[I]f you look at how life in the developed countries has changed from 1930 to 2010 what you see is that people spend more and more time in school, more and more time retired, and more and more time on vacation. In other words, people are step-by-step liberating themselves not from market capitalism as a means of obtaining consumer goods but from wage slavery in the worker-capitalism relationship...This is a brilliant and far-sighted post. In talking about the limits of pure market capitalism, I often talk about public goods (i.e. why we need a government in addition to private companies). But Yglesias has hit on something much deeper - the existence of incomplete markets. It's just not possible to buy everything. Human nature has a great many needs that cannot be satisfied by proxy, and so cannot be traded for. Among these are: a sense of self-worth, a sense of accomplishment, a feeling of individuality, true friendship, a feeling of being at ease in social situations, the excitement of discovering new ideas, and a feeling of hope for a better future.
[I]t’s more possible than ever for people’s non-commercial labors to have a meaningful impact on the world. I think open source software is very exciting. I think amateur mashups are very exciting. I think digital distribution of albums recorded on the cheap by people playing music for fun while holding down day jobs is exciting. I think fan fiction is exciting. I think people who work at universities and other non-profits writing blogs to inform and entertain is exciting. I think people diligently recording the progress of their neighborhood and organizing for a better city is exciting. Wikipedia is, of course, indispensable these days and Wikileaks has done a tremendous job of making a difference...
Meanwhile, of course, for many people around the world the big story of life in 2010 isn’t the promise of transcending capitalism but the promise of adopting it and thereby escaping what Marx called “the idiocy of rural life.”...what’s happening in China today looks, from a number of points of view, an awful lot like the original dawning of the industrial revolution in northwestern Europe and that, in and of itself, is an enormous progressive change compared to what was happening before.
So that’s the agenda I have to offer. For rich countries—productivity growth, social insurance, and efforts to improve public health all aiming at allowing people to live more and more of their time outside the bonds of commercial work. For poor countries—capitalism, to get the process of prosperity and social betterment rolling.
Oh yeah, and love.
Of course, money helps a lot with getting these things. It's hard to pursue self-actualization while trapped in poverty; you need leisure, you need mobility, you need communications, and you need a lot of other things that money can buy. Which is why capitalism, which provides us all with money, is absolutely essential to human progress. Socialism is a failure because socialism kills the goose; by restricting the economic activity that makes us rich, socialism also denies us the opportunity to go beyond material happiness.
In fact, as capitalism progresses (i.e. as productivity improves), we'll have so much material stuff that we'll just give tons of it away, and spend most of our effort going after the stuff we can't buy with money. The dream of the socialists - material equality - will one day be realized, but via a path quite the opposite of what many of them envisioned (although I'm sure that some early socialists realized the possibility of what I'm talking about). That won't be utopia, of course - there will always be "rich in love, poor in love" - but it will be better than the materially stratified societies of yore.
I suppose the central point here is: the question of "capitalism vs. socialism" has been settled in favor of the former. But that does not mean that material wealth should be the one and only goal of our society. It's only the first step.