capitalism is a complex socio-politico-economic system. As in any other system, mechanical or social, failure modes follow certain models. In order to understand the nature of failure or to detect a failure once it occurs, it is very important to understand the model in which failures occur and manifest themselves. One of the most general models used for describing system failures is depicted in figure 2. At the core design of the system, there could be one or more defects or faults. These faults, if detected in the early stages of the system development, are removed and/or fixed. If a fault remains in the system due to oversight by the designers or lack of complete knowledge, it becomes a dormant fault. A dormant fault will not do any harm to the system until it gets excited or provoked by a trigger. A trigger is a certain condition or environment which provokes or excites a certain fault in the system. In physical systems, dormant faults are uncovered and detected through extensive testing which exposes the system to all types of conditions and environments. Unfortunately, social-political-economic systems cannot be tested in a lab! Therefore, dormant faults in such systems can only be exposed when the system is actually implemented and practiced over a long period of time and the proper conditions occur at a given time within a given environment. Once a fault is triggered, the system will experience an error which causes the system to deviate from its normal behavior. An error can lead to complete system failure if not contained and isolated in due time. The failure of the system renders the system unable to provide its main functions or achieve its objectives.

As an example, think of a weak spot in the design of a house basement as the defect or fault. The weak spot is where excessive water due to rain or floods can penetrate the house. The triggering condition for this fault is too much rain in a short period of time. The flow of water into the house through the basement is the error, because in normal circumstances water should not come into the house. This error (water in the house) can be detected by people living in the house or some monitoring device. This is how the error is identified and isolated. To contain the error such that it does not lead to damage, a water pump is used to remove the excess water from the basement and push it outside. If there is no water pump, or the pump fails to kick in for some reason, the error will not be contained and the floodwater persists in the house. This may lead to serious damages, including the collapse of the house.

This failure model is very common in our life. A weak heart or partially blocked arteries or defective lungs or unhealthy kidneys cause all types of sicknesses and pains, which if not treated and contained in due time may lead to death. Mechanical defects in our cars (leaky parts, unbalanced wheels, irregular electric voltage) can cause all types of problems in the car which can lead to total damage of the vehicle or even to catastrophic accidents.

The political, economic, and social systems are not much different. All systems may have defects and dormant faults. It is more difficult to diagnose and define these faults and detect than it is in physical systems. Part of the problem of the analysis is the fact that political, economic, and social systems are usually supported by people with strong convictions and sometimes by people with power and authority. While the Soviet Union was well and powerful, it was almost impossible to point to any defect within the socialist system, leave alone to errors and problems arising from these faults. This dogmatic view allowed the errors to propagate without proper containment, which eventually led to the failure of the system altogether. The case of the Soviet Union and socialism is an interesting case and an excellent example for understanding the fault-error-failure model in socio-politico-economic systems.

What is more interesting, however, is the application of this model to capitalism. Socialism has passed through all the stages of the model and finally experienced a major collapse and failure. It is an interesting case from the historical perspective. Capitalism is going through the second stage of the model. Dormant faults have produced erroneous financial and economic behavior. Policies and strategies such as bailout and government intervention have been exercised to isolate and contain the errors; attempts are being made to return the system to normalcy or normal functionality. Hence, the case of capitalism is important from a practical perspective.

In the discussion to follow, we will address the following questions: What are the defects or dormant faults of the capitalist system? What are the conditions that triggered these faults? What are the errors that resulted from triggering the faults? Were the errors correctly identified within a reasonable time frame? Could these errors be resolved? Are the faults being eliminated from the core of the system? Is failure imminent? What is the impact of the errors on the life of people? What is the impact of the failure of capitalism?.