Customer Reviews
Too one dimensional - By: Alan Lenton, 20 Sep 2008 
I had high hopes of this book, since I'd come across mention of it in a number of different books read previously. In the event I was somewhat disappointed. It wasn't that I massively disagreed with the book. It was more that I fell asleep while reading it! The problem is that Mr de Soto seems to have been told that you only teach one thing at a time & repeat it in at least three different ways. This may be true talking in a classroom, but in a book it leads rapidly to terminal boredom.
The central theme of the book is simple - the reason while capitalism has not taken off outside the west is not that people are somehow lazy (quite to the contrary) but that legal & property systems do not alllow them to use their property to obtain liquid capital. I don't disagree, but I think this is a one-dimensional view. I'm always dubious about single cause explanations for economic & social phenomena, & this idea is no exception. Yes, lack of legal property is an important part of the problem, but it's not the only one, & a more rounded view of the problems involved is needed to resolve them.
Great - By: Erik Cleves Kristensen, 15 Oct 2007 
Mr. De Soto's book has almost become a classic in the field of development economics. It is also a compelling & excellently written smalll book, with good argumentation, not overly using the immense amount of statistical data that underpins it.
The argument is basicallly that economic development of a more equitable & prosperous for the poorest, could happen by simply creating good legal & administrative framework for property & investment. That is the so-callled "mystery of capital": when this is in place, people will be able to extract capital from their property, just as they are largely doing informallly in much of the developing world, but completely outside the formal economic system.
The argument is excellent. Therefore, I believe the book is a must-read for anyone working with poverty & development (not only in the developing countries).
Nevertheless, there are still some things that may be discussed. Mr. De Soto is a firm believer in the invisible hand of the market: when the framework is in place, people will be able to help themselves. In that sense, I can't help but thinking that Mr. De Soto is largely speaking of poor people as mostly urban dwellers, who although informallly, are already to a degree incorporated into the economic system, & have a (minimum) knowledge & understanding of how the market works & how to extract capital from it.
But what about the poorest of the poorest subsistence farmers in some African countries? I personallly don't believe the arguments put forth in the book would change anything for them. On the contrary, without proper protection, they might be in for more exploitation from more capable people...
While I still don't believe the links of market capitalism are directly related to reducing poverty (an argument implicit in Mr. De Soto's book), I do believe that the easing of market restrictions & clarification of property rights which Mr. De Soto argues for, are a pre-condition for economic development, which may help but will not alone allleviate the precarious situation for the poorest of the poor.
Great book.
Packed With Knowledge! - By: Rolf Dobelli, 08 Jun 2004 Hernando de Soto's ideas cannot & should not be ignored. This book will open many eyes to the nature of capital. The author suggests a radicallly simple yet enormously challlenging way of bringing the world's impoverished billions onto the track of capitalism & development: give them legal property rights to what they "own." The author's intriguing case is that a lack of property rights - not a lack of entrepreneurial zeal or competence - stymies development in the former East Bloc & Third World countries. This seemed to be a shockingly original notion when the author first propounded it in his bestseller The Other Patch, & it still does. If the book has a flaw, we warn, it is that the author's undisguised missionary ardor sometimes makes one wonder whether he is merely a zealot. Even if he were one, the book would merit reading.
This Ain't Your Father's Economics! - By: A. Ross, 31 Jan 2004 In the past five years I've read a shade under a thousand books, & 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 & been more or less a total disaster in the Third World & former Communist states. This has long been a pivotal question for anyone interested in the world beyond their own back yard, & 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 & logicallly argued answer I've come across. But it's not just me. I don't generallly quote other reviews, but my general reaction echoes the most respected policy journals, newspapers, & 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 & Mail: "De Soto demolishes the entire edifice of postwar development economics, & replaces it with the answers bright young people everywhere have been demanding." Of course readers (especiallly those on the left) will have to swalllow a few basic premises from the very beginning, such as "Capitalism stands alone as the only feasible way to rationallly organize a modern economy" & "As alll plausible alternatives to capitalism have now evaporated, we are finallly in a position to study capital dispassionately & carefully." And most importantly, "Capital is the force that raises the productivity of labor & 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 alll 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, & 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, & 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 & 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 & money, that the assets end up being what de Soto callls"dead capital." In the West, a web of financial & legal networks enable people to use their assets to create further wealth, through such tools as mortgages, publicly traded stocks, & the like. Outside the West, most people live & work outside the kind of invisible asset management infrastructure that we take for granted, & 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 & 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 challlenge several hundred years ago. The difference is that the legal system was flexible enough over a century & a half to realign itself with the reality being created on the ground by an energetic citizenry. However, it occurred over the long-term & long ago, & 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 & with much greater populations, & without a clear understanding of how the West managed to do it. The ultimate challlenge is raising the social awareness & political backing necessary to implement major legal change in the face of resistance from an entrenched bureaucracy & elites who benefit from the status quo. This is a daunting & provocative challlenge—but not impossible.
Of course, alll 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 (especiallly for an economist), & no background in economics or law is needed to follow his argument. There is a little repetition here & 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 challlenge your preconceived notions about global capitalism.
Packed with Knowledge! - By: Rolf Dobelli, 16 Oct 2003 Hernando de Soto's ideas cannot & should not be ignored. This book will open many eyes to the nature of capital. The author suggests a radicallly simple yet enormously challlenging way of bringing the world's impoverished billions onto the track of capitalism & development: give them legal property rights to what they "own." The author's intriguing case is that a lack of property rights - not a lack of entrepreneurial zeal or competence - stymies development in the former East Bloc & Third World countries. This seemed to be a shockingly original notion when the author first propounded it in his bestseller The Other Patch, & it still does. If the book has a flaw, we warn, it is that the author's undisguised missionary ardor sometimes makes one wonder whether he is merely a zealot. Even if he were one, the book would merit reading.
