Don Pittis, senior producer of CBC News Business. As capitalism goes from failure to failure, there is a rising chorus saying that this is the time to replace a failed ideology.

The internet is full of people saying it. But of course, the internet is full of people saying just about everything. I found it far more interesting the other night when the conversation began heading the same way at a social gathering of middle-class professionals.

It is obvious that capitalism is broken. And this new mood shows that the shock of ever-rising unemployment, ever-falling GDP, and crashing property and stock values is finally starting to recalibrate people's understanding of what the market system can do for them.

In this there is hope.

Such a recalibration is essential if we are going to fix the capitalist system that has made the world richer. It is essential if we are going to preserve capitalism's reputation as a tool that serves us more than it hurts us.

No fairy-tale ending

Until recently, many people were waiting for a fairy-tale ending to the current debacle. It was fairy-tale thinking that, even after we knew about subprime mortgages and the bubble of credit derivatives, made markets resume their climb to their all-time record highs. Knowing what we know now, it is hard to believe that happened just this past summer.

Fairy-tale thinking says that the Goldilocks economy of two years ago (not too hot, not too cold, just right), will bounce back. U.S. house prices will soon resume their climb to unaffordable, oil and copper will once again be breaking new records, and stocks will soon regain their permanently high plateau. Retirees can go back to the golf course and all will be right with the world.

The good thing about this repeating cascade of bad news is that we are beginning to admit that fairy-tale economics is not the answer.

The speculative frenzy that overwhelmed our society is poison to the proper functioning of an economy.

And before we head off into some la-la land of wondrous new paradigms, we must get our heads around the idea that the only alternative to fairy-tale capitalism is real capitalism.

Markets are for raising capital, not for gambling. Commodities are produced because they are useful, not because their prices will rise forever. The purpose of banks is to take the stored value of your work (your savings) and lend it to people to produce things of value.

The purpose of creating value is to make more of what we need and make the world a better place. Otherwise, what's the point? We might as well all quit and play video games.

A certain amount of speculation is always present in real capitalism. A certain amount of self-interest is always necessary. But the speculative frenzy that overwhelmed our society is poison to the proper functioning of an economy.

Back to reality

The casino economy is a broken economy. The idea that you can buy oil stocks and houses on borrowed money and then sit back and live the life of the capitalist gentry just doesn't wash. The idea that we can give our money to banks, that they can lend many times that amount to hedge funds who will use it to make huge bets on rising stock and commodities, and that you and the banks and the billionaire hedge fund managers can watch their money grow like Jack's bean stalk, that's a fairy tale.

Putting down the storybook and realizing that you are back in real life can be painful. It certainly is painful for the people who gambled their retirement nest eggs on income trusts and stocks that they thought would rise by 10 per cent a year. It is certainly painful for the Canadians thrown out of work, and for the poor people who cannot afford food.

Sadly, the world's economy has not yet stopped shrinking. The poison left behind by the casino mentality has not yet washed out of the system. But as we are battered by wave after wave of bad news, there is a light at the end of the tunnel. Finally, the poisonous thinking that all of us — from bank presidents to Quebec pensioners — were on a free ride to capitalist heaven is being shaken.

And that, as Martha Stewart would say, is a good thing.

We must get back to work, we must put our money back to work. We must find the price of oil and copper that reflects a balance between long-term production and use. We must find a price for money that allows us to use it for good things that grow slowly, but not cheap enough to use it for reckless gambling. This is how markets and capitalism are supposed to serve us.

We must get rid of broken fairy-tale capitalism and put true capitalism back to work to make the world a better place. That way, maybe there'll be a happy ending after all.

Don Pittis has reported on business for Radio Hong Kong, the BBC and the CBC. He is senior producer of CBC News Business.