HERNANDO DE SOTO

In this, his classic book on the informal economy of Peru and the reasons why poverty can be a breeding ground for terrorists, Hernando De Soto describes the forces that keep people dependent on underground economies: the bureaucratic barriers to legal property ownership and the lack of legal structures that recognize and encourage ownership of assets. It is exactly these forces, de Soto argues, that prevent houses, land, and machines from functioning as capital does in the West--as assets that can be leveraged to create more capital. Under the Fujimori government, de Soto's Institute for Liberty and Democracy wrote dozens of laws to promote property rights and bring people out of the informal economy and into the legitimate one. The result was not only an economic boon for Peru but also the defeat of the Shining Path, the terrorist movement and black-market force that was then threatening to take over the Peruvian government. In a new preface, de Soto relates his work to the present moment, making the connection between the Shining Path in the 1980's and the Taliban today.

A renowned economist argues for the importance of property rights in "the most intelligent book yet written about the current challenge of establishing capitalism in the developing world" (Economist)"The hour of capitalisms greatest triumph," writes Hernando de Soto, "is, in the eyes of four-fifths of humanity, its hour of crisis." In The Mystery of Capital, the world-famous Peruvian economist takes up one of the most pressing questions the world faces today: Why do some countries succeed at capitalism while others fail? In strong opposition to the popular view that success is determined by cultural differences, de Soto finds that it actually has everything 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 extralegal property arrangements, such as squatting on large estates, to a formal, unified legal property system. In the West weve forgotten that creating this system is what allowed people everywhere to leverage property into wealth. This persuasive book revolutionized our understanding of capital and points the way to a major transformation of the world economy.

Why does capitalism triumph in the West but fail almost everywhere else? Elegantly, and with rare clarity, Hernando de Soto revolutionizes our understanding of what capital is and why it has failed to benefit four-fifths of mankind -- and explains the solution.A revolutionary book . . . may not be in the class of Das Kapital, Adam Smiths Wealth of Nations or Keyness General Theory. But if the criteria for joining that exclusive club 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. Donald Macintyre, The IndependentFew people in Britain have heard of Hernando de Soto . . . but The Mystery of Capital has already led the cognoscenti to put him in the pantheon of great progressive intellectuals of our age. Mark Leonard, New StatesmanA crucial contribution. A new proposal for change that is valid for the whole world - Javier Perez de Cuellar (Former Secretary United Nations)

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