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The Mystery Of Capital Paperback – 1 Nov 2001


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Product details

  • Paperback: 288 pages
  • Publisher: Black Swan; New Ed edition (1 Nov. 2001)
  • Language: English
  • ISBN-10: 0552999237
  • ISBN-13: 978-0552999236
  • Product Dimensions: 12.7 x 1.8 x 19.7 cm
  • Average Customer Review: 4.4 out of 5 stars  See all reviews (14 customer reviews)
  • Amazon Bestsellers Rank: 53,290 in Books (See Top 100 in Books)

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Amazon Review

"People with nothing to lose are trapped in the grubby basement of the pre-capitalist world." This is the nub of The Mystery of Capital. Read just that one sentence and you catch a glimpse of the reason why, as the author puts it, four-fifths of humanity lack the ability to turn dead assets into live capital.

A great deal of the power of legal property comes from the accountability it creates, argues Hernando de Soto, from the constraints it imposes, the rules it spawns and the sanctions it can apply. The lack of legal property thus explains why citizens in developed and former communist nations cannot make profitable contracts with strangers, cannot obtain credit, insurance or utilities services. Because they have no property to lose, they are only taken seriously as contracting parties by their immediate family and neighbours. To put it another way, while most western homeowners dream about paying off their mortgage, their counterparts in the less developed countries could transform their existence if they could only access such sums.

It's rare to come across a book about such an arcane subject that is simultaneously interesting and illuminating, entertaining and thought-provoking. The Mystery of Capital is all these and more. De Soto paints a procession of vivid pictures, from Cairo to the Wild West, from the Andes to the Urals. "The cities of the Third World and the former communist countries are teeming with entrepreneurs," he says, dismissing the notion that entrepreneurialism is the exclusive preserve of the west. "You cannot walk through a Middle Eastern market, hike up to a Latin American village or climb into a taxi in Moscow without someone trying to make a deal with you. The inhabitants of these countries possess talent, enthusiasm and an astonishing ability to wring a profit out of practically nothing."

In The Mystery of Capital, de Soto believes he points to a way in which capitalism can be used to help developing nations. In his vision, the poor are not the problem. They are the solution. --Brian Bollen --This text refers to an out of print or unavailable edition of this title.

Review

"'A hugely persuasive and important book, the more so because of the moving simplicity of its central idea'" (Daily Telegraph)

"'A crucial contribution. A new proposal for change that is valid for the whole world'" (Javier Perez de Cuellar, Ex Sect.General of the UN)

"'A very great book...powerful and completely convincing'" (Ronald Coase, Nobel Laureate in Economics)

"'One of the few new and genuinely promising approaches to overcoming poverty to come in a long time'" (Francis Fukuyama, author of The End of History)

"'A revolutionary book...if the criterion is a capacity not only to change permanently the way we look at the world, but also to change the world itself, then there are good grounds for thinking that this book is surely a contender...thrillingly subvesive'" (Donald McIntyre Independent)

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8 of 8 people found the following review helpful By Alan Lenton on 20 Sept. 2008
Format: Paperback Verified Purchase
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 and 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 and property systems do not allow 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 and social phenomena, and this idea is no exception. Yes, lack of legal property is an important part of the problem, but it's not the only one, and a more rounded view of the problems involved is needed to resolve them.
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48 of 51 people found the following review helpful By A. Ross TOP 500 REVIEWER on 31 Jan. 2004
Format: 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....Read more ›
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38 of 42 people found the following review helpful By A Customer on 27 Nov. 2001
Format: Paperback
This is a book of enormous insight and significance. The revolutionary potential of its central idea is so great that it could transform the world by bringing wealth to many people who are today considered poor. In spite of the fact that enthusiastic entrepreneurs all over the world are able to wring profits out of practically nothing, the wealth and fruits of capitalism continue to be primarily enjoyed by the West. Hernando de Soto argues that many of the poor work as hard as anyone else and already possess significant assets - both in savings, businesses, industries and houses - to make a success of capitalism. So why have they remained poor? What's lacking in many Third World and former communist countries is easy access to documentation - in particular the title deeds to property - as a visible sign that connects all these assets to the rest of the economy. In the West ownership is comparatively easily documented while in many other countries it can take years to obtain. "Thanks to this representational process, assets can lead an invisible, parallel life alongside their material existence. They can be used as collateral for credit." By this relatively simple means wealth is released - as it has been in the West but fails to be in the Third World and former communist countries. This is the essence of de Soto's insight which he deepens in chapter after chapter, drawing on the histories of a number of countries and the work of his team of researchers who had to go out amongst the poor before they could fully understand why capitalism is failing in so many countries. One small drawback of the book - if one can call it that - is that its thesis is developed somewhat exhaustively. But having said that, the conclusions in the final chapter were of such lucidity as to bring joy to this particular reader. Implementing de Soto's insight will bring enormous benefit to many people everywhere. Not implementing it will put us all in peril.
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2 of 2 people found the following review helpful By A. O. P. Akemu on 30 April 2009
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We all know that free markets, which deliver the latest Harry Potter novel within three days to any location in the world, only work in the West. What's more, popular culture tells us that the reason why the free market does not work in benighted places like Uganda is due to a number of simplistic explanations: Culture - the people are lazy, while we in the West have a Christian ethic of hard work; Religion - Third Worlders are still stuck with mysterious religions right out of Conrad's heart of darkness and finally; Third Worlders are `content' with their lot in life. Thankfully, Hernando de Soto's Mystery of Capital presents a more plausible reason for the failure of capitalism outside the West: the lack of property rights in the Third World.

De Soto's premise is that widely accessible legal property systems are the foundation of the West's prosperity and that the absence of such systems in Third World countries is the principal reason why all attempts at macroeconomic reform in the Third World- however good-intentioned - are doomed to failure. By presenting results of original grass-roots research that he conducted in five countries (Haiti, Peru, Brazil, Egypt and The Philippines), De Soto demonstrates that the poor are anything but poor. For example, he showed that the poor in Peru owned about $72 billion worth of property, (an amount that was eight times the amount of savings deposits in Peru at the time). The problem, though, is that all of that $72 billion worth of asset is `dead capital', as it is in the extra-legal sector of the economy. Since there are no legal titles or deeds, this `dead capital' could not be put up as collateral to start businesses, or to generate wealth independent of its status as real estate.
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