Sept. 15, 2009 marks the one-year anniversary of the collapse of U.S. financial giant Lehman Bros., which caused deep, worldwide reverberations.

As we mark the day, CTV.ca presents the second in a six-part series on Canada's economy: the damage done, the recovery that lies ahead -- and whether we might climb out of the financial crisis even stronger.

Is American-style capitalism dying?

According to some, it's already six-feet under, and the crippling recession has dumped dirt on the grave and sealed its fate as a soon-to-be extinct economic system.

But according to others, the system that made America great is still alive and well and poised to regain its place as the envy of struggling economies the world over.

CTV.ca spoke to defenders and detractors on both sides of the argument in an attempt to explore the capitalism quandary and find out where we go from here.

Doug Casey, an economic forecaster and founder of Casey Research, is firmly entrenched on the side that says the time for U.S.-style capitalism has come and gone.

In fact, Casey argues, the economic system in place in the U.S., and Canada, is little more than a shell of the original idea.

"America is dead," Casey bluntly tells CTV.ca from his summer home in Colorado.

"America was an idea. It was a very good idea, but just like the Roman Empire lost its founding virtues, America has, too. I think this is almost an inevitable consequence of states developing and growing."

When America was created, Casey says, it was designed on an economic foundation whose building blocks included minimal government, even less government intervention in the economy, and a minimum of taxation.

That all added up to an unfettered free market that has become the very definition of a capitalist system.

"America used to be that way and that's why America became the most prosperous country in the world," Casey said.

But since almost the very moment the United States was first established, those fundamentals have been eroding little by little. The recent economic downturn, Casey said, has dramatically increased the pace at which that erosion has occurred.

"The government in America has grown like a cancer and this actually started right after the founding, but the process has accelerated rapidly as time has gone by," he said.

Casey said the U.S. is essentially bankrupt, and as a result Washington has been inflating its currency, introducing too much regulation and rescuing major companies from bankruptcy. Those are all moves that undermine the very foundation of a capitalist system.

"The shameful thing," he said, "is that people blame the market for exactly the problems that government intervention in the market, has caused."

Sick but not dying

Johan Norberg, a Swedish academic and the author of "In Defense of Global Capitalism" is, not surprisingly, a fierce defender of the economic model and takes a different approach to Casey's.

While he agrees with many of Casey's criticisms of U.S.-style capitalism as it now stands, he strongly disagrees that the system is dead.

It's just a little sick and in need of a tune up -- a return to some of the original ideals that worked -- Norberg tells CTV.ca from his home in Stockholm.

"One version of financial capitalism did fail, and that is the idea that we were in some sort of new economy where we could avoid recessions altogether," he said.

The concept of failure has been removed almost entirely from the philosophy of capitalism, and people have grown accustomed to a system of continual economic growth and booming prosperity.

That has led to a false sense of security, with investors seeking larger percentages with smaller margins for error, "because nothing would really go wrong," he said. 

He uses the iconic investment bank Goldman Sachs as an example of a company that was rescued with a massive U.S. bailout, but just a few months later was repeating the mistakes that pushed it to the edge of bankruptcy in the first place -- over-extending itself with risky ventures and paying out huge bonuses to executives. 

"Is that strange? Is that a paradox? I'm not sure because maybe they have learned that if things go wrong, the government will step in to save them," Norberg said.

How do we fix it?

What is needed to return capitalism to its former glory, Norberg said, is for government to once again become comfortable with a concept that he calls "creative destruction."

Quite simply -- those companies that can't make a go of it and need government support to function, should be left to die. Failure needs to exist for the system to work, he said.

"Creative destruction is really the essence of free market capitalism -- the idea that when you fail you lose out," Norberg said. "That's a pretty powerful incentive to not take too many bizarre risks, and nowadays with all that stimulus funding going to the financial sector... we have created some pretty powerful incentives in the opposite direction."

Casey is less hopeful. He says the economic ship is floundering in a storm and is so close to the rocks that it's too late to turn it around.

Unless Washington liquidates its assets, abolishes government bodies and fires a raft of staff members, the ship will break apart. Since none of those things are likely to happen, the outcome doesn't look good, he said.

"Everything the government is doing is not only the wrong thing, it's exactly the opposite of the right thing. It's perverse," he said.

"If you're skiing a double black-diamond mogul run, and you hit warp speed and you're heading towards a cliff, what can you do? Nothing."

Instead of a recovery, Casey believes the U.S. will continue sliding into what he calls the "Greater Depression" that will be deeper and more severe than the Great Depression. 

Then as the Greenback loses value, Casey predices, there will be widespread panic by people holding dollars outside of the U.S. -- he claims about $7 trillion in U.S. currency is held outside America's borders -- and foreigners will begin to see those dollars as hot potatoes.

Eventually, he suggests, the U.S. economy will collapse to the point where it must rebuild from the bottom up.

That will be a chance, he suggests, to return or recreate some of the original values America's economy was founded on. But getting there will be a painful, long process.

Hope floats

Norberg, on the other hand, believes all is not yet lost and there are even reasons to take hope.

Countries that have adopted American-style economic reforms that hearken back to the original concepts of free market and minimal government intervention -- especially developing nations such as China -- have seen incredible growth as a result.

"As we are beginning to lose some hope in American-style capitalism the rest of the world is seeing the benefits of it," he said.

The out-of-control skier hurtling towards the cliff can slow down, and the ship venturing dangerously close to the rocks can change course, Norberg said. The solution, he said, is to return to those original fundamentals that made capitalism work.