I like the Keynes quote about capitalism that ends Midcan's post. Astounding, yes. Ironic, you betcha. But it works better than any other, doesn't it? I'm genuinely asking.
So that quote is one that comes up in many an economist's formal training, most often early in it. It does, because taken in isolation, the quote is satirically hilarious and at the same time captures the omnipresent three way "tug of war" among positive economics' straightforward, well tested,and readily understood and applied laws and principles, moral philosophy's notions about socioeconomic justice, and the humanity's general disregard of the better ideas of both.
As for your question, capitalism is a system for which there is a right and wrong time and place. The same can be said of other economic systems as well. The thing that makes capitalism "better" than it's competing economic systems is that capitalism is compatible with a variety of political systems whereas it's opposite on the economic continuum, command economy, is not at all. Capitalism's flexibility is what makes it best.
Capitalism is indeed best when the people living in that system are well educated, well informed, thus able to make responsible/rational choices and they do indeed so choose. It's not essential that the whole of the polity have those traits; only the ones empowered to make decisions need to have them, but it helps if more rather than fewer people at least feel thus (sufficiently) empowered, regardless of whether they actually are.
Where capitalism is not best is where (when) the people in question aren't informed/educated enough to make rational decisions. You see, though people are given to say X or Y is subjective, positive economics rarely cannot identify what is the most rational economic choice and how that choice compares to the alternatives in terms of maximizing utility and profits. People must, however, know what positive economics shows is the most economically rational choice, and they must know how the relevant factors affect the outcome. Well, if people just "go with their guts" on such matters, sometimes they'll be right and sometimes they won't. In short, the more perfect the information, the better capitalism will be for the situation in question.
For example, the models of how supply and demand interact are different in capitalism under perfect competition than they are under monopolistic competition. An individual who knows of neither model may guess right and come out okay, but that's not rational decision making. An individual who knows only the perfect competition model and applies it to his monopolistic competition situation will likely flounder and fail, unless he's lucky.
With that in mind, one need only look to mid-20th century China and the nature and extent of the general public's educational levels and access to information. Even if left to make choices under capitalism, the people would have blundered left and right because they simply didn't have access to the information needed to make a rational economic decision. Oh, they'd have been doing the best they could with the information they had, no doubt about that. The problem comes in when one realises that the facts of a situation are the facts, regardless of whether all the actors involved know of them and their extant implications.
In capitalism, firms and individuals' success depends on their opting for one the top rational choices that can be made, even if not the most rational choice. If under capitalism one makes the most rational decision one can and that election is not among the most rational choices, success is far less likely. Where information dissemination is grossly imperfect, so too is capitalism. Command economics are better when external factors make distributing information pointless. We don't water dead plants.
Aside:
IIRC, the quote has been attributed to Keynes; however, I don't believe there's been any concrete evidence he actually said or wrote that. A similar remark has been found in
Robinson's early 1940s discussion of monopoly. (
Monopoly : by E. A. G. Robinson ; with an introduction by C.W. Gulliebaud. - Version details)
The great merit of the capitalist system, it has been said, is that it succeeds in using the nastiest motives of nasty people for the ultimate benefit of society.
The version that
midcan5 shared is from a 1950s text about Christianity and business and the specific context for the statement was with regard
who decides which leaders have "good" character? You? Me? I believe you and I differ on Hillary's character, but I freely admit that is a personal reaction after watching her over the years. Many "believe" in Trump's good character, same as you and I don't. It is a highly subjective concept
What be good character is not subjective. We all know it when we see it. It may be hard to put our finger on it and define it in a few sentences but we know whom among us doesn't give us pause about their intentions and who does. The people who "held their noses" and voted for Trump knew quite well that he is not a man of good character.
The question in my mind is why they didn't just write in the name of someone whom they felt is of good character. It is the pervasive and pragmatic acquiescence to depravity that is a civilization's doom. Had the electorate been of sufficiently good character overall, we'd have neither Trump nor Clinton in the WH right now. Quite simply, when society becomes overrun, as it appears we are now, with individuals who are just too chickensh*t to subordinate petty politics to good character, we are doomed.
