The populist outrage over the AIG bonuses seems to illustrate the confusion about what capitalism is now.
At one point, capitalism was a contest between the worker and the capitalist. And the capitalist was a rich and powerful INDIVIDUAL. Carnegie or Rockefeller, for example, had power to dictate wages and prices. Investment depended on capitalist elites; work depended on the alienated proletariat.
But people angry about the AIG bonuses are not angry at the rich and powerful individuals. They are angry at knowledge workers and professionals who they suspect have abused their positions.
In today's world, it is the pension funds that direct investments. Powerful individuals have very little power compared with what they had decades ago.
The populist outrage against AIG is, oddly, the outrage of workers against workers. The AIG bonuses were given to knowledge workers – management and analysts – who manage the investments of (and insure) knowledge workers.
This whole mess is no longer a matter of class warfare between Marx's capitalists and workers. Class warfare that might be described by Marx has been replaced by the split personality of schizophrenia that might better be predicted by Freud. What was once fought in the social arena has become a battle over identity. Are these investments made on behalf of capitalists or labor?
The real lesson of Keynesian economics is to subordinate the goals of capital markets to the goals of the broader economy. Returns to capital - for instance - are made lower in order to stimulate employment and consumption. Obama and his advisers are of this school.
But it could be that once pension funds realize that they are themselves the tools of workers, they would do this themselves. It is one thing to run a pension fund in order to maximize returns to capital. It is another to run a pension fund to maximize returns to the workers that depend on the investment of capital to keep jobs and to become more productive. Once pension funds operate from this insight, they may well begin to manage their investments differently.
The problem may not be economic. It may simply be a matter of identity. It seems time that pension funds realized who they were and whose interests they really ought to take seriously.