The Paradox of Capitalism

At the core of our economic system lies a single structural necessity: Profit. It is revenue minus expenses, but it is also wealth extracted from the economy, value taken in excess of what is returned. Capitalism depends on this extraction of wealth, in fact it cannot function without it. Investment, incorporation, market expansion, all presuppose the possibility of achieving surplus.

Yet, if profit is wealth removed from circulation, then, in aggregate, sustained profit systematically drains purchasing power and weakens the very demand that markets require. Keynesian economists have long emphasised the dangers of insufficient demand; Marx identified surplus value extraction as capitalism's destablising engine; Schumpeter saw crisis as enogenous to capitalist dynamism. Each, using different language, touched upon the same idea: the system consumes the conditions that sustain it.

Modern capitalism mitigates this extraction problem through reinvestment and redistribution. Profit is accumulated, but much is recycled back into the economy in the form of capital investment, wages, consumption, philanthropy, or taxation. However, despite this, some amount is always hoarded, and increasingly concentrated in fewer and fewer hands. This extraction of wealth cannot happen forever. Resources are finite, therefore wealth is finite, and so endless growth is impossible. In fact, eventually, once enough wealth has been extracted, the economy will stall and collapse completely.

The only way capitalism can continue is if all profit is recycled to ensure no extraction occurs at all. This could be achieved by all companies becoming non-profit. B, if that were to happen, who would invest in such companies, knowing there would be no return?