The infrastructure that supports our system is slowly being chipped away.

By: Roger Martin Special to the Star, Published on Fri May 17 2013

Why does democratic capitalism seem to thrive in one part of the world and fail so dramatically in others?

In his 2013 book The Mystery of Capital, Peruvian economist Hernando De Soto makes an argument that has radically changed my view of the challenges facing democratic capitalism in North America.

In his book, he makes the case that for much of the world, capitalism fails to take hold because the basic structure of property and property rights doesn’t support it. Unless it is possible for an individual or organization to own land outright without threat of seizure, these land assets cannot be used to generate more capital.

In most countries, the potential capital in real estate is in fact dead capital because they don’t have land registry systems or real estate law that uphold them. The resulting lack of capital diminishes economic growth and hinders the adoption of democratic capitalism.

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