Question
Why did the varnasrama system degenerate into the present system?
Answer

The simple answer is kali-yuga. In practical terms, Vedic civilization always faces a tension between the need for social hierarchy and the ultimate understanding that all souls are one. When society veers toward materialism, hierarchy predominates. When spirituality is strong, social hierarchy is mitigated and moderated by a cultural perception that all living things are one. Thus, due to materialism, oppressive hierarchy became dominant.
Is the varnasrama system only a theory or was there at any time in history of India a period based on varnasrama?
HDG: There is no evidence of a time in which total mobility prevailed, so that each child was routinely considered for all four varnas. The Bhagavatam, Mahabharata, etc. give a clear picture of hereditary varnas, with occasional instances of upward mobility. The most famous case is that of Satya-kama (Chandogya Upanishad 4.4.1).
However, Krishna does clearly teach that varnas are assigned according to sva-bhava, one’s nature. And there are statements in some Brahmana literatures that a brahmana’s son is not automatically a brahmana, etc.
In Manu-samhita, it is written that the varna system is not inheritable. Does it mean that a sudra has a chance to become a brahmana through qualification?
HDG: Perhaps you could provide the exact quote with Sanskrit. Scholars consider the Manu-samhita to be a corrupted text with many interpolations.
What is the intention of the varnasrama system?
HDG: To organize society efficiently so that wisdom governs passion. Compare to the similar social system in Plato’s Republic. Today, vaisyas rule the world and the result is the destruction of the planet and insane consumerism.