Does Capitalism really work?

Everywhere I turn I see people struggling to keep their heads above water. Many accumulate debt in order to make ends meet or live the dream of having everything right now, but on credit. We could say that people simply mismanage their money and sign up for short term easy credit without carefully considering the consequences. Many are paying off yesterday's debts, so how do they pay for today and tomorrow, accumulate more debt?
When we look at Governments, they too are spending money we don't have. The financial juggernaut, the USA has debts totaling $21 trillion and climbing and has no intentions of trimming the debt anytime soon. The European Union's collective debt is at 12.5 trillion Euros but has also been accused of hiding debt which potentially puts the figure even higher. The planet as a whole has debts of $164 trillion dollars.
Now we have 1.3 billion Chinese looking to climb aboard the capitalist merry-go-round. Why is there an assumption that capitalism works and that until we find something better we must endure a lifetime of debt.

Is Capitalism working for you or do you feel we should be looking at other potential options?