Don't Give Up on Capitalism, Fix It

The capitalists will sell us the rope with which we will hang them.
-- Vladimir Ilyich Lenin

These fateful words, uttered nearly a century ago by one of the most notorious figures in world history, could not be more relevant today. As the entire world seems to be turning its back on capitalism, and with it the hard-fought prosperity that capitalism has built during the last 60 plus years since the end of World War II, this is an opportune time to reflect on why we have a capitalist system in the first place.

What are the practical alternatives to it, and what are the implications for investors if we continue to move away from capitalism?

At the most basic level, we have a capitalist system because, in the absence of using markets to determine economic outcomes, the only alternative is the barrel of a gun. This is historical fact. In any society that has turned its back on market forces, the results have been clear: poverty, tyranny and despair. ...