What could be some starting points on a discussion of on capitalism and its effect on modernism and postmodernism?
If we tie capitalism to industrialization and a rising presence of technology (especially the automobile), we may have an in-road to a discussion of Faulkner and Woolf in particular.
Each of these writers was interested in the fabric of daily life and the changes that very specific communities were undergoing between 1900 and 1940.
I would argue that the most important aspect of capitalism is the fact that it causes perpetual change to happen. This change unsettles people and takes away their ability to see the world as predictable and understandable.
In both modernism and postmodernism there is an emphasis on the transitory and insubstantial nature of what we call "reality." It makes sense that these ideas would follow from capitalism because capitalism is continually destroying and recreating reality. New companies form. Businesses are uprooted and sent to other regions and other countries. There is no long-term certainty. This continual process of destruction and change makes the world seem less predictable and helps lead to such things as modernism and postmodernism.
I think that one of the primary starting points on this discussion would have to be that capitalism's pursuit of unlimited economic wealth does not translate into automatic personal happiness. One of the reasons why capitalism, as an economic movement, is able to usher in Modernism and Postmodernism is because its assertion of unlimited economic potential does not immediately result in a totalizing vision of happiness. This disenchantment becomes one of the fundamental points that thinkers like Marx are able to address and become a critical part of Modernism, a movement that sought to explore valences of disenchantment in prevailing economic and social institutions. At the same time, capitalism was able to branch itself out into different forms of economic expression of the good, something that lends itself into Postmodernist through with its emphasis on multiple and more narratives and less in way of totality. Capitalism's morphing into different forms, such as the conventional business, the satellite endeavor, the emergence of capitalism through the web, and the exchange of capitalism in a globalized setting would be all be points of emphasis in the realm of postmodern thought. Deconstruction of these elements of capitalism over time would display much in way of Postmodernism. I think that this might be a starting point in exploring what capitalism means in the Modernist and Postmodern settings.