Are we all capitalists now?

While discussing with John Galt and Diane S here the shifts in our economic approach under Obama, I'll admit that he's been too free-spending for my tastes, and too ideological. I'm going to hope that he is a learner, just as Clinton was a learner who only balanced budgets after a little pushback from experience and from the opposition. If he doesn't learn, he may fail.

Meanwhile, though, the Financial Times, that great champion of global capitalism, is wrestling with what capitalism means in a world that is losing faith in free and unfettered free markets. Here is a great column by Amartya Sen, with some salient passages below about capitalist pioneer Adam Smith:

It is often overlooked that Smith did not take the pure market mechanism to be a free-standing performer of excellence, nor did he take the profit motive to be all that is needed...

People seek trade because of self-interest - nothing more is needed, as Smith discussed in a statement that has been quoted again and again explaining why bakers, brewers, butchers and consumers seek trade. However an economy needs other values and commitments such as mutual trust and confidence to work efficiently....

Despite all Smith did to explain and defend the constructive role of the market, he was deeply concerned about the incidence of poverty, illiteracy and relative deprivation that might remain despite a well-functioning market economy. He wanted institutional diversity and motivational variety, not monolithic markets and singular dominance of the profit motive. Smith was not only a defender of the role of the state in doing things that the market might fail to do, such as universal education and poverty relief (he also wanted greater freedom for the state-supported indigent than the Poor Laws of his day provided); he argued, in general, for institutional choices to fit the problems that arise rather than anchoring institutions to some fixed formula, such as leaving things to the market.

I quote this to point out that Adam Smith could easily be demonized as a socialist today by the talk-radio crowd.

And as I've noted before, Smith believed in a progressive tax, the very thing that is seen by many conservatives today as a violation of fundamental principles on which this nation was founded.

But I think that doesn't tell the whole story. Conservatives and even most libertarians aren't purists in a free-market ideology. I'd like to know where the conservatives on this board would draw the line in terms of some issues I'll post tomorrow.