Most people i think mix the capitalism concept and a monopoly. Pure theorical capitalism would have no barriers to entry, so limitless competition entrering as long as there's still a buck to make in any given market. You can see this happen with trading actually, electronic day traders are mostly the cause of the lower spreads and lower profits from giants monters corporations. With pure theorical capitalism, you could not become insanly rish. You would only get what you are worth, no more... The ones that are rich in our real life are those who have economic rent, be that a monopoly, too much market power, exclusive property of a scare ressource.... it all comes down to the same thing. And the game in the real world played by these rich men is to keep competition away, buying them, making barriers..., to keep your position of strenght. That, is all politics, not economics...
The theoretical capitalism that you suggest as having positive attributes, doesn't exist, any more than does Marx's ideal of the perfect communist state. If either existed, then they would actually be present and functional. The real capitalism that exists, is, like the real communism that exists, complete with the warts of reality. People seek absolute dominance and they always will. So, the capitalist will seek to monopolize the economic power, and the socialist will seek to monopolize the political power, until the people become so discontented that they revolt and cut off the dragon's head. This is the cycle of civilization that has repeated over and over since the beginning of human existence. Power coalesces in the hands of smaller and smaller numbers, forcing the masses deeper and deeper into poverty, until finally the masses have no choice except violent revolution. Then power is redistributed amongst the masses, and the cycle begins anew.
kjkent already answered you but I just wanted to add that quite to the contrary, pure capitalism turns itself in a monarchy type rule. The only difference is that the class barriers are made of capital/money. Imperialist Europe during 1600-1800s was an almost pure capitalist society as industrialization & exploration took over, laws for the working class did not exist and the money brokers got away with everything. Ever wonder why Europe turned socialist? The textbook definitions & theories on capitalism always try to spin the "free enterprise" concept and it is completely untrue. The basic point of capitalism is to capitalize & grow. Those with capital will be the owners and everyone else is just wage labor. The problem is that the wage labor class will not work cheap if they have their own means of productions such as farming, small trade skills, etc. Hence the course of the capitalists is to monopolize the means of production through large scale operations. No capitalist wants free competition, they want their monopolies and will do whatever they need to get it. How else will you grow and prevail? Not one single capitalist would want to give any body else a fair chance to succeed in a pure capitalist society. If you have smth they want, some idea or skill they would exploit it out of you through financial & buerocratic means. After all, once the power structure is established the capitalist controls the key part of the equationâthe capital. There are more than enough examples of this even in today's US history, let alone the early 20th century.
I don't understand your dilemma. Yes indeed it is better to have lots of middle class people rather than a "few rich bastards". The dicrete spending power of many consumers have a bigger effect on the economy than the extravagant spending of the idle rich.
I still haven't seen a mathematical proof of that. It seems true though. Yet economic development seems to start by making a few rich people then spreading to the base of the pyramid. How wide should the base of the pyramid be and how narrow should the top be to have optimal economic value for your country is my dilemma. May be the optimal pyramid should be in fact a square... I think the one who would be able to prove this would have Nobel price material btw. Got to search into general equilibrium analysis for that.
I know it doesn't exist in the real world. I'm dumb but not stupid But what you talk about is politics. Human nature to always get more and more power over others, be that political or corporate. It does exist and always will, we have to live with it. What i'm trying to say is that the essence of capitalism is about risk taking, private ownership, meaning anybody with an idea should be able to enter the market and get a piece of the cake. Everybody knows the benefits of competition. I say that competiton IS the anwser. Breaking down barriers to entry IS the anwser. Fighting against politicians, laws, interest groups, organisations, corporations, individuals or anything that tries to build barriers to entry to keep power for themselves IS the anwser. It's not about breaking down the capitalist system. One of many differences between Canada and USA: free universities. In Canada we have less rich people, masters and Phd may be somewhat less good, but we pump more graduate studens and i think i flatten the income distribution curve. Engineers are paid less cause we pump more, big mama who works at Walmart is paid more cause we have fewer of those. All about relative supply and demand. Cost of education is a barrier to entry. You break that down, you get more competition and better distribution. It's an exemple of what i try to say. To conclude, capitalism is about competition. Monopoly is about politics and human nature. It's not the system that is sick, it's us.
Capitalism *is* all about human nature. More specifically greed and the natural desire to hoard beyond ones needs. To keep on hoarding, human nature will naturally want to monopolize the process that results in whatever widgets that are being hoarded. You seem to be discounting the underlying human factor in all your equations just like the broke pseudo-intellectuals who never trade yet run around telling everyone how it's impossible to make money consistently in the market. As far as Canada having less wealthy people, I'm assuming it's because your high tax rates removes the incentive for someone to bust his/her ass 24/7. Why should someone quit his engineering job where he works 40 hrs a week, to start a business where he has to work 80 hrs a week for the same take home pay? It also has to do with
Where in the equation of capital, wage labor, productivity & growth does it state that it is about competition? Use logic, does it make more sense to monopolize the means of productions & reap enourmous profits or strive toward competitiveness, accomodate new entrants, & offer best pricing? Carnegies, Rockefellers & Vanderbuilts built their enourmous fortunes & empires through monopolies not free competition. Quite successful capitalists, don't you think? They went to criminal means to accomplish what they did, so maybe it is about competition in the same way as wars are competitions over resources. The system is not sick, it is simply human nature and there are no ideals & morals in true capitalism. So when you wish for "laissez faire" capitalism realize that unless you are one of the few that controls a significant portion of capital & production, you will most likely become a servant under that system.
In my opinion, this is Capitalism's greatest strength. Even when business owners are greedy and desire purely to make more money for themselves, they end up helping society, whether they realize it or not. -Taric