Well, this is a first for me: a book review. I’m not sure how I stumbled across this book, but I’m glad I did and I want to share it. The subtitle is “Why capitalism triumphs in the West and fails everywhere else.” Maybe that’s what caught my eye. Capitalism has taken a few knocks in recent years, so I was curious to read why it’s not globally successful.
In a nutshell, the book argues that the lack of property rights keep people in poverty.
Capital is the force that raises the productivity of labor and creates the wealth of nations. It is the lifeblood of the capitalist system, the foundation of progress, and 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.
This resonated with me because I read something similar years ago in William Bernstein’s book, The Birth of Plenty. He also argued that property rights and capital markets were required for a society to prosper. (The other two requirements are the scientific method and communications.)
The book documents how the West developed its property rights systems and offers legal and political suggestions on how countries can reclaim their “dead capital” and make the “extralegal” arrangements legitimate.
The author, Hernando de Soto, is the President of the Institute for Liberty and Democracy in Lima, Peru. Their mission is “to provide governments with the expertise and information to implement institutional reforms in property and business rights that allow citizens to be included in the market economy and thus pull themselves out of poverty and prosper.”
Sounds like a good idea to me.
cross posted at NorannDillon.com