HERNANDO DE SOTO
239
tions a year, of which 27,040 are made by the executive branch and
only 360 are in the form of laws made by Congress . So 99 percent of
the rules which affect us actually come from the executive branch.
There's no control whatsoever over the way the executive branch
makes those rules. We have found that it is those rules that create the
obstacles. Our plan to reform was essentially to put the rule-making
procedures of the executive branch under control of the people to en–
sure there would be a cost-benefit notion, so that when rules were
made they would not obstruct the poor or stop them from being en–
terprising, or bar them from having easy access to markets and to
production facilities. We set up a system that was inspired by mech–
anisms we found in the informal sector on the one hand, and mech–
anisms that work in countries such as yours. So we set up, essen–
tially, a rule-making procedure that was, in fact, approved by law.
But, as we had warned the president, the moment the reform would
go into effect, the vested interests would come and pressure for the
system not to be applied
dejacto.
So, the system worked for about fif–
teen days, and then the first vested interest balked at the rules and
disobeyed them, and departments started publishing their regula–
tions without going through the rule-making procedure. When we
voiced our alarm about this, the president did not take action to stop
it. So, we resigned from the commission, admitted our defeat at that
level and decided to go and work in the opposition. I do not think
that President Garcia, like any Peruvian president, unless pres–
sured, will want to be controlled in this rule-making capacity either.
It's awkward . I don't even think that presidents in your country are
happy with being controlled. I think it will come about only when
public opinion is sufficiently aware that this is where the problem lies
and will actually press for that to occur.
KA:
You call Peru's economy mercantilist. Why?
HS:
It
is a term that describes the situation that existed in most of
Europe toward the end of the Middle Ages when the right to do
business or to have access to rule-making was a privilege of very few
people, specifically of privileged merchants who had struck a deal
with the state or with the feudal lords or, as in Spain, simply with the
lords. Peru and most Latin American countries are in that situation
today. In other words, they are in a situation in which the majority
of people who want to do business or become entrepreneurs have to
do it outside the law, because most of the laws are the result of an
agreement or a pact between certain vested interests and the state.
That's why we call our type of economy mercantalist, not capitalist.
