World History Connected Home    
Home List journal issues Table of contents
Printer-friendly format          

Book Review


de Soto, Hernando. The Other Path: The Economic Answer to Terrorism (New York: Perseus Books. 1989). 304 pp, $9.75.

     The Other Path is about the quest for life's basics — affordable housing, gainful employment, and accessible transportation to work — in Peru. Its strength is less as a great history classic and more as a means to try to understand the violence and terrorism in our times by struggling to grasp a perspective that we and our students might otherwise never encounter. 1
     The Other Path methodically chronicles the historical development of informal housing, informal trade, and informal transport throughout Peru from the late nineteenth century to the present. However, de Soto is first and foremost an economist. To an historian, his work is likely more problematic because it relies almost exclusively on only a handful of source references scattered throughout the text. This subjectivity inherently influences the strength of his conclusions. 2
      In the period de Soto examines in The Other Path, monumental changes came to Peru as a result of the rural population's migration to the urban areas. He explains that, "in order to survive, the migrants became informals. If they were to live, trade, manufacture, transport or even consume, the cities' new inhabitants had to do so illegaly" (11). Informal organizations emerged to improve the migrants' standard of living (27). But when the government attempted to restrain the growth of the illegal sector, the informals responded with resistance. In informal trade, for example, "the vendors resisted the most determined repression ever unleashed against them, a process which strengthened and radicalized their self-defense organizations" (85). 

     In the second part of the book, de Soto describes a redistributive tradition in Peru that is not "historically unique" but rather a "system of social organization in which Peru, Latin America, and possibly a large proportion of Third World countries seem to be immersed at present, as the developed countries were before them — namely, mercantilism" (201). By delving into mercantilism, de Soto creates an opportunity for us to easily incorporate his ideas about economics and terrorism into almost any study of world history. He characterizes Peru by the same excessive legal regulation as any mercantilist state in highlighting, for example, the "important similarities between the system in mercantilist Europe and redistributive law in Peru" (205, 208). He then proposes that politics, rather than markets, govern Peru's economy (209). The author finds that whereas anyone can enter the market in a market economy, "having to waste 289 days on red tape before being able to operate an industry, or having to wait almost seven years before being able to build a house, are the obstacles which the mercantilist system erects against entry to the market" (210). Connecting the changing socioeconomic situation to the rise of violence, he explains that "not only did mercantilist countries become impoverished, they also fostered conflict among their citizens and so undermined their social structures that, throughevolution or revolution, European mercantilism gradually disappeared (211). De Soto illustrates how mercantilism declined in a way that allowed some countries "to transition to a market economy with a minimum of violence and a maximum of well-being" in contrast to those countries which resisted change and endured violent revolutions (221). 4
     De Soto targets the economic problems in Peru as the underlying root of the country's instability and violence. He posits that addressing and fixing these economic problems provides for Peruvians an alternative to the Shining Path's violent revolutionary ways and this approach — providing another path for people to improve their lives and economic condition, in particular — is the most effective way to fight terrorism. Hence, in Peru, the violent revolutionaries lost "because the excluded rejectedterrorism. The goal of the excluded was to improve their lives, and to this end they became convinced that there was a better path than the one offered by terrorists" (xxxi). He says, "what I have come to understand is that today, a massive social and economic revolution is taking place in the developing world that rivals the Industrial Revolution in the West that gave rise to market capitalism" (xxxiii). 
     De Soto concludes that the socioeconomic conditions engendered by the mercantilist tendencies in Peru have inevitably led to violence and terrorism. Legal reform and democratization, however, can lead to a healthy market economy and without the need to resort to these violent measures. The implication here is that if we can see economics as the root of terrorism in Peru, and the economic solutions that have worked to counter it, then we might have a better sense of how to predict and prevent terrorism anywhere in the world. 
     The bulk of de Soto's research here is neatly arranged into the categories in which most illegal activity is found in Peru: Housing, Trade, and Transport. This structure quite convincingly presents the gradual evolution of these economic activities into illegal ones. Yet a connection to the terrorism that he describes so shockingly in the book's preface is missing. He does not effectively connect the dots for the readers and here — depending on their level — his argument may be lost on students as well. De Soto provides much more analysis in the second part of his book than the first, but if you are seeking a resource for an in-depth study of terrorism, you won't find mention of it past the preface until you reach the conclusion. 
     In short, de Soto's work is primarily about economics and its relationship to politics and the law, though it is touted as depicting a grand economic fight against terrorism. While the premise of his book is one with which I wholeheartedly agree, I struggled to follow the link between the evidence and his main idea. De Soto offers mountains of evidence, but it is not easily accessible and not recommended for use in a fast-paced course that must cover global history in a short amount of time. Certainly advanced students and scholars or specialists in Latin American politics, economics, or global terrorism would find it worthwhile and must consider de Soto's work, but it would probably overwhelm a high school student. On many levels, I find Hernando de Soto's The Other Path to be about defying expectations. And, while some of his defiance I find more valuable than the rest, there is certainly a place for world history teachers to consider the questions he raises and the paradigms that he challenges in his work. 
Allison Freedman
Solomon Schechter High School

Home | List Journal Issues | Table of Contents
© 2008 by the Board of Trustees of the University of Illinois
Content in World History Connected is intended for personal, noncommercial use only. You may not reproduce, publish, distribute, transmit, participate in the transfer or sale of, modify, create derivative works from, display, or in any way exploit the World History Connected database in whole or in part without the written permission of the copyright holder.

Terms and Conditions of Use