Capitalism is an extremely controversial subject. Some in the counterculture movement reject it entirely, others ask for modified versions of Capitalism, whether that be Keynesian or Friedman-based, or any other version. However, most agree that Modern Capitalism stems from a consequential work by Adam Smith known as The Wealth of Nations.
The first sentence of the text is, “The greatest improvements in the productive powers of labour, and the greater part of the skill, dexterity, and judgment, with which it is anywhere directed, or applied, seem to have been the effects of the division of labour.” While the sentence by itself sounds rather inauspicious, the consequences of this idea has roots all the way back to the creation of man itself, as well as conflicting with various other ideologies. For example, Marx argues that the division of labor is morally repugnant, as it reduces man to a mere automaton. Alternatively, Smith argues that his tenet of labor division is one of the most fundamental in Capitalism, where if each person works in one area, the factory as a whole is productive and efficient.
Free-Market Capitalism is undoubtedly the most efficient system, however one must take into consideration that efficiency does not guarantee prosperity. Income Inequality is endemic to capitalism, there will always be those who have and those who have not, this is human nature, however the problem arises in that capitalism allows the more prosperous to stifle the less prosperous, by creating monopolies and ending competitive market forces. A prime example of this is how Standard Oil had such monopoly in the industry that they were able to raise and lower prices with impunity. In addition, the boom and busts in capitalism create instability and volatility, which spoils consumer confidence and the wages of ordinary people.
What is the solution to this, if there is one? One must maximize efficiency, while enabling competition, and ensuring that those on the bottom are able to succeed. The truth is that there is no perfect system. There are problems with every economic theory, Communism leads to bureaucracy and inefficiency, as well as cronyism and autocracy, while a purely free-market capitalist system leads to a corporate state, and the destruction of morality in the name of profit. Combining the socialist model with the capitalist model is clearly superior. Out of all of the economists, John Maynard Keynes came the closest. Keynesian Economic Theory led to the prosperity of the 1950’s and 1960’s, however reactionary elements spoiled this prosperity, and allowed the United States to enter a quagmire of depression, monopoly, and anti-democracy. This Keynesian Model could be improved upon by defunding the military-industrial complex, and rejecting the influence of money in politics. This will give the United States hundreds of billions in revenue, which can be used to empower ordinary Americans.
In conclusion, capitalism is the most efficient economic theory, however the moral and environmental side effects hurt sustainability in the long term. The best model would be a combination of socialism and capitalism, the closest of which could be the Nordic Model, or the Slovenian Model.