Collapse of Capitalism?

On a radio programme today the question was asked whether the present turmoil in the financial markets, so soon after the last one, heralds the collapse of capitalism. It seems to me that the markets have been punishing the remnants of socialism within a capitalist system. The Tea Party people in the United States are quite open about this: they accuse Obama's wishes to extend the welfare state in America as sheer socialism. In Britain the development of the welfare state by the post-war Labour government was so popular that the Conservatives could get back into power only by accepting what the Labour Party had done. In order to finance this welfare state, governments have had to spend more money than the Gross National Product produced by way of taxation - in fact, they had to borrow more and more, until in the end, we have the problem of sovereign debts in several countries - now even in the United States - which is on or beyond the verge of being unsustainable. Of course the problem has been made much worse by several factors, such as the crazy rigidities of the Eurozone which means that one country's problems ricochet not only all around its participants but around all the countries who trade with it. Above all, there is the unjust way taxes have been allocated: in the case of Greece, taxation is said to have been almost a voluntary contribution; in many other countries, the absurdly low tax burden on the wealthy individuals and corporations compared with that on the rest of the community has exacerbated the problem. But I think that fairer systems of taxation would only have alleviated rather than eliminated the problem. In the end, a society can only afford a welfare system to the extent that its Gross National Product is sufficient to finance it, and GNP growth in many of the western countries, including Britain, simply has not been big enough to keep pace with, for example, the growing demands on especially the National Health Service and the state pension service, but also on the education serice and lesser but much valued things like library services. To meet the shortfall, governments have borrowed so much that in the end the debt burden has become unsustainable - just as individuals in capitalist societies have also borrowed too much - indeed, been helped and even encouraged to borrow too much by short-sighted financial institutions. However, if it is merely individuals who have borrowed too much to satisfy demands they cannot meet out of their income, it is only they who suffer. But when governments do the same, the socialist elements within the capitalist system become unsustainable. I therefore see the present crisis not so much as an end of capitalism as an end of the socialistic elements within the capitalist system and the triumph of unadulterated capitalism (of which the reluctance of governments to confront continuing huge bonuses or to tackle the banks etc are further symptoms). We are being forced back into all the harshness and inequalities of pre-welfare-state capitalism. The terrible dilemma at the moment is that a revival of the welfare state which we would all like to see depends on the GDP growing enough once more to sustain it, and the cuts that governments are now forced to make actually inhibit such growth.