De Soto answers a hugely complex question with a simple yet compelling argument. Why the rest of the world is unable to manufacture the wealth and social conditions of the first world is a question that has intrigued the West for decades and has spawned many theories.
These range from cultural differences or the post-colonial legacy to the fact that the rest of the world did not undergo the Reformation and, therefore, failed to benefit from the Protestant work ethic - an argument that conveniently ignores the fact that the majority of Europeans are nominally Catholic.
De Soto dismisses such cultural and social theories with a brief but sustained riposte and instead focuses on what he determines is the foundation of western prosperity: its ability to generate capital.
This ability, which De Soto points out fascinated such giants of classical economics as Karl Marx and Adam Smith, is "the hen that lays the golden eggs".
According to De Soto, only 25 of the world's countries have the ability to generate capital and that, despite the ubiquity of Nike and McDonalds, the rest are not at the races.
This, he argues, provides capitalism with its greatest crisis, a problem that even the decades-long struggle with communism failed to engender.
If the West cannot successfully export capitalism, it will wither as the rest of the world turns its back on it and instead wallows in "strong underground economies, glaring inequality, pervasive mafias, political instability, capital flight and flagrant disregard for law".
De Soto's thesis contends that capitalism survived and thrived in the West for one simple reason: property.
Western countries, he points out, have an all-inclusive legal structure that allows people to own and, more importantly, prove they own property.
This allows an individual to translate this asset into capital, the engine that drives the market economy.
Most start-ups in the United States, he points out, get their capital from remortgaging the family home. For the bulk of the world, this simple act is denied.
When De Soto sees such cities as Cairo, Mexico and Manila, he does not see teeming streets, he sees mountains of dead capital, where literally trillions of dollars lie untapped because the mechanisms to translate such assets into capital do not exist.
The West, he argues, has been trumpeting globalisation and capitalism, whilst ignoring this salient fact - a fact that fatally undermines what it is trying to bring about.
Without capital there is no capitalism.
De Soto underpins his argument with an impressive array of statistics gleaned by researchers scattered across the globe.
Some of the sobering results show that, in the Philippines, 57 per cent of city dwellers and 67 per cent of rural dwellers cannot prove they own the houses they live in.
In Egypt, dead capital housing is home to 92 per cent of city folk and 83 per cent in the countryside.
This amounts to literally billions in untappable capital and until this global problem is addressed, the predicted triumph of universal capitalism will remain a chimera.
The Mystery of Capital is a cogently argued, well-researched, intriguing and original piece of work.
It should be required reading for the G8, the World Bank and the International Monetary Fund, as well as for anybody interested in "the crisis of capitalism".
comidheach@irish-times.ie
