IDEAS home Printed from https://ideas.repec.org/a/aea/jeclit/v44y2006i2p391-404.html

Schumpeter Redux: A Review of Raghuram G. Rajan and Luigi Zingales's Saving Capitalism from the Capitalists

Author

Listed:
  • Richard Sylla

Abstract

Saving Capitalism from the Capitalists1 is an ambitious probe into capitalism's past, present, and future. Whereas Joseph A. Schumpeter viewed capitalism as doomed because it was losing its political and social supports, Rajan and Zingales see it more as threatened from within by established or "incumbent" industrialists and financiers who become enemies of free markets. The authors contend that free financial markets foster economic progress while undermining the ability of incumbents to have their way. Rajan and Zingales may overstate the significance of "the great reversal" of financial development in the middle decades of the twentieth century, and their evidence and interpretations are sometimes flawed. Nonetheless, they make a strong case for the fundamental importance of financial development for economic modernization and their warnings about the antimarket tendencies of incumbents are well worth pondering.

Suggested Citation

  • Richard Sylla, 2006. "Schumpeter Redux: A Review of Raghuram G. Rajan and Luigi Zingales's Saving Capitalism from the Capitalists," Journal of Economic Literature, American Economic Association, vol. 44(2), pages 391-404, June.
    • Handle: RePEc:aea:jeclit:v:44:y:2006:i:2:p:391-404
    Note: DOI: 10.1257/jel.44.2.391
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jel.44.2.391
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Peter L. Rousseau & Richard Sylla, 2003. "Financial Systems, Economic Growth, and Globalization," NBER Chapters, in: Globalization in Historical Perspective, pages 373-416, National Bureau of Economic Research, Inc.
    2. Rajan, Raghuram G. & Zingales, Luigi, 2003. "The great reversals: the politics of financial development in the twentieth century," Journal of Financial Economics, Elsevier, vol. 69(1), pages 5-50, July.
    3. Wright,Robert E., 2002. "The Wealth of Nations Rediscovered," Cambridge Books, Cambridge University Press, number 9780521812375, January.
    4. repec:ucp:bkecon:9780226301532 is not listed on IDEAS
    5. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(4), pages 803-832, December.
    6. Naomi R. Lamoreaux, 1994. "Insider Lending: Banks, Personal Connections, and Economic Development in Industrial New England," NBER Books, National Bureau of Economic Research, Inc, number lamo94-1, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Finance is great, but it can be a real drag, too
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2015-03-09 17:04:57

