In recent years, developing countries have carried out the macro-economic policy changes recommended by the West: they have balanced their budgets, cut subsidies, welcomed foreign investments and dropped their trade barriers. Yet capitalist reformers are now intellectually on the defensive, increasingly derided as apologists for the miseries and injustices that still plague the poor. We are beginning to realise that macroeconomic reforms are insufficient on their own. Capitalism requires the bedrock of the rule of law, beginning with that of property, since the property system is much more than ownership: it is the hidden architecture that organises the market economy in every Western nation, the article argues, outlining the kind of reforms that are deemed necessary for third world countries (and those of the former Soviet Union) in order to develop. The governments should be provided with the tools for reforming existing institutions, allowing them to integrate under one law all the economic stock and activities in the country, creating a formal property system that converts a previously anonymous and dispersed mass of ownerships into an interconnected system of individually identifiable and accountable business interlocutors that are able to create capital. © 2002 Taylor & Francis Group, LLC.