The Mystery of Capital

Joined: 01/20/2010
Changes your worldview

De Soto argues, based on surveys performed by his graduate students, that many trillions of dollars in 'latent capital' are tied up in the slum tenaments and properties of the poor of the world. These individuals, for example, are unable to take out a home improvement loan, or to get a credit card from Home Depot, because their property rights can only be established within the formal economy as a result of herculean efforts, and often these efforts can be counter-productive. De Soto argues that fundamental changes in property laws, and more importantly, to the institutions and formal practices that secure the rights of individuals to their newly-recognized property, are required to extract this capital, to the great benefit of the individuals and to the economies. 

De Soto's arguments very closely parallel our efforts to extract working capital+ from intellectual capital+. We need rules, regulations, accounting methods, and reputation that allows investors to view this property in a new light. Investors can purchase rights to  IC with confidence their understanding of these rights will be respected. Owners of intellectual capital can leverage their 'property' to obtain loans and credit, with assurance their property will be respected.