In 2000, the Peruvian economist Hernando de Soto published The Mystery of Capital, his landmark study of the relationship between property rights and poverty. De Soto claimed that some $9 trillion of “dead capital” was locked up in land, homes, and businesses belonging to poor people who did not technically “own” them. Without deeds or titles, he argued, poor people all over the world are not able to leverage their property for profit. Solving this problem became De Soto’s mission.
Though his ideas are controversial, they have been immensely influential. (In 2004, Bill Clinton described him as “probably the world’s most important living economist.”) During the past decade, he has attempted to put his theories to the test, advising governments and heads of state around the world. As a first step, De Soto and his colleagues at the Lima-based Institute for Liberty and Democracy designed an administrative reform of...
