In the book The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, author Hernando De Soto discusses how dead capital can be turned into live capital through the integration of formal property rights into society. De Soto believes by having a formal property rights system, the world’s poor will be enabled to prosper and escape poverty. Throughout the novel De Soto states that capitalism has failed in most third world countries due to a lack of easy access to formal property. In this review, I will discuss the strengths and weaknesses of De Soto’s arguments, and finish with my thoughts about De Soto’s ideas on how to fix capitalism. De Soto proceeds to discuss political hardships that stand in the way of individuals
…show more content…
De Soto claims “it represents the invisible qualities that have the potential for producing value” (De Soto 50). With realized potential, properties can be used as an investment or even used as collateral. This is significant because without the ability to leverage assets, one is unable to produce surplus value. De Soto places such importance on property rights he says, “money does not earn money. You need a property right before you can make money” (De Soto 64). Integrating information into one system is a difficult but necessary part of property rights. According to De Soto, “The reason capitalism has triumphed in the West and sputtered in the rest of the world is because most of the assets in Western nations have been integrated into one…system,” and “most of the world’s nations have yet to integrate extralegal property agreements into one formal legal system” (De Soto 53). Next, De Soto discusses the importance of integrating business information into one system. In creating one cohesive system, business owners can prevent lags that will slow down the creation of capital. It is also emphasized by De Soto that “Making people accountable will create individuals from the masses.” (De Soto 54). De Soto says that by enforcing formal property rights, the laws and rights of businesses are taken more personally and owners are then legally linked to their …show more content…
When researching the validity of his statements, I found a piece titled “Property Rights: The Key to Economic Development” which presents similarities to De Soto’s book. The authors of said essay, Gerald P. O’Driscoll Jr. and Lee Hoskins, claim that “Prosperity and property rights are inextricably linked” and “A private property system gives individuals the exclusive right to use their resources as they see fit. That dominion over what is theirs leads property users to take full account of all the benefits and costs of employing those resources in a particular manner” (O’Driscoll Jr. & Hoskins). The authors argue that with property rights it allows individuals to create and expand their business how they see fit and without government intervention. As a result of this freedom, capital is easily made, and poverty will decline, corresponding with De Soto’s beliefs. Another site that shared similar beliefs on the topic is Enotes. The site says, “Private property and protection of property rights are important because it helps the economy deal with the issue of resource scarcity…The private owner of a resource is expected to act in their self-interest to develop products and enhance profitability as provided by the forces of supply and demand.” (Enotes). With property rights, individuals are able to produce products with their self-interest in mind. That being said, people who are producing and buying goods will
De Soto claims “it represents the invisible qualities that have the potential for producing value” (De Soto 50). With realized potential, properties can be used as an investment or even used as collateral. This is significant because without the ability to leverage assets, one is unable to produce surplus value. De Soto places such importance on property rights he says, “money does not earn money. You need a property right before you can make money” (De Soto 64). Integrating information into one system is a difficult but necessary part of property rights. According to De Soto, “The reason capitalism has triumphed in the West and sputtered in the rest of the world is because most of the assets in Western nations have been integrated into one…system,” and “most of the world’s nations have yet to integrate extralegal property agreements into one formal legal system” (De Soto 53). Next, De Soto discusses the importance of integrating business information into one system. In creating one cohesive system, business owners can prevent lags that will slow down the creation of capital. It is also emphasized by De Soto that “Making people accountable will create individuals from the masses.” (De Soto 54). De Soto says that by enforcing formal property rights, the laws and rights of businesses are taken more personally and owners are then legally linked to their …show more content…
When researching the validity of his statements, I found a piece titled “Property Rights: The Key to Economic Development” which presents similarities to De Soto’s book. The authors of said essay, Gerald P. O’Driscoll Jr. and Lee Hoskins, claim that “Prosperity and property rights are inextricably linked” and “A private property system gives individuals the exclusive right to use their resources as they see fit. That dominion over what is theirs leads property users to take full account of all the benefits and costs of employing those resources in a particular manner” (O’Driscoll Jr. & Hoskins). The authors argue that with property rights it allows individuals to create and expand their business how they see fit and without government intervention. As a result of this freedom, capital is easily made, and poverty will decline, corresponding with De Soto’s beliefs. Another site that shared similar beliefs on the topic is Enotes. The site says, “Private property and protection of property rights are important because it helps the economy deal with the issue of resource scarcity…The private owner of a resource is expected to act in their self-interest to develop products and enhance profitability as provided by the forces of supply and demand.” (Enotes). With property rights, individuals are able to produce products with their self-interest in mind. That being said, people who are producing and buying goods will