Saving Capitalism from the Capitalists: Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity - Hardcover

Raghuram G. Rajan; Luigi Zingales

Hardcover

ISBN 10: 0609610708 ISBN 13: 9780609610701

Publisher: Crown Business, 2003

Synopsis

Capitalism’s biggest problem is the executive in pinstripes who extols the virtues of competitive markets with every breath while attempting to extinguish them with every action.

Saving Capitalism from the Capitalists is a groundbreaking book that will radically change our understanding of the capitalist system, particularly the role of financial markets. They are the catalyst for inspiring human ingenuity and spreading prosperity. The perception of many, especially in the wake of never-ending corporate scandals, is that financial markets are parasitic institutions that feed off the blood, sweat, and tears of the rest of us. The reality is far different.

·Vibrant financial markets threaten the sclerotic corporate establishment and increase corporate mobility and opportunity. They are the reason why entrepreneurship flourishes and companies like The Home Depot and Wal-Mart—mere fly specks a quarter of a century ago—have surged as they have.
·They mean personal freedom and economic development for more people. Throughout history, and in most of the world today, the record is one of financial oppression. Elites restrict access to capital and severely limit not only general economic development but that of individuals as well.
·Open borders help check the political and economic elites and preserve competitive markets. The greatest danger of the antiglobalization movement is that it will keep the rich rich and the poor poor. Globalization forces countries to do what is necessary to make their economies productive, not what is best for incumbent elites. Open borders limit the ability of domestic politics to close down competition and to retard financial and economic growth.
·Markets are especially susceptible in economic downturns when the establishment can exploit public anger to restrict competition and access to capital. While markets must be free to practice “creative destruction,” Rajan and Zingales demonstrate the political and economic importance of a sustainable distribution of wealth and a baseline safety net. Capitalism needs a heart for its own good!

There are no iron laws of economics that condemn countries like Bangladesh to perpetual poverty or the United States to perpetual prosperity. The early years of the twentieth century saw vibrant, open financial markets that were creating widespread prosperity. Then came the “Great Reversal” during the Great Depression. It can—and will—happen again, unless there is greater understanding of what markets do, who benefits, and who really wants to either limit them or shut them down.

Saving Capitalism from the Capitalists breaks free of traditional ideological arguments of the right and left and points to a new way of understanding and spreading the extraordinary wealth-generating capabilities of capitalism.

About this title

From the Back Cover

“Economists usually take it for granted that markets are efficient and that a free market system will therefore prevail. Rajan and Zingales do a wonderful job of arguing that free markets, particularly free financial markets, in spite of their many benefits, are under continual threat from a variety of enemies and must be constantly fought for. Although Rajan’s and Zingales’s reasoning is sophisticated, they write simply, lucidly, and compellingly, and their ideas will be accessible to the general reader. The book deserves a large audience, and it would not be an exaggeration to say that the capitalist system will be more secure if it gets one.”
—Oliver Hart,
Andrew E. Furer Professor of Economics,
Chairman, Department of Economics, Harvard University

“Saving Capitalism from the Capitalists is an extraordinary blend of economic and political analysis, on the one hand, and deft policy recommendations, on the other. Everyone interested in a stronger market-oriented global economy should read this book.”—Jeffrey E. Garten,
Dean, Yale School of Management,
Former Undersecretary of Commerce for International Trade

“Free markets aren’t free. Those of us who live and work in the world’s most advanced market economy tend to take them for granted, much as a fish does water. Rajan and Zingales help us look anew and see just how politically vulnerable and fragile markets are. Saving Capitalism from the Capitalists is at once erudite, insightful, and prescriptive, as it moves our understanding of markets far beyond the stereotypical arguments of the right and the left.”—Barry Nalebuff,
Milton Steinbach Professor, Yale School of Management,
Coauthor of Co-opetition and Thinking Strategically

“Saving Capitalism from the Capitalists is an innovative, thought-provoking analysis of the capitalist system. Rajan and Zingales argue that financial markets are critical for spreading the opportunities generated by capitalism. In the last few decades, we have seen the beginnings of the effects of free financial markets on business practices, a revolutionary change that is benefiting all. However, there is a danger in taking these gains too much for granted. In this timely book, the authors point to how politically fragile financial markets are and offer valuable suggestions on how modern economies can build support for them. This is a must-read for every thinking manager, in fact, for anyone who worries about the future of the capitalist system.”—Rajat Gupta,
Managing Director, McKinsey & Company

About the Author

RAGHURAM G. RAJAN is the Joseph Gidwitz Professor of Finance at the University of Chicago’s Graduate School of Business. Dr. Rajan is one of the foremost academic experts on banking and comparative financial systems. He is a director of the American Finance Association, an associate editor of the American Economic Review, and a program director for corporate finance at the National Bureau of Economic Research.

LUIGI ZINGALES is the Robert C. McCormack Professor of Entrepreneurship and Finance at the University of Chicago’s Graduate School of Business. Dr. Zingales is one of the foremost academic experts on corporate governance and is an inaugural fellow of the recently instituted European Corporate Governance Panel. He is a faculty research associate at the National Bureau of Economic Research and a research fellow at the Center for Economic Policy Research.

Edition details

• Publisher: Crown Business
• Publication date: 2003
• ISBN 10: 0609610708
• ISBN 13: 9780609610701
• Binding: Hardcover
• Language: English
• Edition number: 1
• Number of pages: 384