"The American Two-Party System" is often thrown around as an insult, and since derision of it was recently itself derided in xkcd, grumbling about the "American two-party system" has officially jumped the shark. In some ways, the grumbling about the two-party system is about what would be expected, since people like to grumble, especially when they sense that there is an elite to be loathed. For that reason, much of the dislike for the two-party system annoys me. But beyond that, I find these arguments especially grating, because they ignore some of the basic features of the United States' complex political system.
The founders of the United States did not imagine there would be a party system, and in fact most of them were opposed to such a thing. The United States Constitution does not mention parties, and in fact, describes a system of government that is mostly antipathetic to the establishment of parties. In most other Western democracies, governments are formed under a parliamentary system, where the legislature and the executive are unified, and where the executive is picked from amongst the legislature. Using this system, the ruling party, or coalition of parties, has close to full reign of the government, since they control both the executive and the legislature. As long as the government is stable, and not undergoing a schism or an internal revolt, being in a party means something, because it means the members of the party or coalition are giving support to the prime minister and cabinet. I am not a historian of other country's parliamentary system, but as I understand it, members of a party are required to keep closer to the party line, or at least must continue to support the executive power of their party.
The United States was intentionally designed to have a system where the legislature (which is itself split into two bodies) and the executive would not be unified, and in fact would often be working against each other. It was not meant to be efficient, it was meant to protect people from the abuse of power. Congress has no particular need to agree with the President, even if they are from the same party as him. In almost every presidency, there has been times when members of his own party have refused to support his programs, sometimes dramatically so. In a parliamentary party system, this would mean that the executive had lost his mandate, and the government would collapse. In the United States' system, this means the President moves on to the next issue. This lack of systemic coordination between the executive and legislature is one of the reasons why viewing the United States as a party system is not the best interpretation of the system.
The United States is, if anything, a two-coalition system. What do Ron Paul, Olympia Snowe and John Barrasso have in common? In most other countries, they would be in different political parties, which would then come together to form a coalition. The only thing they are required to do to remain in their party is to vote for members of their party for Speaker of the House or President Pro Tempore of the Senate. Other than that, they are usually quite free to take differing views and votes on bills, as ideology and their regional interests dictate. Of course, if they end up opposing their party a majority of the time, they might lose some or all of the funding and networking their party can provide, but there is quite a bit of wiggle room that congresspeople are allowed.
None of this is to deny that the rhetoric and structure of the political parties, as they have established themselves, often leads to the squelching of ideas or initiative. But this is not a structural feature of American politics: this is because American voters choose to put a lot of weight on to the (R) or (D) next to a candidates name, and to refuse to listen to the ideas of those not carrying them. But this is not a structural feature: this is just the electorate making choices, and after making these choices, the electorate will get the government they deserve.