Extra Legal Markets

The Mystery of Missing Information

• 80% of the population in Third World and former Communist countries are considered poor

• Surprise Revolution
  1. The developement of illegal markets

• Misconceptions of the "extra-legal" sector

• Invisible Resources

• Entrepreneurs

The Mystery of Capital

Capitalism

Capitalism stands alone as the only feasible way to rationally organize a modern economy. Capital is the force that raises the productivity of labor and creates the wealth of nations. Many of the inhabitants of Third World and former Communist countries already have the assests they need to allow for the success of Capitalism. Even in the poorest of countries people save. The reason why these countries fail is because they hold their resources in defective forms. Because the rights to these resources are not adequetly recorded, these assests can not be readily turned into capital. The difference between assests held in the U.S. and assests held by poorer countries is representation. Without representation, their assests are dead capital. Because of this problem extra legal markets, or activities outside the relm of recorded legal economic activity, dominate the economies of many of these countries.

• How much is Dead Capital Worth?

Dead Capital Worldwide

The Missing Lessons of U.S. History

• The United States has had similar issues in our history as these Third World and former Communist countries are having today.

• The "Wild West" of the 19th century is a prime example.

1. Pioneers built houses, farms, and towns on land that they technically had no ownership of.

1. They were essentially sitting on dead capital; their assets were not recorded and technically illegal.

• U.S. government went through a lot of trouble to finally record claims of these western territories. The pioneers believed that simply building a house or farm on a piece of land entitled them to the claim on that land and did not believe any further recording was necessary. They would not move from their illegal land because of what they had built on it, and thus there were instances where the government actually went through and burned down their houses and farms in an attempt to force them to leave.

The Mystery of Legal Failure: Why Property Law Does Not Work Outside the West

The formal property systems of the West produce six effects that allow their citizens to generate capital. The incapicity elsewhere in the world to use capital comes from the fact that most of the people in the Third World and former Communist countries are cut off from these essential effects.

• Fixing the Economic Potential of Assets

• Integrating Dispersed Information into One System

• Making People Accountable

• Making Assets Fungible

• Networking People

• Protecting Transactions

Procedure

Sources

The Mystery of Capital by Hernando De Soto