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.