In our opening quotation, Fernand Braudel likens the development of early modern capitalism to a process occurring inside a “bell jar:” insulated from the rest of the economy and unable to expand to the whole society. The key question for him was to understand why, although the main elements of modern capitalism were already present in the Commercial Revolution, it took so long, until the Industrial Revolution, for capitalism to “conquer” society, and become the dominant organizational mode in the West.

Braudel's puzzle has much relevance for modern development economists. Recently, Hernando de Soto suggested that the bell jar metaphor fairly characterizes today's global financial system. During the past twenty-five years, he argues, many countries have formally opened up to global capital flows, but we still need to see the extreme efficiency displayed by New York's sophisticated financial markets benefit the poor rural areas of Peru, Niger, or India, where credit markets are shallow and interest rates remain high. The implication is that capitalism may thrive in certain areas without inducing rapid progress in other areas. This “Braudelian” puzzle is called by de Soto the “mystery of capital.”