Hernando de Soto

The darling of right wing think-tanks and the former target of the Shining Path in his home country of Peru, Hernando De Soto has produced a very original new book. The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, is a strong challenge to those working on international development issues.

His thesis is simple. The poor in developing countries often have many assets - shacks, informal businesses. What they lack is formal property rights to their assets. This prevents them from unlocking the true potential of their assets - producing capital (for example, through using them as collateral for borrowing) and connecting them to the formal economy - so that utilities such as gas, water and electricity can be legally piped to them. This economics behind this idea will be familiar to those with knowledge of the theory of the Tragedy of the Commons.

De Soto is the president of the Instituto Libertad y Democracia (ILD)in Peru. You can read his biography here.

Interviews

• Securing Property Rights: The Foundation of Markets. Center for International Private Enterprise (US)
• Outlaws and Addresses,
  Reason Magazine (US)
• Trapped in the basement of global capitalism,
  Amity Shales, Jewish World Review (US)
• Is It Bad Culture or Bad Laws That Keep Some Countries Poor? Michael Novak, American Enterprise Institute (US)

Papers, speeches and articles

Chapter One The Mystery of Capital: The Five Mysteries of Capital
Copyright © 2000 Hernando de Soto. All rights reserved. From The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, by Hernando de Soto, Hernando de Soto. © September 5, 2000 - Buy the whole book: US and Canada / UK and Europe

The Missing Ingredient
Speech by Hernando D Soto to the CIDA Forum on Knowledge and Information (Canadian International Development Agency).

Reviews

• Mark Leonard, Foreign Policy Centre (UK)
• Why the World's Poor Stay That Way BusinessWeek(US)
• Fine words, flawed ideas, Guardian (UK)
• Foreign Affairs, Robert J Samuelson (author of The Spirit of Capitalism) critiques De Soto for not taking culture seriously. (US).

Links

• World Bank Development Report. Chapter 5 on poverty and assets contains references to land reform
• Making Markets' Work Better For the Poor,
  UK Department For International Development paper.
• World Bank Land Policy Network
• ElDIS Development Gateway
• Transparency International. Seeks to track the cost of the informal economy (bribes etc).
• The Shadow Economy, Journal of International Affairs article on the black economy, 2000.
• John C Cross, The State and Informal Economic Actors, 1994
• Land titling in action,World Bank

Related Worlds

• Center for Social Development, building assets (but not property?) for the poor in the developed world.
• Grabiner Report on the Informal Economy in the UK
• Grameen Bank in Bangladesh focuses on unsecured lending.
• Leviticus 25:9 had a rather different conception of property - it was to be returned to its original owner every fifty years: the Jubilee.
• Property is theft. Find out more at the Proudhon Archive.
• The Tragedy of the Commons - Hardin's Essay .