The capitalist system is very attuned to the needs of the market. It is an efficient system in reaching the goals of 1) providing the most number of goods possible for those willing and able to pay, and 2) providing the goods and services at the lowest possible price.
In an economic downturn, these two goals are still relevant, and in fact, become even more important to attain. A downturn, however, can make it more difficult, if not impossible, to achieve a third goal – provide a viable livelihood for the greatest number.
Hence, in an economic downturn, where there are less people willing and able to pay for goods and services, and willing to do so only at much lowered prices than usual, market stability may settle at a level that sustains employment for a fewer lucky people. This is a group who, by their current demand levels, can only support economic activities to sustain this same smaller group.
The capitalist system also favors those who already have capital. During uncertain times, money can be hoarded by those who already have it, thereby creating a destabilizing halt to economic activity. Those whose livelihoods depend on the continued investment of capitalists (i.e. all salaried workers) are left at the mercy of ever-increasing economic hardship. This leads to even less able consumers, and more uncertainty to businesses in general.
This is where Keynesian policy prescription usually comes in. Keynes advised that government investment come in and take the place of the lowered private investment, and that government spending should increase to take the place of decreased private spending. In this way, you increase over-all income to once again jumpstart private consumption and investment.
But is there a private sector solution to the crisis?
Right now, no one wants to move first in injecting needed cash to the economy, for fear that nobody else will follow. Could the private sector solution involve local companies engaging in quasi-barter trade with each other? Or paying via in-kind currencies? For example, we can have businesses paying employees via credits that can be used by consumers to buy/pay for services of other local producers. So in essence, in an economic downturn where actual cash flow is scarce, demand is created by empowering cash-starved businesses to pay employees and suppliers in some 'credit principle' that other businesses will then consider acceptable form of payment.
I don’t really know how this type of arrangement can be made to work, but if it can, it will work only if enough businesses participate. The world is now more globalized than ever before, and this solution would again only be possible if an economy has enough industry diversity to be self-sustaining on its own, otherwise the arrangement will need to be global in scope. So could a private sector solution involve a reverse-globalization?
By far, the simpler solution seems to be the government solution. Unfortunately, not a solution for countries low on reserves.