It’s good news that the Federal Government has stepped in to stop–or at least slow–the downward flight of the economy.  The Bear, Stearns rescue; the taking over of Fannie and Freddie; then the $85 billion loan toAIG; and now an infusion of capital wherever it is needed to rescue large businesses and mutual funds.  A new look at the need for regulatory oversight.  And, thank goodness, a short moratorium on short-selling.

OK, Secretary of the Treasury Paulson is now getting serious.  He’s gone beyond the Band-Aid stage and, with the help of many in business and government, is starting to develop a comprehensive plan to stabilize the economy.  The details will go to Congress immediately.  Congress is almost certain to pass any legislation that Paulson and his team recommend, though the Democrats will insist that any new law also provide help for individual homeowners who are threatened with mortgages they can’t handle.

Actually, under the circumstances, and given this administration’s opposition to regulation, oversight, and transparency of any kind, Paulson seems to be doing a good job.  Just a day or two he seemed to be working without a plan.  But clearly he and Ben Bernanke (head of the Fed) and many others realized that extreme measures had to be taken to avoid a total collapse of the economic system here at home and abroad.

So the U.S. Government has now nationalized some very big businesses.  It has provided a safety net–let’s call it what it is:   another version of corporate welfare–for businesses that have been judged (no doubt correctly) too big to fail.  It has, in other words, averted catastrophe through a form of central planning.

But wait!   Aren’t these measures the trappings of Socialism?  Aren’t we the preeminent believers in Free Enterprise?

Well, friends, we have to face an inconvenient fact:  if we want a free-enterprise system that works, we’re going to have to have cooperation between the government and a legal framework, on the one hand, and business–especially large corporations–on the other hand.  Capitalism is impossible under anarchic conditions;  it requires social stability and confidence that the legal and economic framework will keep it running.  We’ve seen lately that confidence–faith in the system–seeped out of the system.  Now Paulson and the others are hoping that billions and billions upon billions of dollars will restore confidence in our system, which capitalism without oversight or regulation has nearly destroyed.

In other words, the free-enterprise system had to be rescued from itself.  The vast energies of capitalism can bring about miraculous, positive changes.  But those energies have a destructive side as well.  Greed may drive the system, but unchecked greed will always bring it to a point of collapse.  My brother has an observation:  “Greed knows no bounds.”  He’s right.  The truly greedy, the supremely greedy, the captains of the universe who want to gobble everything up, have to observe limits.  Otherwise they’ll destroy themselves and all the rest of us as well.

It makes better business sense to have laws that require oversight and regulation.  I’m not talking about iron-fisted regulation, restrictive laws that strangle capital flow and innovation, or actual management of the economy by the central government.  We know that doesn’t work.

But now that we’ve been brought to our knees by the ideology of the free-for-all, winner-take-all, Social Darwinist theory of unregulated free enterprise, let’s give serious consideration to something a little more rational.  If Big Business can doom itself when there’s no agency to monitor it, what have we come to?  Well, I’ll tell you:  we’ve come to the summer and fall of 2008, when Big Business had to be rescued from itself.

As I say above, business can thrive only in a stable environment.  Let’s compare the explosiveness of the capitalist impulses to other explosive forces:  dynamite, fire, nuclear fission.  OK, maybe I’m reaching here, but you get the idea.  These explosive forces can be harnessed to do good work.  If we just let them blow up, they consume themselves and everything else around them.  What the hell’s wrong with applying a little intelligence to make them work better?

Henry Paulson and the others have made the first, tentative steps toward the creation of a structure of cooperation between business and government.  If they haven’t–if this is just another rescue job for the Big Guys–then we can look forward to another meltdown soon.  (That’ll be the credit-card bubble.)  As it is, we’re not out of the woods yet.  There’s going to be a lot of bad economic news in the following weeks, I fear.   This whole mess will take years to sort out.  Our grandchildren will be paying for our recklessness, our surrender to the predator ideology of laissez-faire.