Why Capitalism Triumphs in the West and Fails Everywhere Else - Book Report/Review Example

Name: Tutor: Course: Date: Book report: The mystery of capital (why capitalism triumphs in the west and fails everywhere else) by Hernando De Soto Introduction A variety of books, like The Noblest Triumph by Tom Bethell and the Property and Freedom by Richard (Harvard historian) have increased our understanding of the pivotal role the property has in both freedom and the economic development, However, after it had won nine awards that were prestigious (right from the mainstream economic as well as public affairs organisations), The Mystery of Capital, Written by Hernando de Soto and the most current property trilogy, is viewed as one of the most outstanding books elaborating the economic aspects in a simpler, breath taking way. As the Institute of Liberty and Democracy’s president in Peru, De Soto and his research team have studied to a great extent various countries’ informal sectors and the extralegality existing there , hence the thesis of this book is completely mind-blowing more so in the case where the future influence of the book is put in to consideration. There has never been such a book thesis that greatly initiates direct arguments as the one proposed by Dr. Hernando De Soto, and therefore, with the given rave reviews of this book, his second one, we are forced to meet head-on his claims and express our view and skills in these claims. With the absence of the greatly qualified adherents of such literatures, I have given myself this duty. The Mystery of Capital The most outstanding aspect of this book is the way De Soto further expands on how the secure, permanent, and established property rights greatly affects the development of the capita proper, which signifies the use of one’s property as a way of getting credit for generation of further investments According to him therefore, the property produces a multiplier effect which definately generates economic growth. De Soto as well argues that this role of property was much investigated and realized by Marx, thereby providing the foundation for the critique of the capitalism by the Marxists. Although, as argued by De Soto, Marx actually got it in the opposite way: it is specifically this function, precisely depicted by the word capitalism, which has proved to be helpful in saving and protecting the people who belong to the lower class level in the society, especially since they too have abilities of their property being acknowledged by the law, and as such can be recognised in the capitalist equation hence enjoy benefits related to material prosperity. This is among the lessons the West learnt while there was industrial revolution, and which is a necessary lesson yet to be learned by the third world countries today, since the exact revolution that happened in the West more than a hundred years back is currently taking place the third world. Still there is much to this, as De Soto, in the book, claims of teaching us a vital lesson, greatly and more abundantly than the previous presentation in his earlier book The Other Path, this is the extralegality he refers to, the unrecognized property’s informal sector as well as the associated judicial institutions that are more of do-it-yourself institutions, and Which was a global phenomenon that only got defeated in the West around 19th century, as he suggests when he says that the chief cause of the West’s capitalism success and splutter of capitalism in other parts of the globe is due to the way most western nation’s assets are all integrated in to a unitary system of representation. Such integration had not taken place casually since through out the 19th century decades, the politicians, the judges as well as the legislators gathered all the scattered pieces of vital information as well as guides that control property all over the cities, farms, villages and also the buildings, combining them into a unitary system. This act of gathering the property representations, a moment of revolution in the developed countries’ history, poured all the relevant rules and information about the total wealth of the populace in to a single knowledge base. Before this time, the information concerning the assets was very rare to be reached, while each farm and settlement had its assets, in addition to the regulations controlling them, stored in the rudimentary ledgers, the oral testimony or even the symbols. This information was, although, dispersed and atomized, while not available to any particular agent anytime. As currently realized, more facts can not be basically assumed as equivalent to more knowledge, and as such the knowledge can only become functional when the nations that have advanced integrate all the property data, both loose and separated, into a single comprehensive system. He also continues to state that this has not been done by both the communist nations as well as the developing nations. In the same page he also claims that this 19th century “revolutionary” development was the one responsible for initiating the Industrial Revolution, the economic development that characterizes the western society (De Soto, 52). Therefore De Soto’s argument is that the orientation of the customary-law in the society before modernity came in was the most fundamental aspect behind the extralegality problem, hence overcoming the approach of the customary-law, just as done by the continental Europe in the 19th century (private law codification), is the solution to dealing with the extralegality problem in the current third world, hence the unleashing of the capitalist revolution there, which will enhance economic growth as well as aligning the economies of the third world with West. However, can De Soto be considered fair enough in the way he blames the customary law for the extralegality as well as the informality? This can only be deduced after considering the development of the arguments, mainly as portrayed by page 53. Here, he claims that the Western readers might be astonished by the fact that many nations in the world still haven’t yet integrated the agreements on the extra-legal property into a single legal system which is formal. The westerners suppose that only one law exists, and which is the official law, while their reliance on this system of integrating property is a characteristic that has lasted for not more than two centuries. In the majority of the Western countries, this system of integrating property appeared about a century back, as the integration in Japan took place around fifty years back. As can be considered in details afterwards, various arrangements on informal property were previously the tradition in every country. Legal pluralism had been the continental Europe’s standard until the rediscovery of the Roman law, which happened in fourteenth century, hence various governments collected all the laws in to a single coordinated system (De Soto, 53). According to this argument, De Soto’s reasoning is therefore based on equating of the integrated property system with unified law code establishment. However, they are not identical at all, in fact the integrated property system may exist even without the presence of the other, a legal system that is both unified and centrally administered. The first one gives information of the centrally accessible property while the other safeguards the property. As is evident, information can not be considered as same to protection, although protection of