How Sustainable is Capitalism?

When I told my communist father that I was pursing an economics major he sent me a cardboard cutout of Karl Marx in the mail. I now hang this cut out next to my desk. In the past two weeks I swear the grin on Marx’s face has gotten bigger and the hammer he holds in his hand has slowly started lowering, ready at any moment to crush capitalism. With the massive nationalization of our nationals lending firms that has taken place it is very tempting to get out my dusty copy of the Manifesto and think about how Marx saw it all coming. Reading everyday about the billions of dollars governments and companies are throwing in vain to prevent a wider economic collapse one has to wonder how sustainable this system is.
Last year I visited the Stanford Business School and wandered into a lecture where the vice-president of Barclays, the British version of Bank of America, was giving a talk. In his talk he was asked about the mortgage crisis that was only beginning to emerge. People, especially in San Francisco which is next to Stanford, had begun realizing that the speculative prices they had paid for their homes would never pay off and were beginning to default on their loans, leading directly to last week in which the companies that offered all these loans are going bankrupt themselves. In his talk the vice-president told the audience of how this mortgage crisis was a much bigger deal than anything he had ever seen before and that it would make the completely trump the economic recession we saw after the dot com bubble burst. He went on to say that this was a problem, which he had seen before and was confident he would see again. Investment firms are in the business of creating markets based on speculation.
To often we think of sustainability only in terms of the environment but creating a sustainable economy is just as important. Throughout all of our lives we have been lucky to live in times of prosperity however we must also keep in mind how fragile this prosperity is. Our economic growth is largely the result of other countries willingness to shoulder our debt. What will happen when these countries decide we are too risky of an investment?
Since the government is working overtime to print new currency to buy up these firms we will be facing higher inflation for a long time to come, this will make finding jobs and even buying food more difficult. While I don't think the market collapse of the last few weeks proves the need for a communist revolution (just yet) it should make us at least give pause and maybe consider whether this is the best way to do things.