ra aS A hugely persuasive ani Pent the more so Pees a en eng ST eee Reece eae valutionaty book ..if the etiterion i capacity nat only to change permanently the way we Fook at the world, bur also vo ‘change the word ise, then thereare good _grounds for shinking that this book is surely a contender. .-theillingly subversive’ OVAL MACINEYRE, art Remarkable...no ess than the blueprint forthe new industrial revolution’ IANET BUSH re Tene: “Onc of the Few new and genuinely promising approaches to overcoming poverty to come along in long time’ FRANCIS: FUKUYAMA, outro Te Pd Hisy very great book... powerful and ‘A eracial contribution. A new props change that i valid forthe whole world svi PEREZ BE COELLAR JnHernando de Soto, a Peruvian, is the founder and Pesdent of the Institute of Liberty and Democracy ILD) in Lim, garded by The Economist atthe second most important tink-esnk in the werld: He was recently listed by Tome magazine as one of the five leading Latin Amensan innovator of the twentieth century He has also been an evonomist for GATT (now WTO), CEO of ‘one of Eorope'slugest engnseing fim and a governor of ras Cental Reserve Bank. Ae President Albert Fjimos?s Principal Adviton, he iitated Pers economic reforms and played leading soe i modeeiaing te economic and potital System, In 1995 de Soto dee up and nepotiated the suaregic plan that reversed Fojimon's coup d'etat and retorned the Country to electoral democracy. He and che ILD are curently ‘working in Asia the Middle East and Latin America on the practical implementation of the measures for bringing the pooe ‘no the economic mainstream introduced in The Mystery of Capital His previous book, The Other Path, was published in tore than cen languages and wat a number one bessller throughout Latin America. More information oa Hernando de Soto and the ILD can be fund a wnowudong pe —_" a] ow reo nan hae heard of Hermano de So, tt The Tea pls My the Soar po i a he sr lear an oar age bn ests AStpepey owns th yt ening poverty sae eal ele te pan x ce rope geno ft wedi Caplan Se auc bso ioe SSCS fan fib eds uy pve call lero ak of sper pon grep ans Oe ra ts SES Selle wah rd net epee ll fee a ae a Ty oe (ton ponds whofe Mat Leo Now Sncrmon “Avery great book... powetland comple conning will have ‘Dion lltcy efecto heres held on enor deepen intmald Conse, Nobel surest in Feonomis ‘avd and propery ownership ha og been nif 2 prerequisite iertzone Serf ay re vd ah Sat asp epee isu the sleson "retin froper asnal ll stone a he wees mater af pleat waa ESR AMEE bsuiow a cach for she acs but pasionse Spt a language, de Soo pve noes the the lop fora ne Bal cela tar wl ine he enmeprenetal pou and Bakes etlef we goorand far ap the conventional wisdom of the ‘evelopmene State the proses! “Accucleosbution. A ew proposal for change hats ali forthe sre wos rv Pre de Cua Srmer Secretary General ofthe United Nations “eran de Son every nec bu ot he al Kind Tit'has» profound menage 1." Me de Sows revelion a ‘ere Sere wa ‘Wad Soe Journal ey ye handler omen inne Td Tro tocidr ete te flan oss ora ee S22 se pom apni moan ves hat if The df History he Last Man “Ait apd ilamiating book is empire oandetions ae eal ‘Repo Byalogng aay tthe shay tea of Lina, Pot a ies Cod Mashed heer ve ied i, tough the incomes ae om the por ofthe wold hav saree aly age smn o propery The poke the he property 8 iy eopnsed thesis mea al bed exe ‘Rerolainary.. what de Soo has done document he exaociney ‘aly and sec of wot be cle the exe ep econony i tn dev “png wart andthe former communis counties and then sages ‘yea demolihing he base mac sled bios pro “opel from shag nthe spl of convent global expe ‘heingy sabre nthe way ie demelse some of the asad ‘oni aor Third Word pone frst an fremont of care" ‘Donald Bate, Independent 1 oder ies the hve aul bon four ig ides fingering the of be maids pooe the fourth th eloquat tess By Tisnando de Ss hugely prone te importa Book, he tects Beaute mowng timp of 48 ctl ee in Vander Weyer Daly Telegraph he Motey of Capital has he poesia