Where is capitalism failing today?
Capitalism is functioning within the given institutional structure, which includes tax laws, labor laws, government spending decisions, contract law, etc.
What needs to change in the system?
The system changes continually with changes in the application of the institutional structure and with the advancement of knowledge on how to use any given structure.
Currently, we have a floating exchange rate system in place, which is capable of sustaining full employment and price stability. This is a major advancement over the previous gold standard, which necessarily resulted in periodic recessions and depressions and allocated real resources to the production and accumulation of gold.
However, we continue to fail to recognize how to sustain sufficient demand for full employment and we fail to utilize techniques of government spending that will promote price stability; so, the promise of floating exchange rates has yet to be realized.