But why not listen, instead, to what Hernando de Soto, the Peruvian economist author of The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, has to say. In this article in the Independent last year, de Soto questioned Piketty’s fundamental anti-capitalism premise.
His substantial work in developing countries, de Soto said, led to the discovery “that most people actually want more, rather than less, capital and they want their capital to be real and not fictitious”. Remember, de Soto does not work with just statistics but is involved with empirical issues relating to the poor in several developing countries.
De Soto agrees that capitalism is flawed but doesn’t believe this should lead to an anti-capital approach (much like our very own Raghuram Rajan), but instead to a more pro-markets approach. There is no denying that there is an unequal access to capital in India but while Piketty and his tribe will argue for more state intervention to correct this, de Soto favours an approach where the poor get more economic freedom. In this 2007 interview with this author during a visit to India, he criticised what he called “capitalism for a few” and said:
…if it is perceived as a system that does not provide opportunity for everybody, it will collapse. I favour a market economy that’s open to everybody, not as an act of faith, but simply because I don’t know of a better system.
Read more on the website of Swarajya