Saving Capitalism from the Capitalists: How Open Financial Markets Challenge the Establishment and Spread Prosperity to Rich and Poor AlikeCapitalism’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. |
From inside the book
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... loan. That left her with a profit of only 2 cents. Yunus was appalled: I watched as she set to work again, her small brown hands plaiting the strands of bamboo as they had every day for months and years on end. . . . How would her ...
... loan. That left her with a profit of only 2 cents. Yunus was appalled: I watched as she set to work again, her small brown hands plaiting the strands of bamboo as they had every day for months and years on end. . . . How would her ...
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... loans, and those who did charged extremely high interest rates. Rural credit was fertile ground for the loan sharks, and year after year, farmers turned over their crops to help pay exorbitant interest charges on loans made to keep ...
... loans, and those who did charged extremely high interest rates. Rural credit was fertile ground for the loan sharks, and year after year, farmers turned over their crops to help pay exorbitant interest charges on loans made to keep ...
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... loan, because she will lose the collateral. Thus, a collateral requirement can force rogues to self-select themselves out of the pool of applicants for loans, leaving only those bona fide applicants who fully intend to pay back the loan ...
... loan, because she will lose the collateral. Thus, a collateral requirement can force rogues to self-select themselves out of the pool of applicants for loans, leaving only those bona fide applicants who fully intend to pay back the loan ...
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... loans amount to 52 percent of gross domestic product (GDP) in England. In Italy, a country with roughly the same GDP per capita as England, it takes between three and five years at a cost of between 18 and 20 percent of the value of a ...
... loans amount to 52 percent of gross domestic product (GDP) in England. In Italy, a country with roughly the same GDP per capita as England, it takes between three and five years at a cost of between 18 and 20 percent of the value of a ...
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... loans. Higher state bankruptcy exemptions led to a significantly higher probability that households would be turned down for credit or dis-couraged from borrowing.Z Poor households were disproportionately adversely affected. Since their ...
... loans. Higher state bankruptcy exemptions led to a significantly higher probability that households would be turned down for credit or dis-couraged from borrowing.Z Poor households were disproportionately adversely affected. Since their ...
Contents
Shylock Transformed | |
The Financial Revolution and Individual Economic Freedom | |
The Dark Side of Finance | |
The Bottom Line on Financial Development | |
The Taming of the Government | |
THE GREAT REVERSAL | |
HOW CAN MARKETS BE MADE MORE VlABLE | |
Saving Capitalism from the Capitalists | |
About the Authors | |
Other editions - View all
Saving Capitalism from the Capitalists: Unleashing the Power of Financial ... Raghuram Rajan,Luigi Zingales No preview available - 2003 |
Common terms and phrases
3Com access to finance arbitrage arm’s-length assets banking system become benefits better bonds borders borrower Cambridge capital flows collateral companies competition corporate cost country’s create debt deregulation developed countries domestic economists efficient emerged employees Enron entry equity market example financial development Financial Economics financial markets financial sector financial system firm’s firms force foreign France free markets Glass-Steagall Act growth important incentive increase incumbents industry infrastructure innovation interest investment investors Journal of Economics Journal of Finance junk bonds land limited loans Luigi Zingales Mediobanca million NBER owners ownership paper percent policies political politicians production profits property rights protect Rajan relationship system restrictions Return to text risk search fund shareholders shares steel stock market stock prices trade underdeveloped United University Press vertically integrated workers York Zingales