No economic system is perfect... and to believe capitalism will address all of our social ills is as stupid as waiting for Jesus to come back: neither has strong evidence of occurring.
Take for instance the case of investment bankers, hedge fund managers and the like. Sure, these are professional people who provide a service to the business community. But does that service really warrant billions of dollars of accumulated wealth while the owners pay only a fraction of the taxes that a middle-income wage earner pays?
Most sane people would say no...
An article in the WSJ points out even conservative economists are making this point:
A new argument is emerging among the pro-globalization crowd in the U.S., the folks who see continued globalization and trade as vital to the country's prosperity: Tax the rich more heavily to thwart an economically crippling political backlash against trade prompted by workers who see themselves -- with some justification -- as losers from globalization.How can a society justify an average educator's salary of around $48,000 a year, while someone who runs a investment banking firm pays 15% taxes while accumulating 7 BILLION in assets?
The sharpest articulation of this view comes from ... Matthew Slaughter, who recently left President Bush's Council of Economic Advisers to return to Dartmouth's Tuck School of Business.
The recent widening of the gap between economic winners and losers is "entirely without precedent in the postwar period," Lawrence Summers, the former U.S. Treasury secretary and Harvard president, said at a Washington forum this week."Individuals are asking themselves, 'Is globalization good for me?' and in a growing number of cases, arriving at the conclusion that it is not," ...
To argue that "the market bears the expense" is not an argument at all. The question isn't what the market will pay for a service, but what value does that service bring to society. While I don't argue for a command economy, there must be some sane system of incentives (e.g. - taxes and tax breaks) that help to steer the economic ship in a reasonable direction.
If not, we'll simply continue down the path of the haves vs the have-nots... Where people who provide critical services (water, sewer, garbage collection) are paid subsistence wages while those who skim off the financial markets (adding nothing of value to the process) live like the aristocrats of old.
When it gets ugly enough: when the society is completely stratified with an upper class of billionaire parents leaving riches to children who perpetuate a plutocracy -- people may finally wake up and realize no abstract economic theory in and of itself provides for economic social justice.
Society and the economy require pragmatic management... Not "control", but management. Capitalism in and of itself will lead to a tyranny as sure as despotism. Governments may not always take the right actions in regard to economic policy -- in fact, some actions may make things worse -- but a laissez faire is sure to destroy our country.