If capitalism were someday found to have a soul, it would probably be located in the mystic qualities of capital itself. The substance begins simply enough as personal savings and business profits, then flows like oxygen through labyrinthine channels into the heart and muscle of economic life. Once set in motion, the surplus wealth (Marx provocatively called it "stored labor") becomes one of capitalism's three classic factors of production, alongside human labor and nature (the land and resources consumed to make things). Capital puts up the money to build the factory, buys the machines and pays the company's bills until its goods are produced and sold, thus yielding the new returns that pay back the lenders and investors with an expected increase. It is not simple, but that is the essence.

Given the vast wealth of the country, the financial system forms a rather narrow funnel through which tens of trillions of dollars are continuously poured. Yes, the transactions are dizzyingly diverse and complex, involving thousands of large and small financial firms, but the work itself is actually done by a fairly small number of people. On Wall Street (an emblem of the system now dispersed nationwide) fewer than 1 million Americans manage the money. And only a relative handful of those people make the big decisions. Collectively, they are very, very powerful. Nobody elected them, but their exalted position in American life is reflected in their incomes.

My central complaint is with the narrowness of their value system rather than the financial mechanisms. With a few important exceptions, the agents of capital operate with dedicated blindness to capital's collateral consequences, an indifference to the future of society even as they search for the future's returns. The capital system does not authorize financial agents to think about such things and may well penalize them if they do. Yet finance capital shapes and polices the "social contract" in America far more effectively than the government, which has largely retreated from that role.

The great contradiction--and the reason reform is possible--is that Wall Street works with other people's money, mainly the retirement savings of ordinary Americans whose values it ignores, whose common interests are often trampled. In fact, the huge fiduciary institutions holding this wealth own 60 percent of America's 1,000 largest corporations and yet are utterly passive as investors--meekly following the advice of banks and brokerages rather than asserting the true self-interests of the "beneficial owners." That is a central element of all that must be changed.

A transformation of Wall Street's core values is not only possible but eventually likely to occur, I predict. My optimism may seem incautious, but it starts from an appreciation of how dynamic capitalism evolves continuously from its own restless energies. Within the monolith of finance, some adventurous players are always experimenting with new methods and theories, trying to take profit from what the larger herd doesn't yet see or understand.

Organized labor is widely disparaged as a weak and anachronistic force in American life, but, in one important matter, the labor movement is the vanguard: determined to reposition the capital that effectively belongs to working Americans to serve the true interests of those workers and, therefore, society's long-term interests too. Labor may be greatly weakened from its heyday, but one thing it possesses is capital assets--the power of the $400 billion in union-managed pension funds and the trillions in public-employee pension funds, where labor unions can exercise real influence over the patterns of investment.

"It's very much a capitalist project; it's not socialist or revolutionary," says Ron Blackwell, head of the AFL-CIO's corporate affairs department. "It's a project to improve capitalism through direct intervention." Institutional investors, especially the pension funds, "are well designed to provide this important social value that we need--patient capital for long-term wealth creation," he says. "Instead, they are driving things down the low road, following the same destructive practices the capital markets favor. Our vision is to change that. Since it's our money, we would like to realign the private purpose of business, which is making money, with its broader social purpose, which is wealth creation, and to convince pension funds to recognize that real security for retirees requires wealth creation, not short-term gains." Wealth creation, as Keynes explained, means an economy that provides the material basis to support civilization--not the other way around.

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