Is Capitalism The Best System We Have Or Is It Just The Least Broken?

A man opens a small bakery in Lagos.

He rents a shop, buys an oven, hires four people and begins selling bread. If customers like his bread, he makes money. If they don't, the bakery closes.

Nobody has to order him to wake up at 4 a.m. and bake; the profit he is making is enough to convince him.

Now imagine the bakery succeeds. One shop becomes ten, ten become fifty. The owner buys his flour in bulk, acquires his own delivery trucks and can sell bread more cheaply than the baker who has just opened across the road.

Keep going.

Eventually, our baker is rich enough to buy competing bakeries, negotiate better prices than they can, lobby against regulations he dislikes and survive losses that would bankrupt smaller rivals.

Africa has watched both versions happen.

The continent has produced entrepreneurs who solved enormous problems, built industries and created thousands of jobs. It has also produced economies where access to money, natural resources and political power can determine who gets the opportunity to become wealthy in the first place.

Capitalism promised competition.

Africa's experience raises a harder question: what happens after some competitors become powerful enough to influence the competition itself?

If Profit Is Such a Dirty Word, Why Does It Get So Much Done?

In 2007, a Kenyan with a mobile phone suddenly had another way to move money.

No bank branch was required. No long journey carrying cash. M-Pesa allowed money to travel through the same device people were already carrying in their pockets.

Its success sounds obvious now. It wasn't obvious before somebody built it.

Safaricom had discovered one of capitalism's favourite situations: a large number of people had a problem, and solving it could be profitable.

Africa is full of such problems.

Unreliable electricity created customers for solar companies. Difficult payments created opportunities for fintech firms. Terrible delivery systems created logistics businesses. Expensive international transfers attracted companies promising to move money faster.

Paystack was founded in Nigeria in 2015 around the problem of helping African businesses accept payments. Five years later, Stripe acquired the company in a deal reportedly worth more than $200 million.

The founders became wealthy because they built something other businesses wanted.

It is difficult to construct a better advertisement for capitalism.

Strive Masiyiwa provides another one.

Zimbabwe's telecommunications industry was controlled by a state monopoly when Masiyiwa tried to establish a private mobile network. The government refused him a licence. He fought the decision through the courts for years and eventually won the right to operate Econet Wireless.

Today, Econet operates across telecommunications and technology businesses.

Then there is Aliko Dangote.

Dangote began as a trader and built an industrial empire around products Africans consume in enormous quantities. Cement made him Africa's richest man. His businesses expanded into fertiliser, manufacturing and eventually the enormous Dangote Petroleum Refinery in Lagos.

These stories explain capitalism better than a hundred economics lectures.

The possibility of becoming extremely rich persuaded people to take enormous risks.

And Africa needs risk-takers.

More than 600 million additional people are expected to enter sub-Saharan Africa's working-age population between 2025 and 2050. They cannot all work for government. Somebody has to build the factories, software companies, farms, banks, supermarkets and industries that will employ them.

Profit gives people a reason to try, but Dangote's story also leads neatly into capitalism's second personality.

How Free Is a Market When Money Can Buy You a Better Starting Position?

Suppose tomorrow morning you decide to compete with Dangote Cement.

Nothing legally prevents you from trying.

That sentence is almost funny.

You would need enormous capital, factories, distribution networks, access to limestone, regulatory approvals and enough money to survive while attempting to steal customers from a company already operating at massive scale.

You are free to compete.

You are also free to attempt to buy Manchester United.

Capitalism gives everyone permission to enter the race. It does not give everyone the same starting line.

Think about two young Nigerians with equally promising business ideas.

One has wealthy parents, and the family owns property. There are people to call at the bank. Losing ₦10 million would hurt, but nobody would miss dinner.

The other has ₦200,000 saved from three years of work.

The first entrepreneur can fail three times and still discover what works.

The second may not survive the first lesson.

And Africa adds its own obstacles.

A Nigerian manufacturer may generate his own electricity, repair his vehicle after another terrible road, borrow at punishing interest rates and spend weeks navigating bureaucracy.

His competitor in another country plugs a machine into the wall and electricity appears.

We eventually place their products beside each other and call the result competition.

Money also buys escape routes.

When public electricity fails, wealthy households buy generators or solar systems. When public schools disappoint, they pay school fees. When hospitals deteriorate, they use private hospitals.

The people most capable of demanding better public systems can become the people least dependent on them.

If Capitalists Shouldn't Control the Economy, Who Should?

Say we decide that private individuals have accumulated too much economic power.

The government will take greater control.

Fine.

Now imagine the same politician who struggles to keep the electricity grid functioning is responsible for deciding how much bread should cost, which companies should receive investment, how many shoes factories should manufacture and which industries deserve expansion.

We have removed the billionaire.

We have not removed human beings.

The official making those decisions can still be corrupt. He can still favour his friends. He can still make terrible decisions. The difference is that a customer can stop buying from a bad private company.

Escaping a bad government is considerably harder.

Africa has experimented with extensive state ownership before. Across the continent, governments after independence took control of airlines, telecommunications networks, factories, banks and other industries.

Some enterprises served important national purposes. Others became famous for losses, political appointments and services customers endured because there was nowhere else to go.

Private ownership has its monsters; state ownership can manufacture its own.

So most countries have quietly settled on an awkward marriage.

Let the capitalist build the company, then send the tax authority.

Allow profit, but regulate pollution. Permit companies to become large, but stop them from destroying competition. Protect private property, but use public money for roads and schools.

Reward successful entrepreneurs without allowing success to purchase the government itself.

Nobody has found the perfect formula, and perhaps nobody ever will.

Capitalism is unfair partly because life arrives at the marketplace already unfair. People enter with different parents, schools, passports, talents, inheritances and opportunities.

Yet its great attraction remains stubbornly alive: the baker can open his shop without waiting for a ministry to decide that society needs another baker.

The danger begins when he becomes powerful enough to decide that society does not need another one.

So encourage the baker. Let him become rich, tax him, and if he tries to buy every bakery in town, remind him that capitalism was supposed to produce competitors, not kings.

Perhaps capitalism has survived for so long not because humanity finally discovered a perfect economic system.

Perhaps we simply discovered a system whose failures we would rather keep fighting than exchange for somebody else's.

Capitalism may not be the best system imaginable. It may just be the least broken one we have managed to live with.