Some of the world's best economists are in America. Some of the best among them are in corporate business. But giant firms Bear Stearns, Fannie Mae, Freddie Mac and the American International Group collapsed and had to be bailed out by the government. Merrill Lynch escaped closure after it was taken over by the Bank of America. Lehman Brothers has applied for bankruptcy. Wall Street is in a shambles. The world is quaking. So what happened to the experts? They flunked. Never trust experts.

Fortunately this scribe is not an expert. He is ignorant about the economy. That gives him clear advantage over the experts. He is forced to rely on common sense. Billions worldwide do the same. Some experts are chortling over capitalism resorting to nationalization for damage control. So will this bring back the Soviet system? No. Does it spell the doom of the US system? Yes. Why did the first fail? Why is the second failing?

For the same reason. The success of a politico-economic system depends on how closely it empathizes with human nature. The Soviet dictatorship of the proletariat collapsed because of human selfishness. Everybody's property became nobody's responsibility. There arose a new class of unaccountable despots. Socialist promises degenerated into corruption-ridden state capitalism. 

American free enterprise failed because of human greed. It degenerated into crony corporate capitalism. A few held economic power over many. Greed drove these few to subvert politics and media while relentlessly seeking profit and power. That is why American economy is in crisis. 

If human frailties have caused the failure of systems is there no remedy because human nature is unchanging? There is a remedy. Failures cannot be eliminated. They can be contained. That can be done through democracy. The will of the many is a great leveler. It compels restraint on the few. But doesn't America have democracy? It has only political, not economic, democracy. To create economic democracy that might reclaim genuine free enterprise corporate management must be made accountable to labor and to the public in a real sense in each business unit. How can that be done?

Simple. In addition to the public sector and the private sector create a workers' sector. This sector need not replace either of the existing sectors. Let it compete and prove its superiority. In the workers' sector all employees would have ownership, profit sharing and management participation at different levels of operation. Provident fund of workers in failing units can be converted to controlling equity share. Workers would have a say on the choice of their management, raise loans, and have the freedom to collaborate with MNCs. The conduct of business would be transparent and accountable. 

Ownership and profit sharing would make strikes redundant. Wider participation would ensure greater social accountability. This system can work. It has worked. American multinationals transferred some units to workers because profit margin was too low. The units thrived after the transfer. Amul and Mother Dairy in India are getting the better of foreign competitors. It is not just because they deal with ice cream and milk products. It is because of their wider participation in profit and management. 

Mahatma Gandhi suggested cooperatives and trusteeship in industry. His ideas were considered utopian. Inspired by his ideas, in 1981 the EKTA association was formed. Atal Behari Vajpayee, Chandrashekhar, LK Advani, Devraj Urs, Karpoori Thakur, George Fernandes, Madhu Dandvate and Bhai Mahavir became its members. EKTA proposed the establishment of a workers' sector in industry to compete with the public and private sectors. It presented a brief approach paper outlining its aims. True, these leaders were partly motivated by the attempt to create a radical ideological foundation for forging opposition unity. But it cannot be considered political motivation bereft of practical feasibility. After all, two of the EKTA members became prime ministers, and the third is a prime minister in waiting. When these leaders failed to unite, EKTA was forgotten.
Has the moment for some such radical change arrived? The financial wizards in America may succeed in delaying an eventual global economic collapse. Will they succeed in reforming the system? Because the crisis is not the economy, stupid. It is the system.