Golden Age, Gone?

Readers mulled the implications of the collapse of Wall Street's storied firms, our Oct. 13 cover story. Capitalism is a "double-edged sword," one said, as another dubbed the bailout "madness." And one cast it in perspective."Today's crisis is one of those unavoidable events that occur under freedom."

Capitalism, Closely Examined
As governments sift through the collapse of financial markets and the need for reform, they should consider that the non-financial-market side of the world's economies is doing quite well ("The Future of Capitalism," Oct. 13). This crisis is about financial markets. The causes of the failures are easily identified and include ineffective corporate boards, excessive leveraging, speculation beyond prudent risk, human greed and new products introduced into financial markets unscreened by the Securities and Exchange Commission. The immediate focus on reform should address these specific issues and not the whole system. Clearly the financial markets are global, and the international institutional arrangements designed after WWII need to be adapted or changed. Capitalism has achieved significant results over the years. Fareed Zakaria underscores this point well in "The Age of Bloomberg." The risk today is overkill and overreaction. I am encouraged by the election of Barack Obama as president and the team he is likely to pick: experienced, progressive, nonideological, pragmatic and able to discern that elusive balance between regulation and free markets.
J. H. Faulkner
Rougemont, Switzerland

With an ongoing, severe, worldwide financial crisis, certain facts may help us understand and provide perspective. Ronald Reagan's and Margaret Thatcher's policies were right for their time, given the prevailing circumstances. Then it was a bipolar world with capitalism winning the cold war against an "enemy": the Soviet Union and the hapless Eastern bloc. Until the end of the cold war, capitalism had a special appeal because of the stark contrast between the living conditions of the people on the two sides, a contrast most pronounced from 1955 to 1990. Capitalism took seriously the appeal that communism's promises offered, and as a consequence provided and permitted more opportunities for ordinary people (with much help from social democrats). But people should not underestimate the potentials and capabilities of the free world, especially those of the United States, because of its system's strengths and its potential for adaptation and correction. China and Russia, among others, do not possess even traces of these abilities.
Andras Gal
Budapest, Hungary

A new age of global capitalism starts now. Do we still want to believe that capitalism really works, especially when the rich nations gather their massive wealth at the expense of the poor and weak ones? Or does anybody still want to argue that the democratic system functions when it is subject to umpteen redefinitions and interpretations at the whim of the powerful? Human greed surpasses everything, ending in destruction and chaos. Human idiosyncrasies ignore the suffering of the unfortunate, resulting in a world of disparity and contrast. Yet we think we have been doing the right thing. We are paying a heavy toll for past follies—political, economic and, surely, environmental. The current global upheavals will be a bitter lesson for us all.
Wu Vei-ze
Shanghai, China

The challenge in the coming years will be to guarantee that governments' evident conflicts of interest as owners of the banks they have nationalized do not lead to crony capitalism via favoring their banks in financing public-sector projects. Strong and independent controls will be required to ensure a level playing field. It is unclear how this can or will be done.
Anthony Travis
Givrins, Switzerland

Monetarism is dead! If Milton Friedman were alive today, he would probably be very disappointed. The current global financial crisis has shown us that his theory just doesn't work. Monetarism basically states that the markets should be able to work with or without minimal interventions from government. But in recent weeks we have seen that the greed driving global financial institutions needs to be controlled. Some people have called this the death of capitalism, but such a statement is misleading. Capitalism still works, but we have learned that in order to make it work well we must provide trust and power to our governments, which need to impose stricter regulations. Let's just hope that this power doesn't turn against us. Either way, getting through this crisis is going to be a valuable experience for economists long into the future.
Radek Blazik
Havirov, Czech Republic