The Age of Aquarius or, How I (Almost) Learned to Stop Worrying and Love Free Markets

Abstract:     
This is a review of the book Raghuram G. Rajan & Luigi Zingales, Saving Capitalism from the Capitalists (2003). In this book, the authors appear as latter-day Adam Smiths to tout the power and beauty of free markets, or more specifically the power of capital markets. Their tale is informed by recent work in psychology as well as two well-functioning hearts and focuses considerable attention on the important role free capital markets can play in the developing world. Despite the story's frequent elegance, in the end, it is more a fairy tale than an accurate description of the liberating powers of finance. The authors remain so committed to the ideal of a free market that they too frequently fail to see the full effect of its deformities, and ignore the many stories of the harm that free markets often bestow.

Keywords: finance, capitalism, free markets

JEL Classifications: E44, F00

Accepted Paper Series