Capitalism only efficiently allocates resources if the market value of a good or service closely approximatatoon its "true" value to society. And that ceases to be the case when wealth is very unevenly spread.
No, it's not. Capitalism has nothing to do with equality. We can have extreme inequality as long as the workers actually get enough to satisfy them. That of course depends on many things like their productivity, supply and demand for labor, and preventing monopolistic abuses by corporations and labor.
>Capitalism only efficiently allocates resources if the market value of a good or service closely approximatatoon its "true" value to society. And that ceases to be the case when wealth is very unevenly spread.
Wealth inequality has nothing to do with market efficiency. Every person in the market makes decisions according to their own estimations of what the true value of a thing is. That's basically a democratized hive mind at work. If any individual spots a market inefficiency, they can try to exploit it, and in so doing increase overall satisfaction of market participants. This distinguishes capitalism from other systems like communism, which rely on a small number of central planners to make necessarily imperfect decisions for everyone based on limited understanding of the entire economy and all its participants.
If everyone has equalish wealth then yes. Otherwise the hive mind becomes weighted by each person's wealth...
> This distinguishes capitalism from other systems like communism, which rely on a small number of central planners to make necessarily imperfect decisions for everyone based on limited understanding of the entire economy and all its participants.
...which ends up not being very different at all to communism in this regard. Your billionaires become your central planners. Except they're not even trying to make good decisions for other people in most cases.
Now, granted, power in western democracies in 2025 is less centralised than it was in soviet Russia, but it's a hell of a lot more centralised than it was in the 70s and 80s. And currently it's only getting worse.
What makes you think everyone's opinion is equally important in the economy? Some people do more important things than others, and thus their decisions must be weighted higher. Otherwise, inefficiency would be created.
>...which ends up not being very different at all to communism in this regard. Your billionaires become your central planners. Except they're not even trying to make good decisions for other people in most cases.
If we're talking about billionaires who get rich through honest business, then they are by definition great planners who are bestowed money through satisfying the needs of many people. They can lose their money. They also only do part of the planning... Most of the decisions about what ought to be valuable are made by all the other participants in the economy. The billionaires are just the tip of the spear when it comes to actually doing big picture stuff.
>Now, granted, power in western democracies in 2025 is less centralised than it was in soviet Russia, but it's a hell of a lot more centralised than it was in the 70s and 80s. And currently it's only getting worse.
Western countries have been outsourcing manufacturing and automating everything which destroys jobs for short-term gains. It's not exactly the work of billionaires. It is more like a failure of people at every level to choose their countries over profits. Protectionism is one market inefficiency that I think we need.
It's just we often see these "outrageous" statistics without perspective.
What has it been historically?
Are we still better off than soviet Russia?
It so easily becomes: capitalism = bad.
In the latter 20th century we had 80% tax rates.
> Are we still better off than soviet Russia?
That's the wrong question (a very poor state to aim for!). The right questions are: are we better off than we were? And are we as well off as we could be?
> It so easily becomes: capitalism = bad
It so easily becomes "capitalism vs. communism". Where is our imagination to dream better?
(both are bad in my opinion, and for similar reasons (centralisation of power))
