Hernando de Soto (1) (1941–)

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 show more 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. (Google books) show less

I have had the privilege of meeting the Hernando de Soto back in 2006 while attending training at his Institute for Liberty and Democracy in Lima. I can count among those who have also implemented in practice the theories that de Soto puts forward in the book, through my involvement in a joint policy research program on property rights in Albania. It is enriching and fascinating book to read, as well as both well researched and written. I am also proud to have contributed to editing its show more translation into Albanian. show less

Excellent overview of how we use property to create capital and how most of the world does not have a system for documenting ownership. Most people live in an extralegal system. Has recommendations for changing the systems so that real capitalism can work.

This is a great book on the power of capitalism, and how its use outside the 'first world' is missing a key ingredient, namely, the legal right and acknowledgement of private property.