Logos vs. Pathos

A precis for Ch. 1 of The Mystery of Capital by de Soto

De Soto primary argument in the first chapter of The Mystery of Capital is a rather nice paraphrase of the argument of his book at large. He lays out his argument that the Third World is poor because they lack the conversion process which allows entrepreneurial individuals to turn their concrete fixed assets into representative assets, which are able to be put to use primarily as collateral for credit but also for the creation of reliable public services and securities (which are essentially mortgage-backed bonds).

Given all that has happened in the United States surrounding mortgage-backed bonds it is very difficult for the likes of us to have confidence in this representational system. Fortunately for de Soto, I think he was pitching his text primarily towards people who already believed in the free-market, but felt sudden pangs of guilt over the Third World’s poverty and who want to help, but don’t want to give up their ideology.

From the very beginning he takes as his warrants that the market economy is pervasive everywhere and that there is no alternative to capitalism. What elucidates this faulty warrant is his introductory quote that states “ a significant rate of capital formation was possible only in certain sectors and not in the while market economy of the time” (2). He fails to consider that maybe there were/are systems that chose to operate outside the capitalist free-market paradigm.

Most markedly his oscillation between logos and pathos appeals is fascinating. He begins by saying that capitalism's greatest hour was one of crisis (a claim that has interesting resonances with Klein’s thesis) and goes on to state the “suffering” and “anxiety” of the Third World (1). This is a trend that develops over the course of the chapter. Whenever he talks about the position or state of the Third World he uses pathos appeals. For instance, when describing Latin America’s attitude toward the free market he couches it in terms of “sympathy for the free markets”(2). When he discusses their attempts to formulate a capitalist system he makes note that “after the initial euphoria” they returned to their anti-capitalist policies. Though he does not use the terms “anti-capitalists, in fact never does he detail what an anti-capitalist program would look like or be called. He always defines things in terms of responding to capitalism. The closest he gets to anti-capitalist is “swung back from capitalist and market economy policies”(3).

In his own reasoning, he seems doggedly intent on proving a logical and scientific approach. His association of pathos appeals to undermine the position of the “Third World” is very clear when he writes that to use culture as the reason for poverty in the Third World “is worse than inhumane, it is unconvincing” (4). This clearly demonstrates his internal hierarchy of appeals. He goes on the state that his proscriptions are supported by "facts and figures" (5) from the research he did. Yet, in the very same paragraph, none of the figures that he uses about how much people in Haiti and Egypt save of their income are cited. There is even a moment where he characterizes the assets of the Third World as "defective forms". Which not only serves the purpose of demonstrating that the form in which the assets appear are unsustainable, but also that the structure of the Third World does not conform to his from, his logic. The last sentence of the chapter distinctly confirms his idea that logos is a superior mode of argumentation. He writes that "as all plausible alternatives to capitalism have now evaporated, we are finally in a position to study capital dispassionately and carefully (13). His suggestion that we take emotion out of the picture all together functions as a dismissal of Latin America as he has made a distinct argumentative tie to Latin America through explaining the cultural and political position that much of Latin America occupies through pathos appeals.

As hard as he tries though to produce his text as a logical one, he fails not only on the facts and figures front, but blatantly when he characterizes the nature of the process of incorporation (legalizing extralegally held assets) as having origins in the "economic subconscious" (8). Perhaps this is sloppiness on this part, but the figure undermines his project of supposed logos argumentation because the subconscious is the primal and impulsive, not logical and reserved.'

In all, it is clear that de Soto tries to argue primarily on the logos register, but he fails to follow his own rules because the force and intelligence of his essay depends on communicating urgency through strong pathos appeals and allusions to crisis situations.