Is It Rational To Believe that Global Capitalism Isn't Completely Corrupt?

I know a lot of folks think that free markets are the key to social, political, and economic structural stability, growth, and fairness.  But in light of so many recent revelations about how things really work at the institutions in the marketplace, can that view be rationally supported anymore?

I am not one for conspiracy theories.  Occam's razor generally leads one to prefer explanations involving incompetence or individual malfeasance over larger, complex, well-orchestrated wrong-doing.  But there does seem to be some significant differences in the case of contemporary, global, corporate capitalism.  First, you have a small number of central institutions and functions that require the working of a small number of major actors.  Second, there is an almost complete lack of transparency in these dealings that arise both from secrecy and from technical complexity.  Third, the players in the game are there with the sole aim of maximizing their own profits, that is, they have incentive to cheat from their very reason for being.  Finally, the rules that are supposed to keep them in line and the referees who are supposed to enforce them are controlled by politicians who have a stake in not seeing the rules enforced.

The Libor scandal that is just breaking will be huge.  We have seen Barclay's nailed, but for any real interest rate fixing to have occurred, it would have taken collusion with several other banks -- a number of which we know are currently under investigation.  As I've been following this, it reminded me of a recent Matt Taibbi piece, The Scam Wall Street Learned from the Mafia, chronicling the case of United States of America v. Carollo, Goldberg and Grimm.

In most cases, towns and cities, called issuers, are legally required to submit their bonds to a competitive auction of at least three banks, called providers. The scam Wall Street cooked up to beat this fair-market system was to devise phony auctions. Instead of submitting competitive bids and letting the highest rate win, providers like Chase, Bank of America and GE secretly divvied up the business of all the different cities and towns that came to Wall Street to borrow money. One company would be allowed to "win" the bid on an elementary school, the second would be handed a hospital, the third a hockey rink, and so on.

How did they rig the auctions? Simple: By bribing the auctioneers, those middlemen brokers hired to ensure the town got the best possible interest rate the market could offer. Instead of holding honest auctions in which none of the parties knew the size of one another's bids, the broker would tell the pre­arranged "winner" what the other two bids were, allowing the bank to lower its offer and come in with an interest rate just high enough to "beat" its supposed competitors. This simple but effective cheat – telling the winner what its rivals had bid – was called giving them a "last look." The winning bank would then reward the broker by providing it with kickbacks disguised as "fees" for swap deals that the brokers weren't even involved in.

The end result of this (at least) decade-long conspiracy was that towns and cities systematically lost, while banks and brokers won big. By shaving tiny fractions of a percent off their winning bids, the banks pocketed fantastic sums over the life of these multimillion-dollar bond deals. Lowering a bid by just one-100th of a percent, called a basis point, could cheat a town out of tens of thousands of dollars it would otherwise have earned on its bond deposits.

We have a financial structure in which big money transactions have to go through a set of fixed convoluted routes shepherded by financial overseers whose only interest is making as much as possible. If honest competition among the players is supposed to be what keeps them legitimate and protects us and our money from them, then they have every reason in the world to try to undermine that competition when we aren't looking and the system is created so we can't see much.

Is it the view that the central institutions and functions underlying our financial system are rigged in favor of big banks and investors like believing that the Jews and the Masons control the world or is it more rational than that? Do the continuous scandals make it rational or would it have been justified to believe before they broke?