Capitalism as a way to trade goods and services – which it is in it’s most basic form – works pretty well in certain situations. Just look in any school cafeteria. You will see goods and services traded like crazy. And if anyone tries to cheat the system, they are generally dealt with – usually on the play ground.
And in most societies and countries for a long time this was pretty much the case. Where it did break down, it was caused either by some unforeseen natural occurrence – crop failures and the like – or because a few people got greedy and these were eventually dealt with. Sometimes quite brutally.
In this country it worked pretty well up until the industrial age really got going. Capitalism works best when the need for a product and/or service pretty much is pretty much equal to the availability of the product and/or service. Such as is the case in mostly agrarian societies. Where even hard goods are made by hand with the producer making only what he/she can sell or trade.
The industrial age changed this equation significantly to where it was possible to produce much more than there was needed. This was the one primary causes of the depression of the 1930s. This is where capitalism – in it’s more pure form – is incompatible with industrialization. Too much austerity or too much greed and the whole thing comes unraveled. And contrary to what those with PHDs in business and economics like to believe, peoples behavior, beliefs, attitudes and politics skew the outcome one way or another making and downturn even worse than it would have been.
It’s a common belief that FDR’s policies, especially the new deal, brought us out of the depression of the 1930s. This is only partly true. WWII – which I would call The New Deal On Steroids – had more to do with it. Putting everyone to work and putting industry into high gear. Either fighting The Bad Guys™ or making that which was necessary to do so. I would also call the Cold War that followed, Harry Truman’s New Deal as it did nearly the same thing. Combine that with the space race and the need for housing and new technology etc.
Is it possible to return to these days of prosperity under the current capitalistic system ? Personally I would say no.
For one thing we now compete with the rest of the world for …….everything. And the rest of the world does not follow the same rules we do. Nor does it view the world, life and it’s interrelationships the same as we do. And it won’t no matter how many bombs we drop on it. Nor can we force people in this country to accept a way of life that the rest of the world has. Despite what our politicians think. Any attempt to do so would result in riots, rest assured.
I have read various suggestions from people on either side of the political spectrum and so far none of them are practical or even feasible, IMHO. Trade tariffs only result in trade wars and eventually shooting wars.
Forcing people to accept a lower standard of living here, would only result in even more economic contraction and eventually even more discontent and hostility and even revolt. Forcing the the manufacture of products for this country back onshore would make them even more expensive unless strict controls on prices and even wages were instituted. You would still have the problem of managing supply and demand such that neither would be greater than the other.
You can blame the bankers and financiers and what not all you like. But in short capitalism as we have it, simply does not work in the world as we have it today. Our current economic situation and the likely break up and failure of the Eurozone should be proof enough of that. Something else has to be used to take it’s place.