Steven Pearlstein makes some good points in his Washington Post column today on how and why American-style capitalism has broken down around the world.

From the Latin American debt crisis of the 1980s to the Asian financial crisis of the 1990s to the Internet craze at the turn of the century to today’s economic conflagration, the past 20 years have provided ample evidence that uncontrolled flows of private capital have created massive booms and busts that have overwhelmed the financial system and destabilized the global economy. The booms have misallocated capital, widened the gulf between rich and poor, and eroded the norms of behavior that had contributed to social and political harmony. The busts have brought financial hardship and ruin to innocent businesses and households and saddled governments with huge debts that will take generations to pay off…

American-style capitalism has been undermined by its own success. In its present incarnation, it rewards manipulation over innovation and speculation over genuine value creation, resulting in massive misallocations of capital and the accumulation of unheard-of wealth in the hands of money managers and top corporate executives who are more lucky than they are skilled.

While Pearlstein far overreaches in his first sentence here, the rest of this paragraph is right on:

No longer is it the entrepreneurial capitalism of Google and Amazon and Nucor Steel that animates the American imagination — it is the financial capitalism of Enron and Drexel Burnham Lambert, of Goldman Sachs and the Blackstone Group, of publicly traded real estate investment trusts and multibillion-dollar hedge funds. Here in the United States, they have sucked up a disproportionate share of talent and capital, distorted compensation systems, and helped to perpetuate the false notion that companies exist solely to enrich their investors and investment bankers. And now, through the marvels of global financial markets, they have spread their toxic culture and products to economies across the globe.

But though Pearlstein calls for a “new international capitalism”, he doesn’t give any examples of what that might be beyond a vague idea of new multilateral regulation.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.