Reclaiming Capitalism

“Banksters,” says the cover of the Economist Magazine. Rising discontent against global trade, says New York Times columnist David Brooks.

Twenty-five percent of financial professionals in the U.S. and U.K believe that unethical behavior may be a necessary evil in order to succeed in modern business, according to a June 2012 survey sponsored by whistleblower law firm Labaton Sucharow. (Full survey results in pdf here.)

Capitalism -- global or domestic or both -- appears to be in crisis. Increased awareness of graft combined with recession fears certainly play significant roles.

But as Dick Cassin observes, the human heart does not change. The great appeal of capitalism was the idea of a market in which people (including corporate people) could compete on the merits – price, quality, service, brand. 

The idea of a competitive market is now attacked as “naïve.” Revelation after revelation of corruption by what had been respected corporations eroded the legitimacy of capitalism itself. The market appears systemically rigged to favor insiders, rendering it no market at all but merely propaganda disguising the old feudal oligarchies.

Resignation is not acceptance, as Michael Ndichu Kuria said, writing from the African experience. We have much to learn from veteran graft-fighters struggling in other systemically corrupted economies who have been quicker to understand the erosion of the culture itself due to systemic graft. Fighting cynicism is crucial.

We in the U.S and U.K., as well as many other countries, do have significant tools to fight systemic graft by oligarchical elites. For where compliance fails, we have a mostly free press and above all a mostly independent, functioning legal system.

It is the independence and integrity of our prosecutors and judges, combined with the vigor of an astute defense bar that gives me hope. We can reclaim the idea of capitalism: transparent, functioning, competitive markets where elites must earn money the old fashioned way. By actually earning it.

Transparent market competition enforced by equal justice under law.  

Not a bad policy to address the current crisis. Kudos to whoever thought of it.

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Contributing editor Elizabeth K. Spahn is a professor at New England Law | Boston. She can be contacted here.