Monday, Feb. 01, 2010

Capitalism Is Roughed Up, But Surviving

Weighing in on how capitalism needs to be revamped was a popular pastime at Davos. French President Nicolas Sarkozy made perhaps the loudest call in the annual meeting's opening address: "We can only save capitalism by rebuilding it, by restoring its moral dimension." Plenty of people picked up on that theme — though the discussions often turned sticky. If moral capitalism involves, say, job preservation, then does it also involve keeping unproductive businesses on life support and preventing resources from being put to better use? In a telling comment, Montek Ahluwalia, the deputy chairman of India's planning commission, said that his country, which is in the process of liberalizing its financial system, has a chance to learn from the mistakes of others. The country will now build in better safeguards around things like leverage and firm size. But more broadly, little would change with India's march toward a more market-based economy. "This is not an excuse to back off liberalization," Ahluwalia said.