Arguing against capitalism because of periodic recessions is like arguing against democracy because sometimes governments get voted out for poor performance.
One must also compare like with like. It is hypocritical and employing gross double standards to criticize "free markets" for not achieving the results implied by unrealistic theories of perfect competition, rational choice, and perpetual equilibrium; and then to assume that regulation will be carried out by diligent, impartial, omniscient philosopher-kings who only have the good of society at heart. Just read "No One Would Listen" or spend a week working in government if you actually believe any of that bullshit.
"Free markets" in the real world have problems of government interference, principal/agent incentive problems, special pleading/political capture, excessive short-termism, herding/groupthink behaviour, irrational attitudes to risk and reward etc. But societies with more powerful controlling governments have problems with the corruption of power, regulatory capture, institutional inertia, bureaucracy, complete lack of incentives to perform well, jobs for life, buggins turn, restrictions on originality and innovation, group-think, authoritarianism and eventually repression etc.
Take a look at the world's richest, safest, and most civilized countries. They all have broadly capitalist systems, governments own either zero or a limited amount of the means of production, and there is a relatively liberal attitude towards government (i.e. political pluralism). Take a look at all the socialist societies, let alone communist ones, that have been tried in the last 150 years. They all went bankrupt and became poor. Take a look at when some of the richest countries flirted with socialism in the 60s and 70s - the economy got fucked in places like the UK and USA when they veered left during that era. Even Sweden eventually concluded they had gone too far towards the statist model, and rejected that extreme after an economic disaster in the early 90s. Apparently a 1 year recession is sufficient to completely blind you to the lessons of history. What a spineless soul you are.
The recent fuckup was caused by the same things that cause almost every banking crisis - excessive leverage, the fragility of fractional reserve banking systems, groupthink, moral hazard and a blindness towards outlier risk. Apart from reducing leverage and/or going to full reserve banking (which has its own costs), there is not much one can do about the other problems, because they are inherent in human nature. Do you really think the same regulators who ignored the Stanford and Madoff frauds for a decade, despite being warned repeatedly and literally having it spelled out to them, the same regulators who were asleep at the wheel as the biggest housing bubble in history inflated right in front of them, despite being warned repeatedly about it, the same regulators who are in their jobs because they are so much more stupid and unimaginative than their peers in the private sector, are really going to spot these crises in advance, and then have the balls to poop the party when everything looks great? If you believe that, I have a bridge in Brooklyn to sell you. Take your utopian socialist fantasies some place where they won't destroy society and fuck up all our lives.
P.S. I love how you quote a capitalist-bashing book, but ignore the legions of well-researched, peer-reviewed writings on the problems of regulation, socialism, welfare state etc. In 1979 you would have been posting "do we need less state intrusion into our lives"? People like you are why we have these problems in the first place, just clueless short-termists who extrapolate the last 18 months out into eternity.
