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

by Raghuram G. Rajan, Luigi Zingales, Luigi Zingales Raghuram Rajan,Raghuram G. Rajan

Book Overview

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... This description may be from another edition of this product.

• Format: Paperback
• Language: English
• ISBN: 0691121281
• ISBN13: 9780691121284
• Release Date: September 2004
• Publisher: Princeton University Press
• Length: 369 Pages
• Weight: 1.30 lbs.
• Dimensions: 0.9" x 6.3" x 9.2"

Customer Reviews

THOUGHT PROVOKING BOOK ON THE SOUL OF CAPITALISM AND HOW TO KEEP IT ALIVE

"Saving Capitalism" is a book with a simple and even intuitive thesis -- that capitalists don't like competition. Since competition is the heart of capitalism, then capitalists don't really like true capitalism. Though simple, it is innovative because no one thinks of capitalisms biggest enemies as the capitalists themselves. The book goes to great lenghts to demonstrate the truth in this thesis, drawing examples from different countries and showing what rational behavior by capitalists leads to such a negative situation. The thesis is well defended and makes a reader -- especially an economist as myself -- question the very foundations of economics. However, the authors also expose the reasons why capitalism has survived, especially in the West, despite such threats. It leads to the conclusion that one must fight for freedom in a wide sense, including economic freedom, meaning well oiled financial markets, open trade barriers, and low regulation to increase competition in as many markets as possible. Competition, whatever the source -- for capital, for labor, for markets, for foreign exchange --, is the heart of capitalism and should be defended by all.

A must read

this is an eclectic and well written book. It debunks the popular notion that capitalism is just a scam to make the rich even richer at the expense of the poor. It is true that capitalism can in fact be used by white glove thiefs to "redistribute" joe sixpack's savings into their pockets, but that is not an inherent feature of the capitalistic system, as the authors explain. What I like about Zingales and Rajan is that when confronted upon corporate malfeasance they don't change the topic to the excessive penalization of risk taking because crooked CEOs and Investment Bankers are not risk-takers. Overall it is entertaining and persuasive. I find these Chicago school economists closer to the Austrian tradition than their colleagues maybe that's why I find them so persuasive. They don't throw all capitalists into the same bag they distinguish between entrepreneurs (in the Austrian sense of the word) and rent-seeking "capitalists". Between self-made billionaires and billionaires by inheritance. While entrepreneurs must be defended with tooth and nail to preserve the capitalistic system, the others must be thrown to competition hell. There are a few inaccuracies, for example up-to-date Forbes billionaire data by countries is available over the internet; and a few paragraphs must have been included out of "respect" for their intellectual tradition and not because of their relevance to their argument, for example the Efficient Markets Theory. I do not think markets have to be "efficient" (in the academic sense that prices have to follow some mathematical/fundamental model) to be preferred to any other institutional arrangement. Some other paragraphs come across as exaggerating/overpromoting/overselling the influence of certain academics on real world institutions. Maybe they reflect some insecurity? But the essential ideas, and the reasoning, more empirical and pragmatic than ideologic/axiomatic, make this book an instant classic. It is on the same level as Hernando de Soto's Mistery of Capital and Hayek's Road to Serfdom.

a clear-headed appraisal of financial markets

An unsentimental appraisal of the benefits of a laissez-faire economy. Rajan and Zingales obviously admire financial markets in the way a mechanic would admire a well-designed engine and suggest ways they could be "tweaked" for maximum performance. That includes safeguarding the market mechanism from the very people and industries it has rewarded, and whose immediate interests no longer coincide with the free flow of goods and capital. The authors provide ample evidence of the depredations of crony capitalism, and chronicle the many ways in which powerful industries in Europe, Asia and North America have sought -- and secured -- harmful trade barriers and capital restrictions over the past century. A remarkably clear-headed book, free of the usual libertarian cant or other ideological baggage that plagues so many popular books on this topic.

Excellent book, worth reading for the novice to the expert

It is refreshing to see experts explain cutting edge ideas in a way that is accessible to all. This book explains why the free markets are important to all of us and why we cannot take them for granted. It also spells out in convincing fashion why the free markets are often at risk from those who at first might be considered their strongest supporters. It is important for the common person to understand the forces at work and their own self interest so that they use their political force towards their own and the greater good. It is also very usefull for policy makers in designing systems that are not only more effecient but that are more resilient to subversion and grounded in stronger political support.As an investment professional, this book is interesting as it points to the need to move away from the paradigm of free markets and unbridled competition to generate above average profits. The extent and liklihood of participants actually subverting the free market process and competition should be a part of the analysis in projecting long term profitability of sectors and companies.

Insightful, interesting, thought-provoking. Must read.

Insightful, interesting and thought-provoking. Must read-even for a non-finance expert like me.As a "lay" reviewer I strongly echo Business Week's recommendation that Saving Capitalism from the Capitalists is a great book for "the rest of us". The book starts off by explaining why free financial markets are critical and what the role of the financier is. (Many of my friends in Corporate Finance and Investment Banking should at least read this part as it explains what they do, why it is important and why they deserve the big bucks much better than they have ever been able to explain it to me!) The book then goes much deeper to unpeel the layers of the onion and explain how financial markets develop, what conditions are required to keep them vibrant, what risks they face and who has vested interests in their development. This is key value of the book as I see it. The authors made me think more deeply about the capital markets that I take for granted. For example it seemed surprising to think of "saving" capitalism from capitalists, but after reading the book I must concede that the authors have a point. The very capitalists who initially benefit from capitalism are the ones who stand to lose the most if competition (i.e., new capitalists) enters their markets. Thus they incumbents are likely to vociferously oppose open markets--often masking their vested interests in the guise of humanitarian concerns like the working conditions of third world labor. The book is very easy to read and the authors pull the reader along by summarizing their arguments intermittently. They encompass both developed and developing countries in their analysis and support their arguments with interesting examples from world history ranging from 13th Century Europe to modern day corporate America. The book does slow down a little in the middle, but if you persevere it picks up right back up again. By the end Saving Capitalism from the Capitalists leaves you informed, interested to learn more and makes you understand and think deeper about a subject that is extremely relevant to all of us. Insightful, interesting and thought provoking-isn't that the hallmark of a great read?