Did you know that this crisis "will fundamentally alter the nature of capitalism"? Hey. Those aren’t my words. They’re those of David Dodge, former Bank of Canada governor, who said this mouthful and more over the last week. And he should know.

He’s one of the people doing the reinventing. In fact, he’s just become co-chair of one of the planet’s most high-powered committees to change the world, struck by the modestly named Institute of International Finance, but don’t be fooled. Members include most of the globe’s largest commercial and investment banks, and they pride themselves on their unmatched international political pull.

As we head to a momentous G20 Summit next Thursday, April 2, these financial foxes are going to have a lot of say about how the banking hen house gets rebuilt. Cynicism is definitely called for. But it is one of the many paradoxes of our time that the ethical and financial fissures exposed by the meltdown and the implications of trooping out the tax-payers to fix it up are bringing some of capitalism’s best minds into a surprisingly pro-social stance.

Take Dodge. He got that plum international appointment in part because he can claim some credit for many of the kudos earned by the Canadian financial regulation system. He was also Paul Martin’s deputy finance minister in 1998, when Martin introduced his infamous deficit-slashing budget.

But Stephen Harper’s half-hearted new-neo-con approach makes Dodge look like a wild-eyed radical.

Here we are, on our way to another monumentally important international political gathering, represented by a government leader so inadequate that the Bank of Canada’s former governor, only one year out of office, is calling him out.

It’s weirdly heartening in these bad times to see how much progressives have in common with what Dodge City would marshal to our economic cause right now. Listen up, Harper.

Beefing up EI

Augmenting unemployment insurance was at the top of the list he spilled to the Globe and Mail last week. Dodge says extending the duration of unemployment insurance as job one to bridge the difficult road to recovery.

Long view for infrastructure

Dodge is no fan of Harper’s quick in-and-out approach. He says it’s a great time for a long-term urban infrastructure plan that would unfold over three to four years "rather than piss money down a rathole" in a short-sighted spending frenzy. I think you can safely assume that a $3 billion slush fund to be spent in the next six months is pretty much the epitome of a rathole.

No to matching funds

Everyone but Jim Flaherty and Harper seems to have noticed that the recession puts the provinces in an impossible cash crunch. It’s great that Dalton McGuinty has doubled the child tax credit and plans to unleash some extra deficit billions in Thursday’s budget, but how much can provincial coffers provide when there are fewer tax dollars and peak demands on welfare and education needs?

Here’s Dodge on Flaherty’s insistence on matching funds: "To think you pay for half of it only and it will get done is a bit of a stretch."

Yes to deficit

Not a problem, says former deficit slayer Dodge. It’s affordable and preferable for several years out, and when recovery comes, "A little bit of tax here and there would do it." For those who like to project their worries about the present onto anxiety about the future, this is reassuring.

Oil sands contraction

Suncor and Petro-Canada may be dancing a jig over their beefy merger this week, but Dodge’s economic forecast calls for a sober reassessment of investment in the tar sands. Why? Though our big party leaders are in denial, I’m sure Dodge, as a player on the international scene, gets it that Europe, the U.S. and others are heading into the G20 Summit with plans to make a big counter-investment in a low-carbon global future.

Financial regulation

Here’s some strong stuff from a fellow who’s been given the job of developing an early warning system for systemic risks in global finance. Dodge says we can learn a lot from China when it comes to controlling capital markets — not the other way around. That is radical. China has huge restrictions on the movement of foreign capital.

But while it is good to know that some in the financial community are responding to this crisis with a strong commitment to a new regime of regulation, of course, there’s a catch. We need to go much deeper. If you’ve been combing through the reports, you’ll have seen that the holy grail of finance remains a new "financial stability."

That just does not address the moral hazard that our current crisis has uncovered in a financial system that recklessly eschews any end but higher yield. Ours is a new world where social investors, also known as taxpayers, are investing heavily in the global money system. And by the rules, we deserve to reap pro-social as well as economic rewards in return for our abundant support.

From 1998 to 2007, Canada’s top 100 CEOs’ pay went from 104 times the pay of the average worker to 259 times, according to Armine Yalnizyan of the Canadian Centre for Policy Alternatives. This is bad for people and market growth. We need more than financial stability. We need an ethical financial sector whose commitment to shared prosperity equals its desire for stability.

The ethical blinders are most obvious around the bonus scandal. But it is much bigger. We’re in the midst of a crisis of compensation. Please don’t think it’s just AIG’s million-dollar payouts to failed managers that have exposed the fundamental lack of values from Wall Street to Bay Street and beyond. The list is huge, and of course right here, in the corporate sector, Nortel is handing out $22 million in bonuses for work in a company that is now in bankruptcy protection and has nixed severance obligations to laid-off employees. Funny how all this comes at the same time as corporate auto goes at the CAW to roll back worker wages.

How real will the financial sector get about renegotiating its own hazardous pay system?