Enron was not only a financial Ponzi scheme but an ethical one. The whole charade would have ended if one man or woman who knew or suspected the truth had stood up and said no, I will not be Enroned into silence. Even Sherron Watkins, the internal whistle-blower, said she did not go to the board with what she knew for fear of losing her job. She did, however, sell some of her Enron stock, getting off the ship before it sank with nary a whisper to the crew. And she was the best of the lot.

Why did no one stand up? Let's apply moral realism to the question, seeking not to forgive but to understand.

It is hard to stand up: our ethical Occam's Razor need cut no closer than that. How many of us have kept in our seats when the path of right lay up the hill, so clear but so difficult, before us? Unlike physical courage, writes one ethicist, moral courage is "lonely courage." Frank Serpico, the New York City policeman who exposed corruption in the department, was ostracized by his fellow officers, beaten, and nearly killed for his lonely courage.

Another reason people don't blow the whistle is that they would have to blow it on themselves. "The only way you get to know these things," says a social worker who has worked with whistleblowers, "is that you have been in the thick of it." J. Clifford Baxter, the Enron vice president who committed suicide in January, took his concerns about the partnerships to Skilling, was ignored, then, having made his feeble gesture, sold his stock for millions and retired. Whistleblowers, says the social worker, often "take on the guilt of the organization." The weight of Enron's guilt may have been too much for Baxter to bear.

Countervailing ethical demands also keep us from acting ethically. Ibsen's Dr. Stockman, in Enemy of the People, stands up to expose a public health scandal—and his righteousness destroys his family. Many of us would be moral lions if we did not have kids.

Then there is the "Everybody does it" defense. At Enron, pretty nearly everybody did do it. Over the last two years, while Enron was collapsing, almost 2,000 of its executives got $432 million in bonuses. One trader, on receiving a paltry $500,000, threw his computer screen across the trading floor. "Well, we've all got to drink the Kool-Aid," a top executive remarked after Lay, Skilling, and Fastow directed him to do a bogus deal. They got drunk on the Kool-Aid at Enron. It was a milieu of corruption.

It was also a milieu of rules-are-for wimps innovation. Enron was reinventing the energy market. Fleets of Porsches were in the garage and testosterone was in the air. As Marie Brenner reports in a must-read article in the current Vanity Fair, one vice president displayed a "hottie board," which ranked the women of Enron on their sexuality. When women complained, they were told, He is making us money. Leave him alone. Care for some Kool-Aid? "Every great business person has been in some way a rule breaker," writes the business historian Richard Tedlow. Yes, but some rules are duties, and some are laws. The ethical compass to tell the difference was broken at Enron. To succeed at business, says Warren Buffet, who should know, you need brains, energy, and character. No wonder Enron failed.

The Smithsonian has begun an Enron collection with two items: a coffee mug and an Enron ethics manual--almost certainly inviolate.