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Summary: Essential reading
Comment: It has all been said by the rest of the reviewers - buy, it, read it and reflect.
Customer Rating: 
Summary: Too one dimensional
Comment: 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.
Customer Rating:
Summary: Great
Comment: Mr. De Soto's book has almost become a classic in the field of development economics. It is also a compelling and excellently written small book, with good argumentation, not overly using the immense amount of statistical data that underpins it.
The argument is basically that economic development of a more equitable and prosperous for the poorest, could happen by simply creating good legal and administrative framework for property and investment. That is the so-called "mystery of capital": when this is in place, people will be able to extract capital from their property, just as they are largely doing informally 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 and 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 informally, are already to a degree incorporated into the economic system, and have a (minimum) knowledge and understanding of how the market works and how to extract capital from it.
But what about the poorest of the poorest subsistence farmers in some African countries? I personally 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 and clarification of property rights which Mr. De Soto argues for, are a pre-condition for economic development, which may help but will not alone alleviate the precarious situation for the poorest of the poor.
Great book.
Customer Rating:
Summary: Packed With Knowledge!
Comment: Hernando de Soto's ideas cannot and should not be ignored. This book will open many eyes to the nature of capital. The author suggests a radically simple yet enormously challenging way of bringing the world's impoverished billions onto the track of capitalism and 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 and Third World countries. This seemed to be a shockingly original notion when the author first propounded it in his bestseller The Other Patch, and 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.
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Summary: This Ain't Your Father's Economics!
Comment: 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.... 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 all 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, and 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, and 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 and 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 and money, that the assets end up being what de Soto calls"dead capital." In the West, a web of financial and legal networks enable people to use their assets to create further wealth, through such tools as mortgages, publicly traded stocks, and the like. Outside the West, most people live and work outside the kind of invisible asset management infrastructure that we take for granted, and 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 and 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 challenge several hundred years ago. The difference is that the legal system was flexible enough over a century and a half to realign itself with the reality being created on the ground by an energetic citizenry. However, it occurred over the long-term and long ago, and 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 and with much greater populations, and without a clear understanding of how the West managed to do it. The ultimate challenge is raising the social awareness and political backing necessary to implement major legal change in the face of resistance from an entrenched bureaucracy and elites who benefit from the status quo. This is a daunting and provocative challenge—but not impossible. Of course, all 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 (especially for an economist), and no background in economics or law is needed to follow his argument. There is a little repetition here and 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 challenge your preconceived notions about global capitalism.
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