We are living in one of those momentous periods when we can see the course of history changing. It is like a Berlin Wall come-crashing-down moment. Only, hardly anyone, in the media at least, seems to recognise the phenomenon: the end of capitalism as we have known it.

The totemic entity is the US auto industry. Here we see the abject failure of capitalism writ large. And, what is more, with US government's plans to bail out the industry with a $25 billion stimulus package and talk of chief executives' salaries being slashed and from now on tightly controlled, what we are seeing, effectively, is socialism salvaging the wreckage of capitalism.

Fordist mass production of cars, which began early last century, was perhaps the greatest symbol of modern capitalism and the engine for the American dream. Everyone could own a car, millions of workers were employed and families could buy suburban homes complete with white picket fences. Chuck Berry, Bob Dylan and countless other artists sang about the virtues of having a car.

But the notion that this was free-wheeling capitalism, American-style, in action was always a myth. The car industry could not have operated without massive government intervention, from building roads to subsidising fuel. And free markets had nothing to do with the rise of this colossal enterprise. Witness how the industry has always been dominated by a small number of monster corporations. Today, the US industry is embodied by just three: General Motors, Ford and Chrysler. Employing some three million people with massive centrally planned operations, churning out cars that nobody wants because they are wildly fuel-inefficient, the US car industry is more akin to Stalinist economics than anything envisaged by Adam Smith. The only difference from Stalinism is that the American CEO's have been paid capitalist salaries and bonuses and fly in private jets.

But, arguably, this monopolistic outcome is the inevitable course of capitalism as it always concentrates power into fewer and fewer hands. Think of those other allegedly great capitalist industries: news media, supermarkets, airlines, oil suppliers. They are all massive, centrally planned operations controlled by cartels and enabled by government interventions, from legislative frameworks to market-creating subsidies.

This is not necessarily a bad thing. But in order for us to make progress and get economies working again, it just has to recognise for what it is - shoddy socialism with capitalist perks for the bosses. The correction should involve better rational planning of production and getting rid of the fat cat bosses and their outrageous pay structures. It is right and justifiable for the US government to bail-out its auto industry to keep three million people in jobs and many more in peripheral businesses. But the new management should involve planning of technology and production to meet the real, contemporaneous needs of society and the environment - cars with greater fuel efficiency, vehicles that run on renewable energy, for example, solar-powered batteries, or rebuilding the industry and social infrastructure to produce more public transport vehicles.

In other words, the US economy is ripe for modern socialism. We can and should be grateful to state capitalism for having so far built up such huge means of production. Historically, as Marx and Engels presciently noted, capitalism was a necessary stage in human progress, liberating humans from feudalism and mysticism. That a distorted, ideologically driven form of socialism took off in semi-feudal peasant societies of Russia or China, would have been seen as premature by Marx. The productive prowess and huge benefits of capitalism was never doubted. But now it is time for capitalism to leave the historical field. It is time for socialism. The delicious irony is that the US - with all its suppressed history and antagonism to socialism - is now probably the most auspicious place for this transition.

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