Saving Capitalism from the Capitalists
Encyclopedia
Saving Capitalism from the Capitalists is a non-fiction book by Raghuram Rajan
Raghuram Rajan
Raghuram Govind Rajan is currently the Eric J. Gleacher Distinguished Service Professor of Finance at the Booth School of Business at the University of Chicago. He is also an honorary economic adviser to Prime Minister of India Manmohan Singh and the current President of the American Finance...

 and Luigi Zingales
Luigi Zingales
Luigi G. Zingales is the Robert C. McCormack professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business. Zingales also serves as a member of the Committee on Capital Markets Regulation....

 of the University of Chicago Booth School of Business. The full title of the book is: Saving Capitalism from the Capitalists: Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity. It was published in hardcover in 2003 by Crown Business
Crown Publishing Group
-External links:*...

 (ISBN 0-609-61070-8) and released in softcover by Princeton University Press
Princeton University Press
-Further reading:* "". Artforum International, 2005.-External links:* * * * *...

 in 2004 (ISBN 0-691-12128-1).

The book is neither a defense of pure laissez-faire
Laissez-faire
In economics, laissez-faire describes an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies....

 capitalism
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...

, nor is it an anti-capitalist
Anti-capitalism
Anti-capitalism describes a wide variety of movements, ideas, and attitudes which oppose capitalism. Anti-capitalists, in the strict sense of the word, are those who wish to completely replace capitalism with another system....

 polemic. Instead, the authors develop the following arguments in the book:
  • The free market
    Free market
    A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...

     is the form of economic organization most beneficial to human society
    Society
    A society, or a human society, is a group of people related to each other through persistent relations, or a large social grouping sharing the same geographical or virtual territory, subject to the same political authority and dominant cultural expectations...

     and for improving the human condition
    Human condition
    The human condition encompasses the experiences of being human in a social, cultural, and personal context. It can be described as the irreducible part of humanity that is inherent and not connected to gender, race, class, etc. — a search for purpose, sense of curiosity, the inevitability of...

    .
  • Free markets can flourish over the long run only when government
    Government
    Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...

     plays a visible role in determining the rules that govern the market and supporting it with the proper infrastructure
    Infrastructure
    Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...

    .
  • Government, however, is subject to influence by organized private interests
  • Incumbent private interests, therefore, may be able to leverage the power of governmental regulation to protect their own economic position at the expense of the public interest
    Public interest
    The public interest refers to the "common well-being" or "general welfare." The public interest is central to policy debates, politics, democracy and the nature of government itself...

     by repressing the same free market through which they originally achieved success.
  • Thus, society must act to "save capitalism from the capitalists" -- i.e. take appropriate steps to protect the free market from powerful private interests who would seek to impede the efficient function of free markets, entrench themselves, and thereby reduce the overall level of economic opportunity in society.


The authors offer the following recommendations:
  • Reduce incumbent capitalists' incentive
    Incentive
    In economics and sociology, an incentive is any factor that enables or motivates a particular course of action, or counts as a reason for preferring one choice to the alternatives. It is an expectation that encourages people to behave in a certain way...

    s to oppose markets, especially by limiting the concentration
    Market concentration
    In economics, market concentration is a function of the number of firms and their respective shares of the total production in a market...

     of ownership of productive assets.
  • Provide a social safety net
    Social safety net
    Social safety nets, or "socioeconomic safety nets", are non-contributory transfer programs seeking to prevent the poor or those vulnerable to shocks and poverty from falling below a certain poverty level. Safety net programs can be provided by the public sector or by the private sector...

     for the economically distressed to help maintain broad political support for free markets.
  • Keep the borders of the economy open to support free trade
    Free trade
    Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...

     and maintain a high level of competitive pressure on incumbent firms.
  • Educate the public regarding the benefits of free markets to build political support for free market policies, or more specifically, oppose governmental interventions in the market designed to protect incumbents at the expense of overall economic opportunity.


The book has been translated into the following languages: Italian
Italian language
Italian is a Romance language spoken mainly in Europe: Italy, Switzerland, San Marino, Vatican City, by minorities in Malta, Monaco, Croatia, Slovenia, France, Libya, Eritrea, and Somalia, and by immigrant communities in the Americas and Australia...

, Japanese
Japanese language
is a language spoken by over 130 million people in Japan and in Japanese emigrant communities. It is a member of the Japonic language family, which has a number of proposed relationships with other languages, none of which has gained wide acceptance among historical linguists .Japanese is an...

, Mandarin Chinese
Standard Mandarin
Standard Chinese or Modern Standard Chinese, also known as Mandarin or Putonghua, is the official language of the People's Republic of China and Republic of China , and is one of the four official languages of Singapore....

, Portuguese
Portuguese language
Portuguese is a Romance language that arose in the medieval Kingdom of Galicia, nowadays Galicia and Northern Portugal. The southern part of the Kingdom of Galicia became independent as the County of Portugal in 1095...

, and Russian
Russian language
Russian is a Slavic language used primarily in Russia, Belarus, Uzbekistan, Kazakhstan, Tajikistan and Kyrgyzstan. It is an unofficial but widely spoken language in Ukraine, Moldova, Latvia, Turkmenistan and Estonia and, to a lesser extent, the other countries that were once constituent republics...

.
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