Why Capitalism Triumphs in the West and Fails Everywhere Else
Hernando de Soto
He blames property law that is just so damned complicated that most people can’t legally own property that they actually own. He suggests that the West, somehow got their property law in tune with actual practice, and was so embarrassed by the inelegance of the resulting law, that the process went largely unrecorded by historians.
He lauds Braudel for paying attention to such issues and adopts Braudel’s term the glass bell jar to describe the division between the elite who can use property law and those who cannot.
I found deSoto’s earlier book, “The Other Path” to be nearly a celebration of anarchy where the ‘second economy’ ran by its own rules, creating wealth despite the laws on the books. In “The Mystery of Capital” he has come to realize that the engines that create the sort of wealth seen in the West cannot develop without formal property law that “capitalizes extant property”. In short he says that the outcasts must come in from the cold, and that the insiders must welcome them, for their mutual benefit. This requires changing the property law on the books to largely match the de facto law and at the same time preserve current de facto ownership. In short, change de jure to match de facto.
DeSoto makes a sort of meta physical assertions about property becoming capital with good property law. I suspect that many economists are comfortable with this manner of speaking. I think that his conclusions are largely correct and I shall have to see if I can translate some of his meta physical terminology to terminology that seems clearer to me. I learned much of the economics from my father, who had just experienced the great depression. He had seen much grief caused by debt. I have a visceral fear of debt that only strong arguments can overcome. DeSoto provides some such arguments. I want to see more plainly how a house becomes more than a place to live, when a proper title exists. My parable of capital tries to find some capital in the real world.