Greed is big news right now. The week before last, Congress held a hearing on the long-percolating issue of CEO pay. Then last week, the Vatican's second in command included "obscene wealth" in the 21st century's addendum to the Seven Deadly Sins.

With the economy floundering, and the bear market growling at the door, a crisis in confidence probably makes many people look at capitalism look like a diabolical thief in the night. What's a free marketeer to think?

Those Congressional hearings involved three of the most recent corporate bad boys -- Countrywide Financial's Angelo Mozilo, Merrill Lynch's Stan O'Neal, and Citigroup's (NYSE: C) Chuck Prince. They've all been shown the door at their respective companies, over recent high-profile problems that exemplify our current economic debacle.

All three have been compensated richly for their troubles, too -- particularly for leaving. Not surprisingly, they've defended themselves by citing years of shareholder returns that they generated during their tenures. But that defense is a head-scratcher, since their companies have rapidly vaporized shareholder value and capital in the past year or so.

Pointing fingers is always easy, but it's more difficult to acknowledge that the problems may also lie closer to home.   

Greedy or giving? You might be surprised.
I fear that in our years of excess, many of our capitalistic comrades have forgotten the key to free-market capitalism: a solid grasp on ethics. With all due respect to the Vatican, I don't believe "wealth" is the core of our crisis. After all, it's said that the love of money, not money itself, is the root of all evil. The way I see it, avarice and envy in themselves seem plenty sufficient to explain many of our ills.

It's easy to feel like we're in a state of crisis right now, and not just because of the super-rich CEOs who screw up their companies, jerk around their shareholders, and rake in millions for their efforts. Consider the Center on Philanthropic Panel Study, which showed that the working poor are actually the most charitable among us on a per capita basis. Of people in the survey who felt they couldn't give, the most common reason was that they couldn't afford to. Yet households that bring in less than $20,000 donated 4.6% of their income to charity, while those bringing in $50,000 to $100,000 donated 2.5% or less of theirs.

Now, of those higher-income, "can't-afford-it" survey respondents, how many really could afford to scramble to keep up with the Joneses? It's none of my business how other people spend their money, but I'm betting there's some irony in what many in this bracket consider "affordable." We've all heard the stories of people living in homes they can't afford, and that tale it working its way into higher and higher income groups. Balloon loans on McMansions and leased luxury cars spring to mind. In short, there's been plenty of illusion to go around.

Of course, acquiring wealth doesn't have to cause dire consequences. Many would consider Berkshire Hathaway's (NYSE: BRK-A) (NYSE: BRK-B) Warren Buffett and Microsoft's (Nasdaq: MSFT) Bill Gates "obscenely" wealthy, yet both devote significant portions of their wealth to charitable giving. Many companies are trying to find for-profit ways to do the same. Whole Foods Market (Nasdaq: WFMI) has made many socially progressive and environmental factors part of its mission, and Google (Nasdaq: GOOG) makes similar overtures, including a for-profit philanthropic arm. 

Check yourself before you wreck yourself
Around this time last year, I wrote several diatribes about cuckoo CEO compensation. In one, I argued that the shareholder-unfriendly compensation policies of some companies would have serious consequences, such as calls for government scrutiny and regulation of such "wealth."

Now, here we are, and things have worsened. Capitalism is getting a pretty rotten rap, and critics have ample ammunition. For the record, I don't believe capitalism is rotten at all. I think it holds great power for good when its participants -- all of them, and not just the alleged bad guys -- behave ethically, leaving their avarice and envy at the door. I certainly don't believe that government regulation of these issues will turn out well, however much times like these make my argument more difficult.

As shareholders, we need to support common-sense reforms that encourage moderation, such as "say on pay" policies. We should push for well-run companies that strive to do their jobs well, instead of accepting shoddy short-term routes to short-term gains. And we need to hold our companies -- and their boards of directors -- to the highest of standards, and not just wait until the stock price has tanked. After all, "everything's fine until I lose money" isn't good long-term strategy.

In my opinion, it's not wealth that's the problem, it's us. That's not to say we don't have the free will to turn things around, though. There's something to be said for the saying "You'd better check yourself before you wreck yourself." I believe in the power of the capitalist system, but even the best system requires the occasional reality check. That's exactly what we all appear to be getting right now.