Capitalism has basically failed us — and capitalists have failed us even more so, says Vanguard Funds Founder John Bogle.

“I don't blame government for this,” Bogle told financial Web site Hemscott.com. “We have to learn to have a better capitalistic system.”

Capitalistic standards have lapsed, Bogle notes.

“Now the ethical standard seems to be if everybody else is doing it, I can do it too,” he says.

“Everybody else is doing these funny loans and having earnings grow faster, building up their margins, leveraging those margins … so our directors and the analysts on Wall Street say, boy, you better get on the bandwagon and follow.”

Bogle doesn’t consider today’s high government bank stakes nationalistic.

“If the government owns 35 percent of the bank, it's not their fault … they had to bail the bank out,” Bogle says.

“Frankly, other than the fiscal issues, I don't see any difference in having Washington, D.C., own 35 percent of Citibank than having Dubai own it except Dubai would drive a much harder bargain.”

Princeton professor and former Federal Reserve Vice Chairman Alan Blinder believes Washington really doesn't want to run companies like Citigroup or GM.

"It's in some real sense un-American; it's not the way we do things in the United States," Blinder told National Public Radio.

"We now have in America a bigger socialist sector, if you want to call it that, than we've had in a very long time — maybe ever. But the government definitely wants to get out of these businesses."