This statement from Allen Greenspan in yesterday’s hearing in the House Committee Oversight and Government Reform has been swimming through my head since I first heard it reported:

I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms.

Over on the Acton Institute web site, David Gregg captures my opinion of markets with this statement:

If the current financial upheaval teaches us anything, it should be how much market capitalism depends upon most people developing and adhering to some rather uncontroversial moral virtues.

I don’t follow Gregg in all of his conclusions of how to assign blame during the current economic mess, but I think he is right to show that we need virtue and morality in our economic system from lenders and borrowers, from producers and consumers, and from labor and management. I wish he would say more about what those virtues should be or from where they should originate. We now see how deeply flawed is and was Greenspan’s previous assumption that self-interest would be the best means of organizations protecting their investors’ equity. Self-interest cannot sustain a society for long. Duty, virtue, sacrifice, and love have no substitutes.

I still consider myself a capitalist in part because I still believe it has done more good than other economic systems. The debate needs to open, however, about what type of capitalism will we have in our nation and our world. Unfettered capitalism works in the short term, but appears to have serious crashes. It concerns me that our economic systems have not only run on self-interest, but encourage further selfishness and materialism. I began worrying about this in college when the economy soared and that meant people were buying a second or third car, or buying houses well beyond what they needed, taking themselves further into debt, often through risky loans. Our selfishness created a system and markets that reward and encourage immediate gratification, but as I said in another post on capitalism, “There is a feedback loop between our character and the systems we create. Yes, our values shape the market; we would do well to remember that the market returns the favor.”