property is vital in as it gives the basis for suitable information on the property, since ownership, where the suitable information concerning the property is obtained, cannot be established. Anyway how is this related to extralegality? The property security can not be considered as the last one or two century’s discovery, but it’s this, or even its lack, which has resulted in the creation of the third world extralegality situation. The owners of the property are not able to get their property recognised by the courts and the law in their respective countries: therefore it becomes the problem. The problem is not with proper property advertisement by the owners or even the owners’ publishing of adequate and up to date information about the property to the potential buyers. The two categories are exactly what are run together by De Soto in the arguments he presents. Hence De Soto’s criticized extralegality in western past is not the one the third world faces at the moment; actually it is completely not extralegality but a different legality form, the customary law one, not the one of the centralized legislation, although he never distinguishes them. His arguments are made based on the lack of codified law as well as legislation, thereby presenting the extralegality phenomenon. This is, although, a distant cry away from law systems where the property rights are turned into hurdles that are very high, that the people who can enjoy these advantages are the ones who are well-heeled and better-placed, with the majority of the populace locked- out of the legal system. This is the legal order, the exclusionary one, prevalent in the third world, and which makes the survival depend much on the extralegality. It comes not from the custom, but actually this is a result of legislation, codification and also law codes. In order to make his arguments clearer, De Soto has decided to revisit the history books, and as such has used a particular one to provide the examples he presents, from the United States during the colonial period and in the 19th century. He gives description of a situation where the settlers were not able to get clear titles for the pieces of land they owned since such pieces of land were given to the earlier owners by governors, decrees or colonial assemblies. He therefore claims there were no guidelines provided by the law on the way the courts should deal with the cases where people are found to posess pieces of land with doubtful titles, whether inherited or bought, and as such the English common law was quite unprepared and unable to effectively handle the problems faced by the colonialists (De Soto, 111). Although the absence of the precedents vital in handling the on-going situation can’t be considered as having made the common law unable to provide the necessary solution to curb the situation. Actually it is in these kind of situations that the worth of the common law is felt, as it has the mechanism necessary for handling these situations while they come up. Through the precedent development, the new situations gradually and finally become part of the law, rather than waiting for the law to be written by the legislature in order to handle the specific situations. De Soto therefore answers the question he raises, as per konig: “the courts frequently turned to the customs of the local towns and changed for the people into a fresh law body that will make stable land dealings” Exactly the point (konig, 339). In The Mystery of Capital, De Soto has left the paradigm of the mercantilists as the way to knowing and understanding extralegality, but instead has adopted the codification idea as the best solution. Although by doing this he is actually accepting a great tool that the mercantilists use; since the codification is the way through which the customary law has been superceeded by legislation in these modern times, since, as De Soto masterfully illustrated in the previous book that he wrote how the mercantilist legislation resulted in extralegality then, the neo-mercantilist legislation is responsible for its current production. Extralegality hence can not be customary low per se, but transforms in to this; and in cases where the customary law does not get recognized, it will still spontaneously appear no matter what (Smith, 124). The Mystery of Capital is therefore a book which is completely puzzling while reading, especially to people who have read The Other Path. It is clear that De Soto has actually decided to drag the tradition of the common law and pile the extralegality blames on it, while championing the joy of codification as extralegality’s best solution. However, according to Alvarado, 1999(115), in his previous book The Other Path, De Soto advocates for the common laws, where has the philosophical change emerged from? The answer can be reached at by reading the different lines of The Mystery of Capital. it is possible to assume that he is a free marketer who is disillusioned, mainly disillusioned by his experience of having watched the former countries under communism increase their level of corruption and end-up even increasingly hopeless at the point when the West came in to assist them develop the free market economies. He tries to portray an idea that the problem can only be traced in the ideology of the free market (Bellomo, 125; Samuelson, 78) As can be seen, it is clear that De Soto has fallen for the approach of the civil-law. He expects the legislation to be able provide appropriate solutions for the problems that the legislation has caused. Actually what he has to know is that it is specifically legislation and its accompanying supporter, politics that are the root problem, since they have a very minimal function in private law development. Both politics as well as legislation are entirely institutions of public law (Alvarado, 206). Conclusion De Soto has produced quite elaborate and excellent pieces of work, and as such his pieces of work have been hailed for their outstanding answers to the economic questions raised by different nations, this is more so in The Mystery of Capital book. However in as much as the book suggests that codification provides the solution to the extralegality, this is not perfectly functional on its own and therefore requires proper provision of the private laws, common laws and most importantly customary laws in order to completely encompass all the economic issues pertaining to the general development of a nation. Works cited De Soto, Hernando. The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else.New York: Basic Books, 2003. Konig, David T., "Community Custom and the Common Law: Social Change and the Development of Land Law in Seventeenth-Century Massachusetts," in Land Law and Real Property in American History: Major Historical Interpretations, ed. Kermit Hall. New York: Garland Publishing, 1997, p. 339. Quoted on page 112. Alvarado, Ruben. A Common Law: The Law of Nations and Western Civilization. Aalten, the Netherlands: Pietas Press, 1999. Bellomo, Manlio, The Common Legal Past of Europe 1000-1800, transl. Cochrane, Lydia Washington DC: the Catholic University of America Press, 1995. Alvarado, Ruben, An Outline of the Common Law: I. The Private-Law Nature of the Common Law. New York: WordBridge Publishing, 2000. Smith, Barry et al. (eds.), The Mystery of Capital and the Construction of Social Reality, Chicago: Open Court, 2008. Samuelson, Robert J. "The Spirit of Capitalism", Foreign Affairs. (6)2001: 76-79. Read More