The American Creed Takes a Hit

Last week, Alan Greenspan, former chairman of the Federal Reserve Board, made a formal apology before the House Committee on Government Oversight and Reform, citing his "shock and disbelief" over the state of the financial market that he had once regulated from 1987 to 2006. Greenspan, a relentless proponent for market deregulation, acknowledged that he "made a mistake in presuming that the self-interest of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms."

What does this apology say about the capitalist way of life?

Americans have always been generally skeptical of strong government intervention, and argue in favor of equal opportunity for all individuals. After all, who has never heard of the "American Dream," that glorified ideal of the self-made man who strove to the top on nothing but his wits and a little bit of elbow grease? Alan Greenspan himself was the stronghold of deregulation in his time, believing that business' fears of their own downfalls would motivate them to make timed and careful movements. However, in the midst of the recent economic crisis, the capitalism itself has become endangered.

Of course, there is no doubt that capitalism will bounce back from these troubled times, but what form it will take when that eventually happens remains a mystery. Through its bailout bill, the U.S. Government is playing an active role in repairing Wall Street, but at the expense of sacrificing the old economic system. As both Alan Greenspan and every global leader has come to realize, albeit several years too late, the economy cannot always regulate itself. The question is whether this has become the case as the result of an increasingly complicated and confusing economic system that no one body can fully control, or whether this argument has existed all along. If the former is true, then the American economy is in need of a makeover: a system more effective than what Alan Greenspan once oversaw to keep track of the confusing network of banks, firms, and intermediaries that exist today. If the latter is true, then the classic American ideology of competition free from government intervention was never the right way from the start.