Exploring modern perspectives beyond historical preconceptions

Frans Vandenbosch 方腾波 04.01.2025

Capitalism, Good or Bad?

The answer depends entirely on how you define it. Is it the idealized system of free markets and competition, or the monopolistic, financialized version dominating the U.S. today? How do you view China’s blend of state oversight and market forces? What is your definition of capitalism?

Let’s move beyond abstract definitions and focus on practical results. In my article Defining Communism: Perceptions and Realities, I explored the gap between theory and practice in communist systems. Here, we’ll do the same for capitalism—examining its evolution, the dangers of monopoly and political influence, and why some systems thrive while others falter.

From China’s cutthroat competition to Western monopolies, capitalism takes many forms. But one thing is clear: when entangled with political power, it risks losing its vitality and fairness. By contrasting Western and Chinese models, we’ll uncover what makes capitalism work—and what makes it fail. So, is capitalism a force for good, or a system in need of reform? The answer may surprise you.

Interesting contrast: Western vs Chinese capitalism

Western vs Chinese Capitalism
Louis-Vincent Gave offers fascinating insights into the contrasts between Western and Chinese capitalism. In his analysis, he highlights why the stock market plays a significantly less critical role in China compared to the United States. His thought-provoking perspectives on the Chinese and US economies provide a fresh lens through which to understand these two global powerhouses[i]

China’s Economic Dynamics
Arnaud Bertrand delves into the unique nature of China’s economic system, explaining why China’s stock market is far less central to its economy than it is in the US. He argues that a strong regulatory framework—acting as a “referee” above capital—is essential for fostering a truly dynamic and resilient economy. His tweet offers a compelling perspective on this paradox.[ii]

The Pitfalls of Monopoly Capitalism: A Critical Analysis

1. The Rise of Monopolies and Oligopolies

Capitalism is often praised for fostering competition, which is said to lead to better products, lower prices, and innovation. However, the reality is more complex. Over time, capitalism evolves—often in negative ways. In the United States, for example, the system has reached a phase of monopoly capitalism. Firms initially compete, but in the absence of strong antitrust regulations, one dominant player often emerges, driving out competitors and establishing a monopoly. Alternatively, a small group of firms may form an oligopoly, effectively controlling the market. Once this occurs, the barriers to entry for new competitors become nearly insurmountable, distorting the market in favour of the monopolists.

2. The Negative Consequences of Monopolies

Monopolies such as Microsoft and Google dominate their respective markets—operating systems, office software, search engines, and internet advertising. These monopolies often exploit their dominant positions through practices such as price-gouging, selling inferior products, forcing frequent upgrades, and harvesting user data. Worse, they facilitate the transfer of wealth to a small elite at the expense of the broader population. Google, for instance, is no longer simply a search engine but a tool for monetisation and censorship. Monopolies also engage in regulatory capture, using their power to influence politics and shape laws in their favour. In this way, the economic landscape becomes impoverished, and the economy quickly becomes less competitive compared to foreign competitors. This creates a vicious cycle: wealth becomes increasingly concentrated at the top, while the majority of people face growing impoverishment.

3. The Financialization of the Economy

The result is a financialised economy, where productive investment declines because workers with limited purchasing power can no longer drive consumer demand. Capitalists focus on low-risk, high-return ventures that extract wealth rather than create it. This extraction takes many forms: predatory lending (e.g., student loans, payday loans), rapidly rising rents, and inflated insurance premiums. When capitalists do invest, they prioritise short-term financial gains over long-term productive value, engaging in practices such as leveraged buyouts, cutting jobs, and stripping assets. This leaves behind social and economic devastation, marking capitalism’s shift into a destructive phase where money generates more money without producing real value. Without systemic change, the cycle of extraction and immiseration will only continue.[iii]

This Kind of Capitalism is Driven by Mental Illness

How strange is it that our entire western civilization is built on values and priorities so hollow and absurd that even wealthy CEOs, after taking an ancient psychedelic brew, often quit their jobs and radically change their lives?

This phenomenon suggests that the values driving capitalism—endless accumulation of wealth, status, and power—are fundamentally disconnected from what truly matters to human beings. Psychedelics, by altering one’s perception, seem to reveal the emptiness of these pursuits, prompting individuals to abandon them in favour of more meaningful and authentic ways of living.

If a single psychedelic experience can shatter the illusion of capitalist success, what does that say about the system itself? The relentless pursuit of money and power, at the expense of human well-being and planetary health, appears irrational—even pathological. In this sense, this kind of capitalism isn’t just an economic system; it’s a collective mental illness, driven by false values and destructive priorities.[iv]

How Chinese Capitalism Outpaces the West and the Perils of Political Influence

Monopoly capitalism isn’t even the worst of it; far more destructive is the political influence by big corporations.