vo crest ne, eae hema rca, for adress the sngle reste sure of in tbe'Thd Word and ex-con =the ok of & sof aw tat apholspvae propery and rome a Famework fo cae fl ep drain he oe Rovonse Fahee ch hiking ae — hs Bok asthe capaci to aac be oc of hove couse who have bts een sl 0 make lum work or thes people explains ow econ al ht iintStoe fst ces eal gal ttre nor ee te “lack I Owen, former Beh Foreign Sorta Seman de Sno bas demonstrated in price tat ing ithe Wel no ot ap cermely clecie Way fo promote tooo ip He oer plc poe ch ance he ‘if thes county aod atthe some tne enantio ‘Sonic Sanding wonder combinaton! Sitoe Fada, bel Laureate in zooms‘De Soros commonsense simplicity, nid out in his atest book, The Mystery of Capital has heads of state from Tait to Pakistan lining up for his advice” Time.com “We recommend it to our many readers who have lice des of ‘he problems that the majony ofthe world's population faces a their own rush for “captain Upnideoday ‘Tn the lst 15 years Mr de Soo, 59, has evoluonized the way governments view poverty, and has become one ofthe wordy Feeding advocates forthe poor National Post online "Hernando de Soro provides a powerful explanation for the peculiar tiamph of the West. De Soro makes s very powerf ‘ott fed on eats fom his teatnal network ef searches, ‘Gear understanding ofthe processes of prospeis tnd what ‘sae stake, is also a great weapon nthe endless hgh agin the fearseeking enemies of prosperty. By providing such cleat lnderstanding, de Soto's powerful and immensely esdable book isa very great weapon inthe armoury of freedom” Policy “The most intelligent book yee writen about the cutent chal: lenge of establishing capitalism in the developing world. Ni de Soto deaws lessons from Americas capitalist deveopment to show what needs to be done, Abo al, developing atone must recognise and protect the propery that many poor people have reated, but which is curently of uncertain legal validity, and ‘thus of lite use in securing the Toanssesary to invest personal o business development ‘The Economie Also by Hernando de Soto THE OTHER PATH THE MYSTERY OF CAPITAL Why Caprranisa TaroMens iy THE West AND FAILS EVERYWHERE ELSE Hernando de Soto a BLACK SWAN etd a hy a Tack Sean aon puted 300) ‘ett © Hen Sa 2300 Tabet ten tesa hep tei ara Cpe aah Bk is tk ld nic at a Seanad arc aa stan tn hc gue ers Sa i i ance wg pac Se 109 te akon One Gre A ck Sun ks pled by een Ren rion of Ft Rese Co an ed hr i Sh, ‘iad Conia yee, = cca ‘toga 2198 Such Ab “me cd at ey core mae a Sey a, eel nd penta To Mariano Cornejo, who showed me how to stand firmly ‘om the ground, and to Duncan Macdonald, who taught me how to navigate by the stars.ConrENts 1 The Five Mysteries of Capital 2—The Mystery of Missing Information 1 Surprise Revelation "he Obstacles to Leglry ‘he Undereapalied Secoe “ 16 18 How Mach Dead Capital? 2 aw Mach is This Dead Capital Woth? 30 ‘Acres of Diamonds 3 1 The Mystery of Capital a6 (lacs rom he Past (fom Sith © Marx) a8 "he Potential Energy in Assets 2 "he Hilden Converion Prose ofthe West “ Property Eft No. Te Fixing the Economic Potential of pet Eft No.2: Integrating Dispersed Information ‘nto One Systeme so pot Eee No. 3: Making People Accountable 8 erty Effect No, 4s Making Ares Fungile ss erty Effect No, S: Networking People se ery Effect No.6 rotecing Tatactions « ‘Capra and Money 62] te Sienicane for Thid Wold and Former Beaudet Bal Ja 66 4) Communit avons 156 4—The Mystery of Political Awareness 69 J 6 The Mystery of Legal Failure: Why Property BLIND SPOT I: Lfe ouside the Bel Jar Today 76 || Law Does Not Work Outside the West 160 Growing Cie 78 | PART 1: The Legal Chale 170 “The Match to che Cie 80 J the Move fom a Precapialis toa Capitalist Property Poor People Go Home 83 system im Growing Exrlgality 86 J the Faire of Mandatory Law 14 ‘The Exralegals Have Come to Stay, 88 J ootng Lwin the Social Contract it leis an Old Sony 95 J the Soli of Precaptalit Social Contacs 186 BLIND SPOT ll Lif outside Yesterday’ Bel Jr 96 fF iscning