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Problems of capitalism

The fact that the mercantile-capitalist mechanism manages to establish an allocation in an economy with the complexity of the current one, operating as a real algorithm to solve an economic problem of tremendous difficulty, is astonishing and a huge merit, which is not always valued to its full extent.
Capitalist systems follow a certain rationality, they are not arbitrary, and they achieve allocation through advanced technology.
Some other alternatives that have been suggested would not even work according to any rationality.

We have already briefly outlined some of its problems
In this sense, the rationality of capitalism is not beneficial to humanity. Of course, capitalist systems exhibit many other problems, but we only study those we consider most important.

We don't talk about problems that run parallel to capitalism, like racism or sexism, because these aren't necessary consequences of the pure economic system. Non-sexist and non-racist forms of capitalism are conceivable.

However, capitalist systems have been modified by institutions such as the welfare state, which manage to alleviate some of their problems and partially humanize the allocation of resources.

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Main “structural” problems of allocation in (pure) capitalisms

By “structural” problems, we mean those caused by the very functioning of the system; problems of capitalism, not problems within capitalism. There are other problems that could be considered structural: for example, it tends to foster a competition-oriented psychology, it causes alienation. But let's focus on the most important ones.
Local allocation does not take global objectives into account .

Business owners are bound to make mistakes, having to allocate resources without knowing what other companies are doing and having to predict the future. There are also significant wastes, such as unemployment.

inequality is possible , both within a country's population and between countries.

Maximizing profit is an ahuman objective ; it doesn't consider human beings as distinct from other resources. Human beings are reduced to the category of input, on equal footing with other inputs. If it were beneficial to replace human workers with machines or artificial intelligence, they would be replaced. Therefore, a capitalism without human beings is conceivable, as Sismondi and Tugan envisioned. In (pure) capitalism, humans are neither essential nor indispensable, neither as producers nor as consumers.

Some of these problems even lead to the system, if no action is taken, tending toward self-destruction. For example, economic crises tend to become increasingly severe, greater inequality makes social stability unsustainable, as does concentration and monopolization, and the lack of global consideration leads to climate collapse, etc.
We will not study economic cycles or monopolies now, because we have already covered them in other topics.

Market failures

Market failures

In the literature, "market failures" are a set of situations where perfect competition is not possible. These discrepancies often cause allocation to deviate even further from meeting human needs than it would under perfect competition.

For example, “imperfect competition” (monopolies, oligopolies) or “externalities”.

The expression “market failures” is often accompanied by the idea that the market is right unless the indicated distances occur.

But we have already seen what happens in our game, with increasing inequality, inefficiencies and cycles, where there was no imperfect competition (at least at the beginning of the game) nor externalities.

Furthermore, the problems of capitalism should not be confused with the problems of the market. Markets and capitalism are not synonymous:

Non-capitalist market societies are possible, for example, socialism with a market.
Planned capitalisms are imaginable, economies planned to maximize profit; or a capitalism with partial planning, like the war economies of World War I and II (Göring's four-year plans).

The capitalist market system, in general, fails to meet human needs, even when we are not dealing with "market failures." The hypothetical scenario of perfect competition is not in the best interest of human beings.