When you step into an airplane in New York to fly to Jakarta, what you are leaving behind is not the high-tech world of fax machines and ice makers, television and antibiotics; many people in the Third World also have those. What you are leaving behind is the world of enforceable legal representations.
Assets outside the West are held in defective forms: houses built on land whose ownership rights are not adequately recorded, unincorporated businesses with undefined liability, industries located where financiers and investors cannot see them. Because the rights to these possessions are not adequately documented, these assets cannot readily be turned into capital, cannot be traded outside of narrow local circles where people know and trust each other, cannot be used as collateral for a loan and cannot be used as a share against an investment.
In the West, every parcel of land, every building, every piece of equipment or store of inventories is represented in a property document that is the visible sign of a vast hidden process which connects all these assets to the rest of the economy. Thanks to this representational process, assets can lead an invisible, parallel life alongside their material existence.
These assets can also provide a link to the owner's credit history, an accountable address for the collection of debts and taxes, the basis for the creation of reliable and universal public utilities and a foundation for the creation of securities (like mortgage-backed bonds) that can then be rediscounted and sold in secondary markets.
Third World and former Communist nations have been unable to give the overwhelming majority of their citizens access to this representational process. The inhabitants of these nations do have things, but they lack the process to represent their property and create capital. They have houses but not titles, crops but not deeds, businesses but not statutes of incorporation.
It is the unavailability of these essential legal representations that explains why people who have adapted every other Western invention, from the paper clip to the nuclear reactor, have not been able to produce sufficient capital to make their domestic capitalism work.
One of the greatest challenges to the human mind is to comprehend those things which we know exist but cannot see. Time, for example, is real, but it can be efficiently managed only when it is represented by a clock or a calendar.