Mystery of Capital in His Essay

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This reveals an important connection between capitalism and participatory governments, and a look at how De Soto views the relationship between democracy and capitalism further demonstrates how countries, and especially developing countries, can more effectively grow and protect capital.

Naturally, De Soto views democracy and capitalism as two forces existing in a symbiotic relationship, but only when the political and economic systems are integrated at the same level. This means that the disparate property systems of developing countries must become "interconnected in a larger network" because only then can they "become tremendously powerful," thus incentivizing citizens to participate politically (De Soto 72). The relationship between democracy and capitalism can serve to support and refine each one, but in many developing democracies "what national leaders are missing is that people are spontaneously organizing themselves into separate, extralegal groups until government can provide them with one legal property system" (De Soto 73). Political democracy cannot flourish so long as large portions of the population are precluded from accessing the economic protections and rights provided by that political organization, because only when citizens' property is protected and they are subsequently invested in the government both personally and commercially "can government begin to administer development instead of heroically rushing to plug each and every leak" (De Soto 72). De Soto's main critique of many developing democracies, then, is that their institution of capitalism and the development of property rights have not occurred on the same scale or to the same extent as the institution of democracy, thus leading citizens to develop their own economic organizations, and subsequently, retreat from the public sphere as well, creating a vicious cycle in which government becomes less and less receptive to the needs of its citizens, and the citizens retreat further and further into localized, extralegal organizations.

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When Hernando De Soto discusses the mystery of capitalism, he means the phenomenon in which capitalism has seemingly failed to provide developing countries with the same economic and democratic growth seen in Western countries. In his book, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere De Soto argues that the cause of this failure lies with dead capital, which exists only in extralegal economic organizations and whose owners are precluded from accessing the full range of opportunities that would otherwise be available to them. De Soto's ideal role of government is the maintenance of property rights, but this can only be done when efforts are made to integrate extralegal capital into the so-called bell jar of economic activity, which ultimately serves to integrate citizens further into political society, reinforcing the mutually beneficial relationship between democracy and capitalism.

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