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Capitalism's Achilles Heel: Dirty Money and How to Renew the Free-Market System

ISBN: 978-0-471-64488-0
438 pages
August 2005
Capitalism

Description

For over forty years in more than sixty countries, Raymond Baker has witnessed the free-market system operating illicitly and corruptly, with devastating consequences. In Capitalism’s Achilles Heel, Baker takes readers on a fascinating journey through the global free-market system and reveals how dirty money, poverty, and inequality are inextricably intertwined. Readers will discover how small illicit transactions lead to massive illegalities and how staggering global income disparities are worsened by the illegalities that permeate international capitalism. Drawing on his experiences, Baker shows how Western banks and businesses use secret transactions and ignore laws while handling some $1 trillion in illicit proceeds each year. He also illustrates how businesspeople, criminals, and kleptocrats perfect the same techniques to shift funds and how these tactics negatively affect individuals, institutions, and countries.
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Table of Contents

Prologue 1

CHAPTER 1 Global Capitalism: Savior or Predator? 11

PART I Illegality: We Like the Money 21

CHAPTER 2 Playing the Game 23

The Dirty-Money User Manual 24

You're in Business 47

CHAPTER 3 Dirty Money at Work 48

The Corruption Industry 49

The Criminal Component: Drugs, Thugs, 88

and Terrorists

Global Commerce and Tax Evasion: Coin of the Realm 133

CHAPTER 4 Magnitudes and Misunderstandings 162

How Much Money? 162

A Failure Rate of 99.9 Percent 173

Well-Intentioned Efforts 174

The Patriot Act 177

Dirty Money Is on the Rise 182

Chasing Terrorists' Money 183

Ill-Intentioned Loopholes 186

Haven and Secrecy Structure 191

Falsified Pricing Structure 194

We Like the Money 201

Challenge 205

PART II Inequality: The Gap Matters 207

CHAPTER 5 The Global Divide 210

The Quintile Canyon 210

Measure for Measure 217

It's an Uncertain World 224

The Monkey Wrench 234

CHAPTER 6 "I Don't Understand" and "Don't Tell Anyone" 240

Myths 241

"Don't Tell Anyone" 246

Corruption—At Long Last! 249

Filling Western Coffers: Mum's the Word 252

Debtor's Prison 254

What If? 257

Intellectual Gap or Character Gap? 258

CHAPTER 7 It's the 70 to 90 Percent that Matters 262

It Can't Last 262

Convergence? 267

The Gap Matters 272

Challenge 275

PART III Disutility: Bentham KOs Smith 279

CHAPTER 8 The Anguish of Adam Smith 282

Theory of Moral Sentiments 283

Wealth of Nations 286

Invisible Hand 290

Das Adam Smith Problem 293

The Tears of Adam Smith 297

CHAPTER 9 The Joys of Jeremy Bentham 300

Jurisprudence 301

Utilitarianism 302

Related Interests 305

John Stuart Mill 307

Problems 309

CHAPTER 10 Philosophy Becomes Culture 312

The Great Infusion 313

Twentieth-Century Utility 319

Twentieth-Century Utilitarianism 321

Inoperable Doctrine, Deadly Practice 323

Disutility 327

Challenge 330

PART IV Run It Right: Trust the System 333

CHAPTER 11 Capitalism's Achilles Heel 337

CHAPTER 12 Spreading Prosperity 342

Delegitimizing Dirty Money 342

Tougher on Corruption 346

Reining in the Support Structure 346

Mispricing and Transfer Pricing 348

Capitalism's Contribution to Slashing Inequality 351

". . . When You Pay Me What You Owe Me" 353

Reconstitute the World Bank 360

Justice First 361

CHAPTER 13 Renewing Capitalism 368

Acknowledgments 377

Notes 383

Index 425

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Author Information

Raymond W. Baker, after a long career in international business, is a guest scholar at The Brookings Institution and a Senior Fellow at the Center for International Policy, both located in Washington, D.C. He appears often on television and radio in the United States and overseas and often testifies before House and Senate committees. Baker has an MBA from Harvard, lived in Africa for many years, and has done business across much of the developing world.
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The Wiley Advantage

COLLEGE INTEREST: Potential college interest for business ethics and economics courses.

AUTHOR WILL PROMOTE BOOK THROUGH HIS AFFILIATIONS: Baker is affiliated with the Caux Roundtable, a group of international business leaders dedicated to new ethical leadership and cooperation. Caux will feature him at conferences and also promote book to its supporters, through its web site and newsletters.

AUTHOR DOES REGULAR SPEAKING ENGAGEMENTS: Baker regularly speaks at business, academic and government engagements and expects to maintain this visibility for several years to come.

 

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Reviews

"...Challenging the view that financial scandal and tax dodging are isolated cases in an otherwise robust system, Capitalism's Achilles Heel shows how these 'negative externalities', as economists call them, have generated a spirit of lawlessness that threatens the integrity of the market system and the finance industry as a whole..." (The London Review of Books, 6th October 2005)

"...Baker is an ethical capitalist - at least - more so than most - his concern is the incredible rapacity and corruption of modern capitalism - a must-read for those on the left...." (The Morning Star, 28th September 2005)

“…excellent book…well-researched…” (Financial Times, 10th August 2005)

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