We don't just need to recapitalize the banks. We need to reconceptualize capitalism.

A better name for our new system might be life jacket capitalism. The role of the watchdogs isn't just to enforce seat-belt and helmet laws for the financial sector. Market misjudgments have produced systemic risk with growing intensity and alarming frequency, requiring rescues in 1988 (the savings-and-loan crisis), 1994 (the Mexican collapse), 1997 (the Asian meltdown), 1998 (the Long Term Capital Management debacle), and 2008 (the subprime catastrophe). In an age of globalization, threats to the financial system can arise unexpectedly from almost any place. What's scary about such an arrangement is how much power it vests in our economic guardians and how vigilant, wise, and adroit those guardians need to be. One dud call like letting Lehman go and the whole world can blow up.

Or perhaps we should say that we've entered the Marxist stage of Rube Goldberg capitalism. Bill Gates coined the term creative capitalism earlier this year to describe a market approach to alleviating poverty. In a broader context, his phrase gets at the reality that private enterprise on its own won't address global ills such as climate change, economic inequality, or systemic financial risk. Put a different way, when capitalism stops working, it's time to start looking for a good adjective.

(Illustraton by Mark Alan Stamaty.)