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

The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else is a 2000 book by Hernando de Soto Polar about the persistence of poverty in developing countries. In strong opposition to the popular view that success is determined by cultural differences, de Soto finds that it actually has 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, but in the West it was forgotten that creating this system is also what allowed people everywhere to leverage property into wealth. De Soto speaks about "dead capital" that cannot be used to its full potential.

"Imagine a country," writes De Soto, "where nobody can identify who owns what, addresses cannot be verified, people cannot be made to pay their debts, resources cannot be conveniently turned into money, ownership cannot be divided into shares, descriptions of assets are not standardized and cannot be easily compared, and the rules that govern property vary from neighborhood to neighborhood or even from street to street."

Links

 * Book Review by Richard M. Ebeling, February 2001
 * Capital and Property Rights by William L. Anderson, April 2001 (review)
 * De Soto's Embrace of the State by Gabriel Calzada, May 2004 (review)
 * The Role of the Economist in Economic Development (pdf) by Christopher J. Coyne and Peter J. Boettke, 2006