I just finished writing a comment on the This is not the end of capitalism, Mark Shuttleworth, 4th November 2008. The article triggered a thought process that resulted in a long comment. I have reproduced the comment here and added some further thoughts.
Regulated capitalism is the last man standing. We have no choice but to make it work. We must, however, acknowledge that regulated capitalism has failed its citizens comprehensively. The failure of regulated capitalism is equal to the collapse of central planning. The communists recognised their system had failed and chose to implement something else. Will capitalists do the same? Or will we try to save the status quo at any price? Will bailouts move on to other “too big too let fail” activities that prevent the operation of creative destruction?
Regulated capitalism has delivered national insolvency, individual bankruptcy, inadequate retirement savings for the baby boomers, water shortages, food shortages, no substitutes for critical resources, pro-cyclical investment, war, stalled innovation, a vast waste of resources on a global scale and potential conflict for generations. Regulated capitalism was not regulated. Regulated was focussed on the process of specific market, rather than to ensure comprehensive set of specific community outcomes was achieved.
Short term interests were able to unduly influence the regulator and long term interests of sustainability, solvency, equality, investment in the future and peace were sacrificed to short term opportunism. This opportunism occurred in industry and politics from the local to global level.
A different level of regulation won’t resolve the situation. A depression may give this generation a new perspective, but the next generation may simply repeat the same mistakes. The regulation pendulum may just swing back and forward. The problem lies in the organisational structures we rely in an economy. These structures (now a hundred years old) allow short term opportunism of one individual to compromise the long term imperatives of the organisation or community. These structures are not transparent. The structures pioneered by the open source community demonstrate the potential of internet enabled communities.
We need to build the Web 3.0 online social, industry and political networks on the critical path to Web 4.0 and pull in the next stage of financial markets, economic development, environmental sustainability, awareness, life, work and global governance. The transparency provided by these networks will have a far greater impact than pushing the pendulum of regulation in another direction, or choosing a new political system.