Can democracy deal with the complex problems of the 21st century?

I was pondering whether our political institutions are even capable of solving the challenges that the 21st century poses.  I should say these challenges are also incredible opportunities for prosperity.  Much as the challenges of the 1930's were also great opportunities. 

In the 1930's the western states eventually had to put in the social welfare state in order to save the economy and system.  Otherwise capitalism was destroying itself with mass unemployment and the downward spiral on demand that creates.  The farm combine and other technologies had made millions unemployed, and they were migrating to the cities bringing wages down there, and creating public infrastructure challenges.  In the 1930's many political systems began to fail under the weight of mass unemployment.  Ultimately a number of nations political systems did fall, eg.. Italian democracy and the Weimar Republic in Germany.

The old EU of consensus is already arguably fallen.  And a new German dominated EU has emerged.  To get things done you need one voice in charge.  Others can have a seat at the table and voice their concerns and opinions, but one leader has to make the call.

One of the most basic problems is the out of control power of the banks.  Its insane to be insured by the state, and to be able to take extreme bets and keep the profits if they go well.  Yet our democratic systems seem captured by the monied interests.  Special interest in general seems so powerful that you cannot reform anyting without hurting someone's profit.  So the leaders shy away from reforming anything and just hope for hte best.. or try to print some more money and cover things up for awhile. 
Look at the movements now like the 'indignatos', occupy, the strikes in Europe, the loss of political credibility of both major ideologies.