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.
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.
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"
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).
| 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"
| 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.