Why is Capitalism failing in the USA?

[Snowcat]

As another answer pointed out, capitalism is not a form of government. The US has a democratic republic as its government. Capitalism is an economic system based on profits flowing to the owners of capital and with most capital being in private control. We do not have a purely capitalistic system as there are areas of government involvement in the economy. Some government involvement improves the market/capitalistic system by providing for fair competition, equal regulation so that good companies don't have to compete with bad ones in an unfair way. Government also provides a framework for currency and financial transactions. We have had periods of less government involvement, but have chosen through democratic means to have more. I think this is partly due to the increasing complexity of the society and the complex market system that creates winners and losers. Since we don't always approve of the outcome, we involve the government. The current state of the economy is typical of the cycles found in capitalistic systems. The boom/bust cycle was even more ruinous when we had less government regulation in the 1800s. I'm not sure if the answer now lies with more government or less government, my guess is that a certain amount of regulation of the financial sector could have prevented the worst abuses that helped to make this last recession worse.