Capitalism will not take root around the world if corruption defiles it. Socialism collapsed a decade ago because it became discredited in the eyes of the peoples who lived under it. Now capitalism is receiving severe rebukes, with its critics given powerful evidence that they are right in seeing it as a system that works for insiders and their cronies. After all, isn't Enron's bankruptcy a crystal-clear example of inmates controlling their guards? If America wants to lead capitalism's global march, it must exorcize a growing culture of corporate crony capitalism.
The choice, of course, is no longer between socialism and capitalism. Socialism became a mess as great expectations of a workers' paradise were bogged down in bureaucracy. Without incentives and radical decentralization, economic progress is simply a dream. So the past century demonstrated time and again, which is why China - nostalgic egalitarian rhetoric notwithstanding - opted for all-out capitalism under its post-Mao rulers.
Did Deng Xiao Peng foresee the vast inequalities that would result? Possibly. But Deng wanted higher standards of living for every Chinese, even if inequality resulted. To function and remain socially acceptable, however, capitalism must be as clean as possible. Everybody may not get a chance to become rich in a capitalist system, but the system should not be perceived as rigged in ways that allow only insiders to get rich while everyone else pays the bill.
If inequality is one negative aspect of radical capitalism - to some extent mitigated by the public sector - the other one is the potential corruption of capitalist institutions: call it the Enron syndrome. When American Congressional committees weaken regulatory oversight of their business friends; when accounting firms surrender their independence because of the lure of mega-contracts; when corporate boards can't say no because the fees of board members are stunningly large relative to the effort; and when managers live in a frenzy of self-dealing, the stage is set for capitalism to lose its reputation.