As bank shares plunge to new lows around the world, it seems we have entered the next stage of the financial crisis -- most likely the last chapter in this horror story. The final word will probably be nationalization of the major financial institutions in the United States and the United Kingdom and in many other countries.

How has it come to this? The global credit crisis and the ensuing economic slump we are now entering have both ultimate and proximate causes. The ultimate cause was the ingrained social behavior of the...