The thing about capitalism, which I feel is not widely understood, it's that as a participant, you're meant to compete, but you're not meant to win. The need for money to sustain your lifestyle is what drives people to productive work; competition is what drives companies to optimize. But the moment someone wins - a person becomes rich, a company becomes a monopoly - they actually become a problem. At best, they're no longer working and optimizing. At worst, they can disrupt lives of a lot of people.
No; in designing a robust system, you can't rely on what people are "supposed to do" out of their own initiative. As it is on the market, the moment you win and the external incentives pushing you to "aim higher" disappear, you become a wildcard - i.e. a problem.
aiming higher is human nature. The system is based on this evolutionary fact (sometimes called 'greed', or self-interest), not on directing human behaviour.
The market is also based on mutual self-interest. There are no 'external incentives' other than access to higher/more expensive goals.
> There are no 'external incentives' other than access to higher/more expensive goals.
There are - living in a market economy requires nontrivial amount of work just to maintain what you have. Both individuals and companies have to work to balance out their operational (living) expenses; moreover, in case of companies, competition forces you to "aim higher" because not doing so will make your profit fall with time.
When you "win" in the market game, those incentives diminish or disappear completely.
> living in a market economy requires nontrivial amount of work just to maintain what you have
This is not external, but natural.
Humans need a constant supply of food/energy, food spoils etc. Tell me what kind of economy works otherwise.
I'm also talking more about life goals e.g. getting a better job, as opposed to working at all.
> competition forces you to "aim higher" because not doing so will make your profit fall with time.
This is dependant on a lot of things. There are plenty businesses that have survived being less than innovative. But I'd argue whether being competitive counts as "aiming higher"; competition doesn't always grow, sometimes there is constant competition, and innovation is part of business.
Thinking about it, the real problem is that the market is finite in size. In an infinite market, being a monopoly is impossible (although anticompetitive behaviour should still be discouraged). The problem comes when one fish gets too big for the pond.
I can't really imagine an "infinite" market. The biggest one I can imagine is an ultra-global one, where every living human anywhere can buy anything from anywhere and get it reasonably quickly. In such a market, monopolies would be global monopolies.
Actually, come to think of it, the market for digital services is quite "ultra-global" already.
Either way, whatever the market size is, monopolies in a given market is the the victory condition - the goal - for the monopolist, and a failure mode for the entire market. Hence how it works is that the idea of "the win" is dangled in front of you so that you work, but it's meant to be snatched away in the last moment, so that you never reach it.
The thing about capitalism, which I feel is not widely understood, it's that as a participant, you're meant to compete, but you're not meant to win. The need for money to sustain your lifestyle is what drives people to productive work; competition is what drives companies to optimize. But the moment someone wins - a person becomes rich, a company becomes a monopoly - they actually become a problem. At best, they're no longer working and optimizing. At worst, they can disrupt lives of a lot of people.
The promise of great wealth is phony by design.