Even before the dust settled on the Enron eruption—the biggest bankruptcy in American history—regulators, legislators, and prosecutors were sifting through the rubble seeking an explanation for such a massive ethical collapse. How could the auditors be so negligent? Is there no way to safeguard against this in the future? What new regulations are needed?

These are important questions. But the most crucial questions are ones secular observers may be unwilling to ask: Is Enron merely a symptom of something deeply wrong with our society? Has value-free postmodernity, the fruit of modern secularism, undermined the moral foundation essential for democratic capitalism? After the Western model of free markets has won the great ideological contest of the 20th century, for it to implode here would be the supreme irony.

We can't say we weren't warned. A decade ago, the eminent theologian Michael Novak argued that Western liberal democracy is like a three-legged stool. Political freedom is the first leg, economic freedom the second, and moral responsibility the third. Weaken any leg, and the stool topples.

Enron's collapse exposes a decayed third leg. Enron was not some sleazy, backroom bucket shop, mind you; it involved the best and brightest, pillars of the community. Enron Chairman Kenneth Lay boasted that he hired only graduates of the top business schools—Harvard and Wharton.

But perhaps we shouldn't be surprised. In the late '80s, a friend of mine gave $20 million to Harvard Business School to teach ethics. I argued, somewhat impertinently, that Harvard couldn't teach ethics because it was committed to philosophical relativism. Irritated Harvard trustees invited me to give a lecture at the business school, which I provocatively titled ...