Theoretically we could switch to a communist system if it was voted in. Who gets to decide what is fair? Come on Tom I know you know what the meaning of the word democracy is. As a democracy the people get to choose what system they like best and I'm pretty sure few people would vote for a system that rewards inside traders and frauds. The system that a democracy is likely to support is one in which the majority of the population benefits them the most. Communism and socialism have fallen into disrepute due to obvious colossal failures. In the aftermath capitalism was somewhat idealized as the perfect system capable of giving the biggest benefit to the most people. Many scandals and economic colapses later it is now obvious to most that capitalism is not perfect either. What the US has that many of the floundering systems of capitalism do not have is a system of laws and regulation based on moral concepts of fair play. Capitalism as you described it does not include such concepts and that is the problem with unbridled capitalism from a democratic view. From an economic point of view unbridled capitalism is not the perfect system because corruption and abuse can cause instabilities that cause cause wide swings in economic output. The most efficient system over the long haul is a regulated capitalism in which abuses are limited and steady growth is maintained.

What the true optimum of regulation is is not clear however, because all regulation is a step in the direction of socialism and communism which in their pure forms are miserably inefficient systems. I believe a light hand on the tiller is best, but one thing I think is not addressed very well in our system is abusive accumulation of wealth. I believe business founders are entitled to whatever wealth their business accumulates as a reward for innovation and or hard work, but I do not believe hired managers should earn more than about 10 to 20 times the average pay of their employees. That is plenty of difference to provide motivation, but not high enough to make some of the outlandish kinds of manipulations we've seen lately very tempting. Most businesses in other countries do not pay outrageous CEO salaries as we do and many CEOs are getting these salaries despite poor performance. There is nothing in the basic theory of capitalism that accounts for this unless you truly believe that somehow these guys are all involved in tremendous bidding wars. I don't see much evidence for that. It appears to be much more of an abuse of accumulated power situation. This supports Robert's linear reward comments.

Regards,
Mark