With the fall of socialist regimes at the end of last century, the free market capitalism, which started in Europe a few centuries ago, has become the dominant system across the world. The system has provided an unprecedented level of production and consumption to the people of developed countries through increasing productivity and efficiency in the use of limited resources. It is fair to say that most people around the world benefit from the material gains despite the unfair distribution of wealth. People are better off compared to those who lived a century ago in terms of material possessions. In other words, people now could purchase and consume much more than what they were able to do few decade ago. However, many studies indicate that this material gain has not translated into happiness. On the contrary, many studies indicate that we are experiencing a growing “happiness crisis”. As if the “happiness crisis” was not enough, capitalism is also currently facing the biggest financial/economic crisis since the Great Depression. Starting with the crash of the U.S. housing and mortgage market in the summer of 2008, the the financial tsunami has caused over trillions of dollar to be lost over the world. Some economists estimate that the full economic cost of current crisis to the U.S. alone will be $15 trillion. Even the most liberal governments decided to intervene in the free market.

In short, the happiness and financial crises have touched almost every nation around the world. People are watching with awe and shock and asking the following questions: is this going to be the end for capitalism? Or is it just another great depression? Was Karl Marx right in his view of capitalism? Is capitalism preparing its own end? Why does capitalism face a happiness and financial crisis? I will try to answer those questions in this paper. I would like to cover both the happiness and financial crisis because I think they are closely related to the capitalist theory of human nature. Therefore, I will first discuss the success and failure of capitalism in terms of its assumptions about human nature. Then, I will offer an alternative theory of human nature, called the “Grant Theory of Inner Universe”, to explain, overcome, and prevent both financial and happiness crises. The new theory provides an easy answer to some challenging questions regarding the success of capitalism against socialism, the root causes of financial and happiness crises. These questions can not be easily answered with the current understanding of human nature. The theory also provides some recommendations to the policy makers and individuals to properly deal with the irrational aspects of human nature.