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The U.S. economy, as are most developed economies, is a mixture of public and private producers of goods and services. Capitalism is an economic system wherein production of goods and services are all privately held, and in a socialist system, production is in the hands of the public, either through their government or through some other form of collective ownership.
In the 20th century, after the Great Depression, the U.S. enacted several reforms to our economy. These reforms regulated our banking system, provided public insurance for the elderly and the unemployed, broke up monopolistic trusts, mandated collective bargaining with unions, ensured that the elderly had healthcare, and many, many other reforms. These reforms, and others, created the largest middle class in American history, and this middle class allowed our economy to have steady growth for years without a financial crisis.
The problems with our economy started with the Reagan revolution in the 1980s who told us that if we de-regulated business and cut taxes on the wealthy, then we'd all get rich. What really happened is that a very small number of us, most of whom were already rich, got even richer, and the rest of us had to borrow more and more just to have the lifestyle that our parents had. Our economy has gotten so skewed that we've returned to the boom and bust cycles that lead to the Great Depression.
I say all of this so that we can debate our economy on the basis of truth. Capitalism did not cause our current problems because we don't live in a purely capitalist society. What caused this problem is that we've allowed a small group of people to completely skew our political system so much so that it is incapable of writing and enacting legislation that balances the interest of the people against the economically powerful. It's vital to the argument to make this distinction because there were public institutions involved in the financial crisis as well as private ones. (See Fannie and Freddie.)
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