Institutions that promote markets, individual liberty and voluntary association have always been the best sources of peace and stability.

Maybe the problem with this year's Nobel Peace Prize was that the decision was just too rushed. Barack Obama had been President only twelve days, the date for submitting nominations was fast approaching and, well, what's an overworked Norwegian Prize-giver going to do? People rarely make good decisions on important issues when they're under duress, so in the interest of making next year's Prize a little less shocking I'd like to submit an early nomination for a man who has promoted peace and prosperity for decades and has the battle scars to prove it.

That man is Hernando de Soto. While not exactly unheralded, de Soto is also not the household name (like, say, the Dalai Lama) that he deserves to be. He is the founder and head of the Institute for Liberty and Democracy (ILD), a think tank and advocacy organization based in Lima, Peru. The work of de Soto and ILD has been admirably captured in a recent PBS documentary called The Power of the Poor, which first aired on October 9th.

For thirty years, de Soto's passion has been creating legal and property rights for Peru's poor. ILD research has documented the barriers that make it nearly impossible for poor people to own property or operate businesses in Peru's "legal" economy. For example, opening a retail store can involve jumping through hundreds of legal and bureaucratic hoops and take years to complete. This unnecessary red tape has driven a significant share of Peru's economic activity into the "underground" economy, where businesses operate without legal recognition or protections. Most of Peru's poor people do not legally own the homes they live in or have title to the land they farm or small shops they operate. Even some very visible industries, like public transportation, are almost entirely underground and not legally registered. 

De Soto emphasizes that these individuals and firms are "extralegal" rather than illegal, since they are providing otherwise legal goods and services that the proprietors would like to move into the legitimate economy if it were cost effective to do so. Operating underground does, in fact, involve a significant number of disadvantages that make it more difficult to operate profitably. Without a legal address, it is almost impossible to obtain credit or legal utility services. The lack of a secure institutional framework also makes it more difficult to plan for the future or integrate firms into wider commercial and trading networks that would increase markets for their products.

De Soto and the ILD have not only documented these barriers and their consequences, but have effectively advocated real policy reforms in Peru. It is estimated that they are responsible for more than 400 changes in Peru's laws and regulations that have made it easier and less costly to register and license businesses. ILD has also helped over a million home- and landowners obtain legal titles to the properties they lived and worked in.

One of the highlights of The Power of the Poor was the story of an Andean farmer whose family had worked the same plot of land for generations without a legal title. At one point they were forced to stop working for themselves and to farm for someone else who claimed ownership. They were treated badly by the new "owner," and the man being interviewed said that he used to dream of owning the title to his property. Near the end of the film, it showed this man and dozens of others from nearby farms celebrating and proudly displaying the new titles to the land they had traditionally farmed, due to the efforts of de Soto and the ILD.

This story also illustrates one of the most important implications of de Soto's work. Poor people locked out of the legitimate economy can become frustrated. Exclusion increases the salience of leftist complaints that capitalist economies only benefit the rich and exploit the poor. This can transform would-be entrepreneurs into violent opponents of the system, as terrorist groups and left-wing agitators prey on individuals' frustrations and thwarted ambitions.

Helping the poor become peaceful entrepreneurs rather than violent revolutionaries has always been central to de Soto's mission. This idea was front and center in the title of his first book, The Other Path: The Economic Answer to Terrorism. The title was also an unsubtle dig at a Maoist group called the Shining Path, which terrorized much of Peru's countryside and some urban areas from the 80s through the mid-90s (the jibe is even more direct in Spanish – "El Otro Sendero" contra "El Sendero Luminoso").

The Shining Path did, in fact, consider the ILD to be one of its main opponents, and ILD's message of capitalist participation was a threat to its collectivist dreams. The Shining Path bombed, shot and threatened ILD employees for years, culminating in a July 1992 bombing of ILD offices that killed three and wounded nineteen. De Soto and the ILD continued unabated, and their courage and persistence are credited with playing a significant role in the defeat of the noxious Sendero in the late 90s.

Unlike Barack Obama, Hernando de Soto and the ILD therefore have a record of real achievement, as they have helped create peace (and prosperity) both through the power of ideas and political engagement. Awarding the Peace Prize to de Soto would be similar in spirit to the Prize given in 2006 to Muhammad Yumas and the Grameen bank, which were recognized for their role in creating microcredit markets (loans to small farmers and businesses) in Bangladesh. De Soto and ILD's vision is even broader than Grameen's, and they have been at least as effective in reducing the appeal and likelihood of violence.

But while de Soto's candidacy should be a no-brainer, it would no doubt prove controversial in some quarters since he's such an unabashed capitalist. All the more reason to give it to him. Institutions that promote markets, individual liberty and voluntary association have always been the best sources of peace and stability. These values are coming under greater attack from cultural and academic elites, including Michael Moore and his legion of know-nothing fans pining for the glories of socialism.  Especially in the current environment, the Nobel Committee can make a bold statement, and very wise choice, by awarding next year's Nobel Peace Prize to Hernando de Soto.