What the free market needs

Los Angeles Times ^ | October 21, 2008 | Claire Berlinski

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The free-market system, it is now fashionable to say, is to blame for the current financial crisis. By way of rejoinder, a growing cohort of commentators have argued that the crisis should be understood not as a failure of free-market economic theory but as its vindication. They argue that the U.S. government perverted the wisdom of the market by encouraging banks to make loans no rational actor would make -- and that the players took the risks they did because they held a reasonable expectation of a government bailout should things get hairy. The problem, in this view, is not that the markets were free but that they weren't free enough.

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When I've heard capitalism critized in countries like Venezuala, Russia, etc., because the few would obtain monopolistic power over the many, resulting in (or from) widespread corruption it was obvious this was not true capitalism. However, I realized I was making the same arguments as those claiming communism has never really been tried (as the article mentions). I think this article makes some good points. Supporting capitalism in and of itself is not sufficient. We need to support the creation and maintenance of those institutions and habits that support capitalism. If we don't, in the long run capitalism will as comatose as communism.