co che Barking Dogs 189 ‘The Move tothe Cries, 96 ff ecoding Bxralegal Law 193 The Emergence of Exlegaliy 98 ff PART U The Poltcal Challenge 199 ‘The Breaking Down of the Old Over 102 IJ taking the Respective ofthe Poor 201 ‘And Finally = after 300 Years 106 J} Co-opeing the Bes 204 Dealing with the Custodians of the Bll Jar 20 5 ~The Missing Lessons of US History 108 te Lawyers 209 “The Paral with US History 112 ff the Technicians 2 Leaving behind Anise Bes Law 1 ‘An Early American Tradion ~ Squatting 117 7 ~By Way of Conclusion 29 The New Social Contract: Tomahawk Right 120 J The Private Cab of Globalization 219 Shooting the Shes 121 J Facing upto Mace’s Ghose 2 “The Legal Breakthrough "Preemption! 123 J troperey Makes Capital Mind Friendly” Dt ‘More Legal Obwacles~ More Extalegals 125 IP the Enemies of Repreenatons 23s Lavlesnes or Clash of Legal Stems? 133 BP Succeeding at Capitalism a Calera Thing? 2 State Ef t Lif she Bel Jar 136 J] the Only Game in Town m1 Federal frst Lf the Bal Js 1 algal forts Lift he Bell Jar 142 Append: 23 (Cla Asocations 43 JP Notes 24s Miners! Orgenizations 147 J Acknowledgements 261 Index1 ‘Tue Five MYSTERIES OF CAPrTAL The key problem is to find out why that sector of society of the pat, which I would not hesitate to cll eapitaist,sbould ‘nave lived as ifn abel jc ff fom te ets shy was it rot able to expand and conquer the whole of scity? [Why eae hat significant rate of capital formation was sible ony i eta ectore ad wot i the whole market comamy ofthe time? RXAND MRALDAL The Wheel of Commerce ‘he hour of capitalism's greatest rump is its hour of criss The fll of the Bedin Wall ended more than a century of polseal competition between capitalism and communism. ‘Capitalism stands alone asthe only feasible way rationally to ‘onjanize a modern economy. At this moment i history no responnible nation has @ choice. AS a result, with varying ‘kyrces of enthusiasm, Thied World and former communist ‘ution have balanced their budgets, cue subsidies, weleomed toxcgn investment and dropped theixeavffbasiers. Tie flores have been repaid with bitter disappointment, rom Russia to Venezuela, the past hldecade has been a tine of ono fering, tumbling incomes, anxiety and ‘esentment; of ‘starving, rioting and looting, in the stinging words of Malaysian Prime Minister Mahathir Mohamad. In a recent editorial the New York Times said; ‘Fo much ofthe ‘world, the marketplace extolled by the West inthe afterglow ‘of victory inthe Cold War has been supplanted bythe ruchy ‘of markets, wariness towards capitalism and dangers of in stability’ The triumph of capitalism only in the West could be recipe for economic and politcal disaster, For Americans enjoying both peace and prosperity, it has been all too easy to ignore the turmoil elsewhere. How can capitalism be in trouble when the Dow Jones Industrial average is climbing higher than Sir Edmund Hillary? ‘Americans look at other nations and see progress even its slow and uneven. Can't you eat a Big Mac in Moscow, tent a Blockbuster video in Shanghai, and reach the Internet in Caracas? Eren inthe United States, however, the foreboding cannot be completely sifled. Americans see Colombia poised on the brink of major civil war berween drug trafficking guerillas and repressive militias an intractable insurgency in the south fof Mexico; an important part of Asia's force-fed economic ‘growth draining away into corruption and chaos, In Latin, America sympathy for free markets is dwindling: concretely, by May 2000 suppor for privatization had dropped from 46 ‘er cent ofthe population to 36 per cent. Most ominously of all in the former communist nations capitalism has been found wanting, and men associated with old regimes stand poised to resume power. Some Americans sens, too, that ne reason for their decade-long boom is that the more precarious the rest of the world looks, the more attractive American stocks and bonds become as a haven for inter national money. In the business community of the West there is growing