Peruvian economist Hernando de Soto launched a mini-revolution with his book, The Other Path, in the mid-1980s. This was a man peddling something truly new: capitalism for the poor. De Soto explained that Peru’s poor didn’t have legal ownership of their assets – the land they were squatting on, their sweatshop factories hidden down back alleys – so they couldn’t make capitalism work for them. His ideas helped Peru unleash an economic boom.

De Soto is a revolutionary in another sense as well. Economists have always had conflicting ideas about what’s needed to lift countries out of poverty – first they thought money, then education, then population control, then open markets. At the end of the 90s they started realizing the importance of institutions, including property rights. So on this de Soto was a decade ahead of the game.

The Mystery of Capital updates de Soto’s arguments and broadens them from Peru to the world. He estimates that the world’s poor own $9.3 trillion worth of real estate – in short, they have the means to alleviate their own poverty. But without legal title to their land, they can’t borrow against it and are reluctant to invest in it. So they stay poor.

De Soto does over-simplify and wax polemical at times – he’s a man with a political agenda. His arguments don’t do much to explain Asia, which boomed without property rights. But it’s a crucial book for understanding growth and development.