In a pure capitalist system, an institution as moronic and corrupt as Bank of America would be swiftly punished by the market - the executives would get to loot their own firms once, then they'd be looking for jobs again. But with the limitless government support of Too Big to Fail, these failing financial giants get to stay undead forever, continually looting the taxpayer, their depositors, their shareholders and anyone else they can get their hands on. Too crooked to fail, Matt Taibbi, 'Rolling Stone', 29 MarchYes, a pure capitalist system would be an improvement on the current model, in that it would respond to people's wishes, rather than the interests of monopolies or government. What we have in the west, more and more, is government that is reponsive not so much to the citizens whom it's supposed to represent, but to powerful institutions. These include large corporations, trade unions, or government agencies, including the military. They all have one over-riding goal: self-perpetuation, regardless of the interests of society or the environment. Unfortunately, there is little in the way of self-correction, especially when government gets involved. Indeed, the dynamic works in the other direction: corrupt favouritism entrenches itself along the lines that Mr Taibbi describes. Interests groups whose influence is out of all proportion to their contribution to society benefit from direct subsidy or regulatory manipulation to such an extent that they become wealthy enough to resist any change.
If this sounds far-fetched take a look not only at the Bank of America, but also at farmers and agribusiness in virtually every rich country. The insanity of agricultural support policies has been widely understood and quantified for several decades now. Its persistence is a savage indictment of our so-called capitalist model.
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