In China, industrial competition is far fiercer and more cutthroat than in the West. Years ago, I observed: “Western companies operate as sheltered workshops, oblivious to the true nature of competition. They should look to China to understand what real, unrelenting competition looks like.” Indeed, Chinese capitalism operates on a level of intensity that Western businesses can scarcely imagine. Take Evergrande, for example—a textbook case where the Chinese government made no attempt to rescue the company from collapse, allowing market forces to run their course.

At the heart of healthy capitalism lies one critical principle: staying away from influencing politics. This means no lobbying, no financing political campaigns, no manipulating mainstream or social media, and no attempts to steer political agendas. Unfortunately, American-style capitalism is terminally ill, plagued by its overly cosy relationships with media and politics. This entanglement undermines the very foundations of a fair and competitive market.

In China, both state-owned and private corporations have grown into colossal conglomerates, often dwarfing even the largest and most renowned U.S. companies. However, when some of these giants—like Ant Group – Alibaba[v] (led by Jack Ma) and Didi Chuxing[vi] (led by Cheng Wei)—tried to leverage their power to influence Chinese politics, they faced swift and decisive consequences. The Chinese government made it clear: no corporation, no matter how large, is above the state.

On the other hand, there is the typical Chinese capitalism, infused with Confucianism. In my article “I don’t want to steal your baby” I described the striking differences between Chinese and American entrepreneurship.[vii]

This stark contrast between Chinese and Western capitalism raises important questions about the role of government, the limits of corporate power, and the true meaning of competition in a globalized economy.

Wrap-up

Capitalism, like any system, is neither inherently good nor bad—it’s how it’s practiced that determines its impact. In the West, unchecked capitalism has devolved into monopoly and financialization, where wealth concentrates at the top, innovation stagnates, and political influence corrupts the market. Meanwhile, China’s model, with its fierce competition and state oversight, offers a stark contrast, though not without its own challenges.

The key takeaway is this: capitalism thrives when it prioritizes fair competition, limits political influence, and serves the broader public good. When it strays from these principles, it risks becoming a rigged game, where a few players dominate while the rest struggle to survive. As we’ve seen, the consequences of such imbalance are stark—economic stagnation, social inequality, and a loss of trust in the system itself.

So, is capitalism good or bad? The answer lies in its execution. By learning from both the failures of Western monopoly capitalism and the successes of China’s regulated approach, we can envision a system that balances competition with accountability, innovation with equity, and profit with purpose. The future of capitalism depends on whether we choose to reform it—or let it collapse under the weight of its own contradictions.

Thank you for reading! We’d love to hear your thoughts—please share your comments here below and join the conversation with our community!

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[i] Western vs Chinese capitalism: Louis-Vincent Gave, CEO of Evergreen Gavekal Research, 27.09.2024   Tweet by @gave_vincent     

[ii] China’s Economic Dynamics: Arnaud Bertrand in a tweet 27.09.2024 https://x.com/RnaudBertrand/status/1838846018215112888

[iii] Based on an article by Johnson Choi,  27.09.2024  https://johnsonwkchoi.com/2024/09/27/interesting-contrast-western-vs-chinese-capitalism/    

[iv] Based on: Capitalism Is Driven By Mental Illness: an article by Caitlin Johnstone  27.09.2024  https://www.caitlinjohnst.one/p/capitalism-is-driven-by-mental-illness

[v] Alibaba – Ant Group: In 2020, Jack Ma criticized China’s financial regulatory system during a high-profile speech, suggesting it was outdated and stifling innovation. This was seen as a direct challenge to the Chinese government’s commitment to care for the people. Shortly after, Ant Group’s IPO (Alibaba’s financial arm) was abruptly suspended by Chinese regulators, and Alibaba faced a record $2.8 billion antitrust fine in 2021. Analysts argue that this was a clear signal from the Chinese government that no corporation, no matter how influential, can operate above the principles of national governance or undermine the leadership of the state. The case is often cited as an example of the Chinese government’s strict control over corporate behaviour, even for private enterprises.  10.04.2021 https://finance.sina.com.cn/wm/2021-04-10/doc-ikmyaawa8923230.shtml  (in Chinese) English translation: https://finance-sina-com-cn.translate.goog/wm/2021-04-10/doc-ikmyaawa8923230.shtml?_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-US&_x_tr_pto=wapp 

[vi] Didi Chuxing, China’s ride-hailing giant, faced a regulatory crackdown shortly after its U.S. IPO in June 2021. The Chinese government accused Didi of violating data security laws and potentially exposing sensitive user data to foreign entities. The Cyberspace Administration of China (CAC) ordered Didi’s app to be removed from app stores, and the company was subjected to a cybersecurity review. This incident is often interpreted as a warning to Chinese tech companies: even global ambitions must not compromise national security or challenge state oversight. The case highlights the Chinese government’s willingness to intervene in private corporate affairs when it perceives a threat to its political or security interests. 07.07.2021 https://thediplomat.com/2021/07/chinese-rideshare-giant-didi-in-hot-water/

[vii] Frans Vandenbosch 方腾波: I don’t want to steal your baby. 15.11.2024  https://yellowlion.org/i-dont-want-to-steal-your-baby/