Last Updated Sep 2, 2008 12:55 PM EDT
Has any other system ever really been seen to work effectively? Not really. But that doesn't mean capitalism is perfect and shouldn't change.
It all starts with accountability -- of producers, consumers, government, even business schools. The credit crunch has been largely caused by the pursuit of short-term profits, in rapidly growing markets with a relaxed focus on risk. Construction and financial services have led the way with aggressive building and self-certificated mortgage applications.
Properties have been bought off-plan, in many cases as investments rather than dwellings. Yet, well over a year ago, you only needed to take an evening stroll around the new apartments of central Leeds to see the reality -- far more lights out than on -- empty flats bought as investments at a time when there was a dearth of family accommodation.
This apartment bubble was going to burst. But was accountability all about the next profits report rather than medium-term sustainability? The constant push for great results in good times has a habit of ending badly.
It's easy to put all the blame on the producers -- but what about the customers? For every seller there is a buyer. In the US, property ownership with "guaranteed" returns suddenly became a reality for the sub-prime market.
The capitalism doom-mongers tell us that these people were poorly educated "victims" of smooth talking mortgage salesmen. I just don't buy this. We've all got a level of common sense and buying a house when long-term unemployed or in poorly paid employment showed greed as well as naivete. Consumers need to take some responsibility as well.
What about we business academics? I am a passionate believer that good management education can help managers see the route ahead, to spot the threats as well as the opportunities, to manage for a sustainable future.
Academics also need to be accountable to the management community. With today's turmoil, we need to help managers take the objective view, challenge their strategies and see the sustainable medium term.
Its not time to re-engineer society as we know it. But it is time for us to become more realistic, more pragmatic and more supportive of each other. Government needs to take the lead.
First, we can't allow unrealistic sales of major assets. Second, we must educate the more vulnerable, or even the more greedy, consumer of the perils of chasing unrealistic wealth.
If anything good comes out of the current turmoil, it will surely be that we won't rush headlong into another crisis. Unless we lose our memory, chase the next short term boom and forget about accountability.