What follows is the essence of David Korten's message in his recent book, Agenda for a New Economy.
Defenders of capitalist excess insist that capitalism is synonymous with markets and private ownership. It is not. In fact, this claim is seriously misleading, for it obscures our ability to see an obvious alternative to capitalism.
The theory of the market economy (not in itself capitalism) traces back to Adam Smith, who was long dead before the term 'capitalism' even came into popular usage. Smith's seminal work, Inquiry into the Nature and Causes of the Wealth of Nations articulates the powerful and wonderfully democratic ideal of a self-organizing economy that creates an equitable and socially optimal allocation of society's productive resources through the interaction of small buyers and sellers making decisions based on their individual needs, interests, and abilities.
In modern capitalist society, the term "free market" serves mainly as a code word for a largely unregulated market that allows the rich to consume and monopolize resources for personal gain, doing it in a manner that is free from accountability for the broader social and environmental consequences. More often than not, such a "free market" rewards financial rogues and speculators who profit maximally from governmental, social, and environmental subsidies, speculation, the abuse of monopoly power, and financial fraud, thereby creating an open and often irresistible invitation to externalize costs and increase inequality.
Markets work best within the framework of a caring community. The stronger the relations of mutual trust and caring, the more the market becomes self-policing. Here the need for formal governmental oversight and intervention is minimal.
In contrast to this, 'capitalism' is based on an economy of powerful corporations governed by a culture of greed and a belief that it is their primary legal duty to maximize returns to shareholders. It is basically an economic and social regime, very difficult for even the strongest governments to control, in which the ownership and benefits of capital are ever more deftly appropriated by the few to the exclusion of the many who through their labor make capital productive.
With bits and pieces of market theory, capitalism's defenders preposterously argue that the public interest is best served by giving globe-spanning megacorporations a license to maximize their profits without public restraint. In this way, capitalism has distorted market theory beyond recognition, for the purpose of legitimizing an ideology that has no logical or empirical foundation, all in the service of a narrow class interest.
Wearing the mantle of "the market," capitalism's agents vigorously advance public policies that create conditions diametrically opposed to those required for markets to function in a socially optimal way. Like cancer cells that attempt to hide from the body's immune system by masking themselves as healthy cells, capitalism's agents attempt to conceal themselves from society's immune system by masquerading as agents of a healthy market economy. Capitalism has become so skilled in this deception that we now find our economic and political leaders committed to policies that serve the pathology at the expense of the healthy body.
To restore health we must first recognize the diseased cells for what they are and either surgically remove them or deprive them of access to the body's nutrients.
Under a socialist system, government consolidates power unto itself. Under a capitalist system, government falls captive to corporate interests -- and then, as its captive and servant, facilitates the consolidation of corporate power. In a true market system, on the other hand, democratically accountable governments provide an appropriate framework of rules within which people, communities, entrepreneurs, and responsible investors self-organize in predominantly local markets to meet their economic needs in socially and environmentally responsible ways.
In today's WallStreet-based capitalist economy, on the other hand, money is both means and end, and the primary product is phantom wealth, i.e. money that becomes increasingly disconnected from the production or possession of anything of real value.
Contrast this with a truly market-based "Main Street" kind of economy that is largely engaged in creating real wealth from real resources to meet real needs.
Wall Street is very good at making rich people richer, but it has no concern for the health of people, community, or nature -- except insofar as they can be exploited, as sources of short-term profit and phantom wealth.
Our recent credit collapse has drawn back the curtain to reveal the inner workings of Wall Street, and it begins to look less like legitimate business enterprise and more like a criminal syndicate running a lucrative extortion racket. The nearest equivalent in nature is a cancer that drains the body's energy, but produces nothing useful in return. You don't 'fix' a cancer; you excise it and rebuild the healthy tissue that surrounded it, from which it drew its strength. "Main Street" is the healthy tissue and the foundation of the New Economy.