Could Capitalists Actually Bring Down Capitalism?

OVER the last few centuries, capitalism has been the heartiest contender in the global bout for economic supremacy. It emerged from its decades-long death match with communism as the unquestioned victor. Its dust-up with socialism barely lasted a few rounds. It flourished in wartime, and survived wrongheaded assaults from embargoes and tariffs. Even terrorism aimed at capitalism's heart failed to deliver a knock-out punch.

But now, a staggering rush of corporate debacles is raising a disturbing question: can capitalism survive the capitalists themselves?

The scandals that have oozed out of corporate America with alarming regularity in recent months have repeatedly featured executives betraying the marketplace for their own short-term self-interest. From Enron to Global Crossing, Adelphia to WorldCom, the details differ but the stories boil down to the same theme: the companies lied about their performance, and investors paid the price.

To those inured to corporate wrongdoing — perhaps by the insider trading scandals or the savings and loan debacle of recent decades — the latest scourge of white-collar malfeasance might seem like more of the same, with greedy executives cutting corners to make a profit. But in truth, the corporate calamities of the new millennium are of a different ilk, one that challenges the credibility of the financial reporting system, and in turn the faith of investors in the capital markets — the very engine that has driven capitalism to its success.