Hernando de Soto Interview. October 21, 2003.
Tuesday, June 27th, 2006Audio Options:
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How do your ideas differ from conventional ideas on the source of capital?
I would say that they add to conventional ideas rather than differ from them. I believe that the only way we’re able to capture capital is through property. Property is the system that allows us to capture the value we have in things in a manner that’s tangible and that allows us to transfer value so as to initiate new causes and sources of growth.
T.S. Elliott asks, “Where is the wisdom we have lost in knowledge and where is the knowledge we have lost in information?” In terms of capital, this is an interesting metaphor.
Right. The information contained in the property system - or concretely in the recording system, a deed, a share, or something that represents equity - represents its value. The value is captured in the property document. In this sense, property is a system of representations of value. If you don’t have a property system, you don’t have the representational devices with which you can then capture value, store it, make it liquid, and invest it. The majority of developing and former communist countries do not have property systems that allow them to concretize the value of the many things that they produce and own. As a result, they are unable to grow. So they end up rejecting the system. Interestingly, even developed countries are not conscious of what makes the accumulation of capital possible, despite the advanced stages of their property system. (more…)








