Economist Jagdish Bhagwati has a fantastic article over at World Affairs Journal. Not only does he go after all the eager critics of capitalism, especially his Columbia colleague Joseph Stiglitz, but he also sets the record straight:

After two and a half centuries of this fascinating debate, I have to say that my own sympathies lie with those who have found markets, on balance, to be on the side of the angels. But I should also add that I find the specific notion that markets corrupt our morals, and determine our ethical destiny, to be a vulgar quasi-Marxist notion about as convincing as that other vulgar notion that ownership of the means of production is critical to our economic destiny.

Capitalism is efficient and moral, he argues. His case is compelling and worth reading.

My favorite section:

How does one react then to a phenomenon like Bernie Madoff? Does it not represent the corrosion of moral values in the marketplace? Not quite. The payoffs from corner-cutting, indeed outright theft, have been so huge in the financial sector that those who are crooked are naturally drawn to such scheming. The financial markets did not produce Madoff’s crookedness; Madoff was almost certainly depraved to begin with. The financial sector corrupts morality in the same sense that the existence of an escort service corrupted Eliot Spitzer. Should we blame the governor’s transgressions on the call girls rather than on his own flaws?

Well said. The whole thing is here.