I recently raged against John Gray's answer to this question and I've been planning to blog it myself Any Day Now for far too long. Several heroes answered (including Gary Kasparov). See here, here and here for Tyler Cowen, Will Wilkinson and Tim Harford's answers.
No hero gets it wrong, but only Will gets it really right. Tyler and Tim argue that places with free, well functioning markets are the ones with the high levels of trust and cooperation and low levels of corruption. These qualities are moral ones, so it doesn't look like the free market has corroded them.All very fine, but if we agree that loyalty to your in group is more of a virtue when Nazi's are trying to kill you and less of one if you live in the EU, we should accept that what counts as moral behaviour changes as circumstances change. A free market produces a huge amount of social change and our moral norms should change accordingly. To people who prefer the good old days, this will obviously look like moral debasement. And it's true that a moral character will be degraded which is what the question asks about, but this is a good thing!
Creating a better moral character sometimes means what used to pass for moral character must be corroded.