"THERE ARE business scandals that are so vast and so penetrating that they profoundly shock our most deeply held beliefs about the honesty and integrity of our corporate culture. Enron Corp. is one of them. This financial disaster goes far beyond the failure of one big company. This is corruption on a massive scale."

So began a recent Business Week magazine essay on the unfolding Enron scandal. Strong words for one of the country's leading mouthpieces for big business. But they're actually an understatement.

The Enron scandal is shocking--but it also exposes the truth about "corporate culture," and not just at Enron. It shows that "honesty and integrity" are meaningless terms when applied to the people who run companies like Enron--people who will sacrifice almost anything or anyone in their drive for profits and power.

Because Enron crashed and burned, we're seeing the ugly facts about how capitalism really works. Nowhere is this clearer than in the different fates of Enron executives and the company's workers. "Tremendous harm has befallen innocent employees who have seen their retirement savings disappear as a few at the top cashed out," Business Week solemnly stated.

True enough. Enron's top 29 executives and directors sold $1.1 billion in stock in the years leading up to the company's bankruptcy--while workers, whose retirement savings in Enron stock were locked in when share prices started to plunge, lost an estimated $1.3 billion.

But no one could seriously claim that the Enron bosses' "get rich at any cost" attitude is unique--not after the 1990s "miracle" economy.

Compensation for top executives reached into the stratosphere--until the difference between CEO pay and average factory workers' wages increased tenfold to 531 to 1. Some of the biggest rewards went to the nastiest bosses--those most willing to make sure that their companies were profitable, no matter what the cost.

For example, the Institute for Policy Studies and United for a Fair Economy last year studied 52 U.S. companies that laid off more than 1,000 workers and found that their CEOs raked in an average of $23.7 million--almost double the average for CEO compensation in Business Week's annual survey. One year's pay for one of these CEOs could have covered the average factory worker's wage for nearly 800 of the people they kicked out of a job.

So if Enron CEO Kenneth Lay goes to jail, it probably won't be because he screwed workers over--or he'd have a lot of company.

Actually, most of the federal investigations revolve around the company's shady accounting practices. Essentially, Enron created an incredibly complex corporate structure that allowed management to hide losses and debts--so that the company's bottom line continued to look healthy to admiring Wall Street analysts.

Experts are still trying to unravel the books, but Enron apparently had some 3,500 subsidiaries--including nearly 900 located overseas in tax havens like the Cayman Islands, allowing Enron to get away with paying no taxes at all in four of the last five years. But none of this is necessarily a crime.

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ONE OF the trends in Corporate America in the 1990s was the growing use of accounting tricks--all designed to understate losses and pump up earnings statements.

More importantly, though, financial trickery isn't the main reason for Enron's collapse. It's the other way around--the company's growing problems caused by the recession led to the exposure of Enron's accounting frauds.

Enron's core business was wholesale trading of natural gas and electricity. Basically, it was a huge middleman in new markets created by deregulation, buying low from companies that drilled for natural gas or generated electrical power, and selling higher to companies that provided these to consumers.

But in the late 1990s, the company tried to duplicate its success in many other markets--all the while gambling heavily on complex financial investments called "derivatives." This was an increasingly flimsy house of cards balanced on the success of Enron's energy business.

At the end of the decade, the company sank more than $1 billion into an effort to trade access to Internet "bandwidth"--that is, the fiber optic network backbone that allows people to send e-mail and surf the Web.

But Enron jumped in just as the Internet bubble was bursting. Investments to build fiber optic networks had run far ahead of what was actually needed--one estimate found that only 3 percent of fiber optic capacity was in use.

With demand far lower than supply, prices dropped, and Enron took a huge loss. At the same time, the recession caused a drop in natural gas prices, impacting the company's energy business.

Eventually, Enron had only losses to hide, and no earnings to show off. The company's stock price dropped, which led banks to ask questions about the cooked books, which led to still lower stock prices, and so on. The spiral toward bankruptcy had begun.

Just as it ruthlessly exploited free-market principles on the way up, Enron was a victim of the chaotic logic of the free market on the way down.

Booms and slumps are part of the nature of the capitalist economy. Different companies compete with each other to dominate, making big investments in the hopes of making the most profit and pushing out the others.

But at a certain point, the market gets saturated. There are simply too many products being produced for all of the companies to make a decent profit.

From headlong expansion fueled by new investment, companies suddenly face the choice of cutting back or going under. Those that are most overextended--like Enron--go belly-up. But more survive--by making workers pay the price through layoffs, plant closures and so on.

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MORE THAN 150 years ago, Karl Marx recognized the tendency of capitalism to suffer regular crises of "overproduction" caused by the upside-down priorities of a system that puts profit first.

"So long as the most urgent needs of a large part of society are not satisfied, or only the most immediate needs are satisfied," Marx wrote, "there can of course be absolutely no talk of an overproduction of products--in the sense that the amount of products is excessive in relation to the need for them. On the contrary, it must be said that on the basis of capitalist production, there is constant underproduction in this sense. The limits to production are set by the profit of the capitalist and in no way by the needs of the [workers]."

In a rational world, everyone would be involved in the process of deciding what society needs--and in planning how to use our resources and technology to produce this. Instead of a system that wastes hundreds of billions on guns and bombs, we would have a system dedicated to making sure that every single person had enough food to eat, a roof over their head, an efficient and environmentally sound transportation system and the best health care we could provide.

That's what a socialist society would be--a society organized around meeting people's needs, not around the profits of a few.

The Enron scandal has produced calls for changes in the way that the capitalist system operates--maybe more honest accounting practices or ways to protect workers' retirement savings. But no proposal from Washington--which helped Enron's rapid rise in return for campaign contributions--will change the priorities of capitalist society.

That's why, in addition to the day-to-day fights that we're involved in, we need to organize a larger struggle as well--for a different world altogether. We need a socialist society, where the vast majority of working people take away the power of a handful of rulers to impose misery and suffering--and create a new world where their crimes are never known again.

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