Quora Answer: If Capital is the Sole Driver of Greater Capital, & the Basis of Business is to Maximise Capital, is Capitalism Doomed?

The following is my answer to a Quora question: “If capital is the sole driver of greater capital, and the basis of any business is to maximise that capital, is capitalism not doomed?  Does it not organically create massive inequalities over time?”

Firstly, we have to understand that capitalism is an economic system.  It is based on the centrality of private ownership as the means of production, and their operation for profit, not altruism.  Capitalism is the recognition that when we want things done, we appeal to other’s sense of self-interest, not altruism.  The purpose of this is the accumulation of wealth, through the free exchange of goods, and services, and competition.

Predatory capitalism, without legal and ethical controls, is destructive, and the system eventually depletes the economic, social, and physical environment, and destroys resources.  But then, this argument applies to every system taken to an extreme.  No system is perfect, and all of them, without any form of balance and control, are eventually doomed to failure.

One of the greatest myths of unfettered capitalism is that the market is self-correcting.  It fails to take into account human entrepreneurship.  The same genius that allows people to accumulate massive wealth and power, can also be the same genius that entrenches and consolidates it at the expense of others.  This creates a massive imbalance in the economy, leading to disenfranchisement and institutionalised poverty.  The system becomes corrupt, and whenever we have had massive portions of the population disenfranchised, we have had revolutions.  The social system “corrects” itself.

As such, whilst capitalism is a viable system, it has to be managed.  That is the purpose of government.  An effective government is able to navigate the balance between free enterprise and market control for sustainability and social welfare.