Solara, it's easy to pick raisins out of a pudding and show capitalism's good face, without showing its dark side. If you were in the United States in the 1930s, or even 1880s or around 1907, it would be easy to call capitalism a failure because our country was racked by Depressions in those years.
Similarly, while the United States could be called a capitalistic success at the moment, places like Chile, the Honduras, or Mexico would not represent capitalism in too favorable a light, would they? Sometimes capitalism works, sometimes it doesn't.
Apropos East Germany, one thing that must be remembered is that pockets of the former DDR still is racked with 25% unemployment after 20 years—half the time that the DDR was in existence.
There are two problems entangled with capitalism in the scenarios you reference: one is culture (of graft, of corruption, etc.), and the other is scale.
As populations expand, rules change (learned that in ecology class
). Pure capitalism was fine when a large corporation meant a dozen men pooling their funds to outfit a fleet of ships for trade, when the basic resources were easily accessed by many, if not all. There are now corporations with more employees plus family than there were in all of New England at the time of the ratifying of the U.S. Constitution -- and that changes the nature of the game.
The basic capitalist principles apply, because those are just descriptions of how (most) people behave if allowed to do as they please (while honoring the rights of others). But within corporations, the structure is more feudal than capitalist -- departments instead of fiefs, of course.
I'm going to assume there's no need to explain corruption and graft.
There's another factor at work, too, that has nothing to do with any economic system in particular: wealth, and power, tend to concentrate. The denser the wealth -- another way of saying the denser the population -- the greater the potential concentration, and the weaker the forces inhibiting concentration. That leads toward economic feudalism in the whole society, paralleling that within the large corporations.
At any rate... we've never seen a test of pure capitalism on a large scale; governments tinker both in favor of and against corporations, large and small. As a result, we have no real way of saying that capitalism works, or doesn't, on the kind of scale we're dealing with today.
