Paul Krugman –

These days, we’re living in the world of the imperial, very self-interested individual; the man in the gray flannel suit has been replaced by the man in the very expensive Armani suit. Look at the protagonists in the global financial meltdown, and you won’t see faceless corporations subverting individual will; you’ll see avaricious individuals exploiting corporate forms to enrich themselves, often bringing the corporations down in the process. Lehman, AIG, Anglo-Irish, etc. were not cases of immortal hive-minds at work; they were cases of kleptocrats run wild.

I like the word, kleptocrat. It captures the sound of what it is, someone who can’t resist the lure of money, no matter what the cost.

The 21st Century might well be a hundred years devoted to kleptocracy in America. That’s pretty sad.

Do we have choices? Yes, but not the ones most people think of.

There is no return to a simpler moral age. There may be spots in American history where this virtue or another was more predominant than now but I promise you the trade offs are not anything you would want to play with.

What needs to be done is a combination of looking forward and looking backward, a fancy way of saying we should learn from experience but not react identically.

What am I talking about? Well, we’ve had kleptocracy before, roughly 1918 to 1929 maybe as late as 1931. We reacted by changing the balance of power between industry and government, imposing a large regulatory structure so as to never let the disaster happen again. Once that structure was abandoned, we fell into the trap once more. Except this time the force of the financial industry is such that no power moved to the government. We are at a stand still in the same spot where disaster struck in 2007.

There are three things that need to be done.

One – Corporations are creatures of the state, nothing more. They have the same living essence as a can opener if not less. The usurpation of human power by these moble documents is a pathetic farce a child can see through.

Return corporations to organizations under law, not as persons, as contracts. (which is what they are)

Two – Return morality to the law. First enlarge and enforce the duty of fair dealing, honesty and loyalty in business agreements. Those already exist in case law and often in statutory law. Let them be reborn as an integral part of contract law. But more than this, let us also revive the doctrine of unconscionability. The fees and contracts imposed on Americans regularly violate the basic standards of fairness. It is time to rein in those practices. If a practice “shocks the conscience,” a business, a corporation, shouldn’t be doing it.

Three – Give the owners of the corporations some say in what they do. Right now, a CEO and a board of directors are essentially unencumbered by oversight. The actual owners of the corporation have little say in the operation, major decisions and salaries of a company that are supposed to own. Isn’t a basic element of capitalism that the owner of property should be able to exercise rights in it?

That’s a start. Really, we’ve already been through these kinds of crisis before. Generally we know what to do. But there is no willpower, intelligence or wisdom to do it.

James Pilant