In many circles today the claim is made that capitalism is reaching its limits. Climate change, inequality, populism, and cultural unrest are often described as proof that the system has run out of steam. For some, the idea of “degrowth” offers an answer, calling for societies to abandon the pursuit of expansion and embrace contraction. The phrase “limits of capitalism” appears frequently in articles and speeches, suggesting that a new era must replace the one we know.
The appeal is understandable. In a time of crisis, simple diagnoses are attractive. Yet declaring capitalism itself to be the culprit is short-sighted. It mistakes the serious problems we face for evidence of systemic failure. It disregards the historical record of alternatives. Most of all, it overlooks capitalism’s greatest strength, which is not its perfection but its ability to harness incentives. The central task before us is not to dismantle capitalism, but to direct its energy toward values that sustain rather than destroy.
The Communist Nightmare We Must Not Forget
To see why capitalism should not be discarded, we only need to remember what happened when societies tried to abolish it. The twentieth century gave us stark experiments in replacing markets with central planning. The Soviet Union, Maoist China, and later North Korea stand as reminders of what occurs when incentives and competition are suppressed.
The record is brutal. Famines, mass killings, and political purges scarred entire generations. Ecosystems were damaged by reckless industrial projects. Rivers were diverted, seas drained, and forests stripped in the name of meeting production quotas. Culture and education were fractured under ideological campaigns. Far from creating equality, these regimes produced a narrow elite who enjoyed privileges while ordinary people sank into hardship.
It is tempting for modern critics to dismiss these events as mere “misapplications” of Marxist theory. Yet the disasters were not accidents on the edge. They arose from the very structure of command economies that silenced feedback, ignored reality, and rewarded loyalty over results. To forget this history is to risk repeating its mistakes.
Factfulness and the Expansion of Human Well-being
Contrast this with the broader trajectory of the capitalist world. If we look at global data, the picture is clear. Extreme poverty has declined sharply over the past half century. Life expectancy has risen in nearly every region. Education has spread to populations once excluded. Vaccines and medicines have saved millions of lives.
Hans Rosling’s Factfulness captured this reality. The average human being today lives longer, reads and writes with greater ease, and enjoys a higher standard of living than previous generations could imagine. The world is still unequal and turbulent, but the baseline of well-being has risen significantly.
This improvement is not the result of planned economies or moral exhortation. It has been powered by the interplay of trade, innovation, and enterprise within capitalist systems. The data remind us that while capitalism has flaws, it has also been the most effective engine of human progress in history.
Capitalism as an Incentive Engine
At its heart, capitalism is not a moral code. It is an engine of incentives. By rewarding success and penalizing failure, it drives people and organizations to innovate and compete. The mechanism itself is neutral. It can push in harmful directions, encouraging waste, speculation, and overconsumption. But it can also be directed toward good, creating powerful forces for improvement.
Examples of positive direction are visible. Competition lowered the price of renewable energy, making solar and wind increasingly viable. The market for electric vehicles grew because consumers desired efficiency and style, and companies competed to supply them. Energy-efficient appliances succeeded not from ideology alone but because households saw clear financial benefits.
In each case, capitalism amplified values that had become socially and politically important. When sustainability was translated into a market incentive, real change followed. This is what makes capitalism unique. It does not guarantee virtue, but it provides a framework where values can be made actionable.
The Abuse of Capitalism and the Wrong Incentives
Acknowledging capitalism’s power does not mean every use of it is virtuous. In fact, some of the most troubling distortions today occur under the banner of sustainability itself. The language of SDGs and green transformation can be co-opted for profit in ways that undermine their original purpose.
A striking example is the solar panel industry in several countries. In the rush to capture subsidies and government support, firms have flattened mountains and destroyed habitats to install vast fields of panels. What was presented as clean energy turned into a new form of environmental damage. The incentive was not truly market-driven but shaped by political planning and subsidy hunting. In this sense, it resembles the errors of planned economies, where artificial signals created destructive outcomes.
This case illustrates a crucial distinction. When incentives are distorted, capitalism does not produce value but waste. Abused capitalism can mimic the failures of command systems, dressing itself in the language of virtue while repeating the same errors of shortsighted planning. Recognizing this danger is essential. Good incentives are not automatic. They require careful design.
The Limits of Vocal but Idealistic Activism
Alongside these distortions, another problem arises in the sphere of activism. Public campaigns for degrowth and systemic overhaul are often vocal, emotional, and highly visible. They raise alarms about ecological breakdown and call for radical restraint. Yet they lack mechanisms to produce real outcomes.
These movements often thrive in spaces created by capitalism itself. Social media platforms, publishing industries, and global conferences amplify their voices. Their visibility depends on the very systems they condemn. The paradox is striking: critiques of capitalism circulate most effectively within capitalist networks.
The deeper weakness is practical. Idealistic campaigns can warn, but they cannot scale solutions. They may inspire followers, but they also polarize societies, harden resentments, and at times spill into destructive protest. Without the discipline of incentives, activism risks turning into performance rather than progress. The result is division rather than development.
Growth in Good Values
The real alternative to both distorted incentives and empty rhetoric is not to shrink from growth, but to grow in the right directions. Growth in good values is the task before us.
This means aligning profit with sustainability, competition with responsibility, and enterprise with social benefit. Carbon pricing can make pollution costly. Transparent ESG standards can direct investment toward firms that genuinely meet environmental and social goals, not just those that adopt the label. Markets for cleaner technologies can thrive when they are supported by rules that reward efficiency rather than political connection.
The examples of success are clear. Solar power became affordable not because of slogans but because firms competed to make it so. Electric cars became desirable not only because they reduce emissions but because they were made stylish, affordable, and practical through competitive markets. Even cultural shifts toward healthier food and sustainable design gained momentum when businesses saw that consumers valued them and were willing to pay.
This is capitalism at its best: not blind growth, not artificial planning, but incentives carefully tuned to direct human creativity toward values that matter.
Beyond Degrowth, Toward Value-Driven Growth
The crises of our time are real. Climate change, inequality, and political division cannot be ignored. But to declare capitalism finished is to ignore both the disasters of its alternatives and the progress it has enabled.
Degrowth offers warnings but no solutions. Distorted capitalism, when incentives are warped by subsidies or political capture, produces waste and resembles the very command economies it claims to avoid. Activism that relies on moral urgency without mechanisms risks fueling division rather than transformation.
What we need instead is a renewed vision of capitalism as an amplifier of values. The task is to ensure that what it amplifies are not destructive impulses but constructive ones. Growth in good values, driven by incentives that reward what benefits society and the planet, is not a fantasy. It is already visible in the advances of technology, medicine, and sustainable industry.
Capitalism is not our enemy. It is the most powerful tool we have. The question is whether we can use it wisely, aligning its energy with the values that will allow humanity to endure and flourish. The choice is not between capitalism and survival. It is between abused capitalism and refined capitalism, between directionless growth and value-driven growth. The time has come to choose the better path.
Image by THỌ VƯƠNG HỒNG
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