerful? Capitalist nations have fought many wars and spent trillions, especially in South America, to restrict property and capital. Poverty is no accident. It was and is an important part of Western policy. This was not done in the dark. The U.S., itself, has time and again, before the Cold War and after, explained its need to hold down any competing nations. To think that cumbersome bureaucracy and unclear property rights in those circumstances are just accidental blindspots fixed with facts and figures is criminal naïveté. Perhaps that's why de Soto can say such insanities as, "Looting, slavery, and colonialism now have no government's imprimatur" (217). Ask Afghanistan and Iraq. No wonder "advocates for capitalism are intellectually on the retreat."

Review # 2 was written on 2008-12-21 00:00:00 Carlos Ochoa 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 your land and house. And that's precisely the problem of much of the 3rd world -- where you have vast squatter communities on the periphery of virtually every major city. Those squatters may have been there for decades, but no matter. They still can't establish title to land or house. Not only that, they're vulneable to eviction, which leads to another chronic problem of countries where property rights are shaky: violence. It takes armed force to protect your property, so societies without the rule of law for property rights also lack the rule of law for personal safety. It's a compelling argument. I recommend the book highly.