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ulrike Malmendier, 2009. "Law and Finance "at the Origin"," Journal of Economic Literature, American Economic Association, vol. 47(4), pages 1076-1108, December.
    2. Andrei Shleifer & Florencio Lopez-de-Silanes & Rafael La Porta, 2008. "The Economic Consequences of Legal Origins," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 285-332, June.
    3. Langlois, Richard N., 2013. "Business groups and the natural state," Journal of Economic Behavior & Organization, Elsevier, vol. 88(C), pages 14-26.
    4. Mark J. Roe & Jordan I. Siegel, 2009. "Finance and Politics: A Review Essay Based on Kenneth Dam's Analysis of Legal Traditions in The Law-Growth Nexus," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 781-800, September.
    5. Hans Degryse & Thomas Lambert & Armin Schwienbacher, 2018. "The Political Economy of Financial Systems: Evidence from Suffrage Reforms in the Last Two Centuries," Economic Journal, Royal Economic Society, vol. 128(611), pages 1433-1475, June.
    6. James Foreman-Peck & Leslie Hannah, 2012. "Some Consequences of the Early Twentieth Century Divorce of Ownership from Control," CIRJE F-Series CIRJE-F-864, CIRJE, Faculty of Economics, University of Tokyo.
    7. Office of Financial Research (ed.), 2020. "2020 Annual Report to Congress," Reports, Office of Financial Research, US Department of the Treasury, number 20-01.
    8. Leisen Fabrizio & Mira Antonietta, 2006. "Coalescence time and second largest eigenvalue modulus in the monotone reversible case," Economics and Quantitative Methods qf06011, Department of Economics, University of Insubria.
    9. Coyle, Christopher & Musacchio, Aldo & Turner, John D., 2019. "Law and finance in Britain c.1900," Financial History Review, Cambridge University Press, vol. 26(3), pages 267-293, December.
    10. HANNAH, Leslie, 2018. "Corporate Governance, Accounting Transparency and Stock Exchange Sizes in Germany, Japan and “Anglo-Saxon” Economies, 1870-1950," Discussion paper series HIAS-E-77, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    11. Bertocco, Giancarlo, 2008. "Finance and development: Is Schumpeter's analysis still relevant?," Journal of Banking & Finance, Elsevier, vol. 32(6), pages 1161-1175, June.
    12. Maria Aristizabal-Ramirez & Maria Camila Botero-Franco & Gustavo Canavire-Bacarreza, 2017. "Does Financial Development Promote Innovation in Developing Economies? An Empirical Analysis," Review of Development Economics, Wiley Blackwell, vol. 21(3), pages 475-496, August.
    13. Kuvshinov, Dmitry & Zimmermann, Kaspar, 2022. "The big bang: Stock market capitalization in the long run," Journal of Financial Economics, Elsevier, vol. 145(2), pages 527-552.
    14. Mustansar, Talreja, 2023. "Financial innovation, technological improvement and bank’ profitability," OSF Preprints 8wy95, Center for Open Science.
    15. Hannah, Leslie, 2015. "A global corporate census: publicly traded and close companies in 1910," LSE Research Online Documents on Economics 59414, London School of Economics and Political Science, LSE Library.
    16. Leslie Hannah, 2015. "A global corporate census: publicly traded and close companies in 1910," Economic History Review, Economic History Society, vol. 68(2), pages 548-573, May.
    17. Aldo Musacchio, 2010. "Law and Finance c. 1900," NBER Working Papers 16216, National Bureau of Economic Research, Inc.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stephen Haber & Enrico Perotti, 2008. "The Political Economy of Financial Systems," Tinbergen Institute Discussion Papers 08-045/2, Tinbergen Institute.
    2. Rousseau, Peter L. & Sylla, Richard, 2006. "Financial revolutions and economic growth: Introducing this EEH symposium," Explorations in Economic History, Elsevier, vol. 43(1), pages 1-12, January.
    3. Andrianova, Svetlana & Demetriades, Panicos & Xu, Chenggang, 2011. "Political Economy Origins of Financial Markets in Europe and Asia," World Development, Elsevier, vol. 39(5), pages 686-699, May.
    4. Michael D. Bordo & Christopher M. Meissner, 2015. "Growing Up to Stability? Financial Globalization, Financial Development and Financial Crises," NBER Working Papers 21287, National Bureau of Economic Research, Inc.
    5. Enrico Perotti, 2013. "The Political Economy of Finance," Tinbergen Institute Discussion Papers 13-034/IV/DSF53, Tinbergen Institute.
    6. Matthew Lowenstein, 2024. "Rotating savings and credit associations (ROSCAs) in prewar China: Communal finance and the roots of economic development," Economic History Review, Economic History Society, vol. 77(3), pages 796-822, August.
    7. Howard Bodenhorn, 2016. "Two Centuries of Finance and Growth in the United States, 1790-1980," Working Papers id:11352, eSocialSciences.
    8. Lai, Karen M.Y. & Saffar, Walid & Zhu, Xindong (Kevin) & Liu, Yiye, 2020. "Political institutions, stock market liquidity and firm dividend policy: Some international evidence," Journal of Contemporary Accounting and Economics, Elsevier, vol. 16(1).
    9. repec:onb:oenbwp:y::i:115:b:1 is not listed on IDEAS
    10. Kim Oosterlinck & Loredana Ureche-Rangau & Jacques-Marie Vaslin, 2013. "Waterloo: a Godsend for French Public Finances?," Working Papers 0041, European Historical Economics Society (EHES).
    11. Betz, Timm & Pond, Amy, 2025. "Governments as Borrowers and Regulators," SocArXiv gr37y_v1, Center for Open Science.
    12. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2003. "Law and finance: why does legal origin matter?," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 653-675, December.
    13. Temin, Peter & Voth, Hans-Joachim, 2005. "Credit rationing and crowding out during the industrial revolution: evidence from Hoare's Bank, 1702-1862," Explorations in Economic History, Elsevier, vol. 42(3), pages 325-348, July.
    14. Bertocco, Giancarlo, 2008. "Finance and development: Is Schumpeter's analysis still relevant?," Journal of Banking & Finance, Elsevier, vol. 32(6), pages 1161-1175, June.
    15. Brousseau, Eric & Schemeil, Yves & Sgard, Jérôme, 2010. "Bargaining on law and bureaucracies: A constitutional theory of development," Journal of Comparative Economics, Elsevier, vol. 38(3), pages 253-266, September.
    16. Enrico Perotti & Marcel Vorage, 2010. "Bank Ownership and Financial Stability," Tinbergen Institute Discussion Papers 10-022/2, Tinbergen Institute, revised 11 Sep 2010.
    17. Djankov, Simeon & Glaeser, Edward & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2003. "The new comparative economics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 595-619, December.
    18. Wafa Ghardallou, 2021. "Political origins of financial structure in developing countries," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 895-915, May.
    19. Raghuram G. Rajan & Rodney Ramcharan, 2011. "Land and Credit: A Study of the Political Economy of Banking in the United States in the Early 20th Century," Journal of Finance, American Finance Association, vol. 66(6), pages 1895-1931, December.
    20. Peter Temin & Hans‐Joachim Voth, 2008. "Interest Rate Restrictions in a Natural Experiment: Loan Allocation and the Change in the Usury Laws in 1714," Economic Journal, Royal Economic Society, vol. 118(528), pages 743-758, April.
    21. Robert Lensink & Aljar Meesters, 2014. "Institutions and Bank Performance: A Stochastic Frontier Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 76(1), pages 67-92, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:jeclit:v:44:y:2006:i:2:p:391-404. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.