What are the pros and cons of capitalism?

Capitalism promotes innovation in a free market economy

Question: What are the pros and cons of capitalism?
Position1 of 2›: Capitalism is good
Argument1 of 5›: Capitalism promotes innovation in a free market economy

A free market encourages innovation because people have incentives to work harder, which leads to higher productivity. Innovation allows societies to develop rapidly and gives people a better quality of life.

The argument

Capitalism promotes and rewards innovation from people and companies, and it does so at all levels, for both goods and services. The mechanism is straightforward: in a system where the returns from a better product accrue to whoever produces it, the pursuit of profit and the pursuit of improvement point in the same direction, so innovation does not have to be commanded or subsidised to happen. Companies invest in research and development in an effort to create better products so that they can sell more and increase their profits. That investment is not charity or foresight; it is the rational response of a firm that knows a competitor may otherwise get there first. This leads to huge advances, especially in fields like medicine and technology, where the cost of developing something genuinely new is enormous and only the prospect of a substantial return justifies bearing it. The system also rewards companies for constantly making improvements to already existing products and technologies, so progress does not stall once a product works well enough. Capitalism creates an incentive for companies to keep improving because that is how they earn the most money, and competition ensures that standing still is not a neutral option but a losing one. These continual improvements benefit consumers, because they lead to more choice among goods, and because a firm that must persuade a customer to buy rather than simply assign them a product is disciplined by that customer's judgement. Due to the competitive nature of capitalism, citizens also have an incentive to work harder. People know that with creativity and hard work — the backbone of innovation — they can become the next Bill Gates or Jeff Bezos, and the visibility of that possibility does as much work as the probability of it. This results in a culture of productivity that increases overall efficiency, allowing civilizations to develop rapidly as new technological advancements are made. Capitalism is therefore good, because the innovation it generates is not incidental to the system but the thing the system is built to produce.

Premises

[P1]Capitalism rewards innovation by allowing companies and individuals to profit from creating and improving goods and services. [P2] These profit incentives drive sustained investment in research, development, and hard work, producing advances in fields like medicine and technology. [P3] The resulting innovation benefits consumers through more choices and benefits society through greater productivity and rapid development. [C] Therefore, capitalism is good because it promotes innovation that improves society.

Counter-arguments

One result of capitalism has been the formation of monopolies. The incentives for innovation (such as competition) do not occur under monopolies. This results in large corporations becoming lax in their development and suppressing or buying new products in an effort to protect their dominant position. This is bad for a free market and bad for innovation.

Rejecting the premises

[Rejecting P1] Incentives for innovation do not occur under monopolies (which occur in capitalism).