“The fall of the Berlin Wall really was a strong message that communism does not work as an economic system. The collapse of Lehman Brothers on Sept. 15 again showed that unbridled capitalism doesn’t work either.” – Joseph Stiglitz
I’ve long suspected that systems of government and economics are only as good as the people who believe in them and support them without manipulating them for personal gain. Monarchies have been too susceptible to individual corruption. Communism has been too susceptible to party manipulation. Capitalism has used the pursuit of personal gain as its economic engine, and that seemed to work well for quite some time. But we may now be seeing that, over the arc of the 19th and 20th centuries, democratic capitalism has been harder to manipulate directly by individuals, but more easily manipulated by corporations and other groups.
This systematic corruption seems to have taken shape via the accrual of very minor crimes being built into a global economy over time. Mortgage-backed securities, for example, in and of themselves aren’t criminal acts, but are apparently intensely susceptible to mathematical fudging. So we got where we are not by the corruption and manipulation of a king or a party but by the financial tinkerings of a few and the general fiscal ignorance of the many (myself included – like many Americans, I hope, I’m learning more and more about economics these days).
The key to Stiglitz’s quote is the bridle, I think. Government has to set limits because people are not mature enough to police themselves; power corrupts. The invisible hand is only as good as a thoroughly informed populace and thoroughly transparent businesses. As complex as our society has become, those requirements may not be possible.