Is the global economic crisis a failure of capitalism?

Question

I am having a debate on the topic of "is the global economic crisis a failure of capitalism?", and i am on the pro side. Could you help me to give me some ideas, because i really have no idea.

Answer 1

There are only two failures in economics of capitalism or free market principle: 

1. market failure 

2. government failure. 

The crisis is just a boom and bust cycle that will happen in every 6 years in average. And the IMF is a helper as a last resort.

Answer 2

Yes. Definately.



There has been two crises in a century (don't forget 1929). The 1929 stock market crash put into place a global crisis that ended in World War 2.



The current financial crisis isn't over yet. There are millions starving across the globe. Even the so called 'rich' nations (Britain and America, to name just two) have a good percentage of their populous in poverty situations, mass unemployment, and under employed.



Democracy is silent. And capitalist gets richer. Go figure!



Is capitalism working ? Really?

Answer 3

Capitalism is prone to boom and bust cycles. Whether you choose to call this a failure, or the nature of the beast is a matter of opinion. 

But, if you are preparing for a debate it is a reasonable place to start: 

Why is capitalism prone to boom and bust cycles?...I am going to go with something derived from the Austrian school (but not entirely...) 

Fluctuations in investment spending are the primary driver of economic / market volatility. 

Investment decisions are informed by: 

rational expectations, reactive expectations, fear and greed. Information is imperfect. With this combination we get environments where some investments look better than others. When sentiment changes it changes quickly. This is instability. 

In the 2000's housing, (and housing related investments such as mortgages and mortgage derivatives) appeared to be both safe and profitable. Investment in these vehicles soared (you could say irrationally, but it seemed rational at the time). Soaring investment drove hiring in the construction and banking industries. When these vehicles started to appear less safe and less profitable, than previously imagined it triggered a massive reallocation in investment dollars. 

Result is massive market losses, retirements destroyed, companies put out of business and job losses. In the capitalist system job losses in one sector have reverberations to other sectors of the economy. 

I would also suggest looking up Hyman Minksy. He had some good (related) stuff as to why markets are inherently unstable.

Answer 4

Capitalism is as much to blame as the market influences that drive it. 

When we look at capitalism as a system its flawed, it assumes that everyone can accumulate the same equity and knows what to do with it once it has it. That's why the top 1percent are so rich. They have the financial knowledge to begin with. 

That doesn't mean that a system like socialism would have handled the crisis any better, it wouldn't have had to. The socialist tenent is all for all, not all for one... 

It might have ended up with a bankrupt economy though, just the same.

Answer 5

Definately not. This country was built on capitalism. Free interprise is part of capitalism and it has brought success to this country and made us the wealthiest country in the world. All that in a comparitively short amount of time.



In a non-capitalistic society there may be more equality as to wealth but it ends up being a poorer society in general usually.



Check the socialism societies , totalliarian, Marxist, communist governments against Capitalist societies. A Democracy is superior and part of what makes it that way is capitalism.



What would you consider an improvement ? Think about that. If capitalism is bad, what would you think is more perfect ?

Answer 6

You could argue that it is because of the modern, facsimile capitalism, with the govt. giving special subsidies, gifts and regulations to some companies or industries, which will inevitably lead to a weakening economy as failure is rewarded with bailouts (European banks) and success punished with monopoly charges(Microsoft). This is in opposition to laze-fair capitalism, in which the govt. stays out, letting the free market punish failure with lack of money and bankruptcy, and rewards success with more sales and growth.

Answer 7

NO BUT it has problems like all systems.



read "Capitalism in the 21st century by "Pickerty (sp) a best seller on economic theory and history

Answer 8

Without capital investment, no production, and without private capital and 

initiative , just rationing and waste, as has been seen in the alternative systems.

Answer 9

No it is a failure of crony capitalism and socialism. The two are intertwined and can not be separated