July 10, 2003

Defending The Free Market

Bruce Bartlett comments on Raghuram G. Rajan's study of crony capitalism:

What interests me about Rajan is that he is co-author (with Luigi Zingales) of a very interesting new book, Saving Capitalism from the Capitalists (Crown Business, 2003). It is one of the most powerful defenses of the free market ever written. Not only does he defend the market from anti-globalists and socialists, but against capitalists who manipulate markets and government policies for their own benefit.

In this respect, Rajan writes very much in the tradition of Adam Smith, who was very sophisticated about the ways of businessmen. Smith well understood that businessmen could often be the free market’s worst enemies, because they will sacrifice it in a minute for the sake of profits. Often they enlist government as a co-conspirator, getting it to enact laws that restrain competition and raise prices, which benefits them but hurts everyone else.

(Raghuram G. Rajan is the new IMF chief economist)