We Need Capitalists
A lot of people hate "capitalism". Many of these people, however, don't actually know what capitalism is, and so they hate things about "capitalism" that aren't actually features of capitalism. But I'm going to set that problem aside for now. At least some people are bothered by things that are genuinely key features of capitalism.
So here is one central objection to capitalism that is actually about capitalism: On the face of it, it appears as if it rewards certain people handsomely, for socially valueless activities that no one deserves to be paid for. In particular, capitalists can make a lot of money, for seemingly doing no work. On its face, that looks unjust.
Terminology
Just to make sure you know what I'm talking about:
Capitalism is an economic system that allows private control of the means of production by capitalists.
Socialism, by contrast, has collective control of the means of production, by or "on behalf of" the workers. This could mean control by the state, or (in the anarcho-socialist view) worker cooperatives.
Capitalists are people whose income derives from owning capital. A business owner gets to collect the profits from a business, not for doing any particular work, but just for owning the stuff that is being used to produce goods. You could become a capitalist in a small way right now (if you're not already): go online and buy some stocks. The stocks represent partial ownership of some businesses. If they go up in value, you can make a profit.
An Objection to Capitalism
So here, again, is the objection that I think many have to capitalism:
In the capitalist system, empirically, capitalists not only make a living; they often become very rich. But you shouldn't be able to get rich just because you own stuff. You should have to do real, productive work. Owning stuff isn't productive work.
The workers in a business, meanwhile, typically make much less money than the capitalists. Yet the workers are the ones doing the actual productive work! This looks unjust.
People then try to devise theories to explain how the capitalists have managed to scam society. Notice, by the way, that the underlying evaluative assumption behind the objection is something that most conservatives would agree with -- that people should be paid (only) for being productive. (Of course, there are other objections to capitalism that turn on values that conservatives would disagree with.)
To be clear, the objection is not that business management is a useless activity, like "Oh, managers are just pushing papers around; that's useless." (That's kind of a dumb objection.) Defenders of capitalism are liable to confuse capitalists with managers. To be a capitalist, per se, is not to manage a business. Nor is it to do anything else at all, except own stuff, and collect income from that. And the possibility of doing that is central to capitalism.
Recently, I bought some Boeing stock. In so doing, I became a part owner of that business. I am now in principle entitled to some small share of that business' profits. I can assure you, however, that I have absolutely no intention of helping to manage Boeing. I have no intention of doing any work whatsoever for Boeing. The "work" I will do will be strictly limited to selling those shares at some future date, hopefully at a profit. That's it.
Of course, many capitalists are also business managers. But (a) as that example shows, the "capitalist" function and the "management" function are distinct; and (b) it is actually their "capitalist" role that makes most of the money, for the world's richest people, not their "manager" role. E.g., look at Bill Gates, Warren Buffett, Jeff Bezos: their wealth is almost entirely due to their stock holdings.
So I think this is a good philosophy-of-economics question: how is being a capitalist, as such, productive? How, if at all, does that function make a person worthy of receiving payment? If it doesn't, is that an injustice, or some other sort of flaw, in our society?
I'm going to guess that most of my readers here are pro-capitalist. But you still might not know exactly how to answer those questions.
Three Cheers for the Capitalist
There are at least three important functions served by capitalists (and these are focusing specifically on the "capitalist" role, not the "manager" role).
1. Risk Acceptance
Business is risky. Most new businesses fail within a few years. Even big, long-established companies frequently go into decline. E.g., Sears was the largest retailer in the 1980's and earlier, yet in 2018, they filed for Chapter 11 bankruptcy.
If business activity is to go on at all, someone has to assume that risk. Workers could do that in theory, but, empirically, few want to. When you take a job, you don't want to have to front the company some money to get started or expand operations -- and then stand to lose that money if the business fails.
So it's left to another group of people to play that role -- the capitalists. When a business fails, the capitalists are in line to take the loss. In return, if the business succeeds, they collect the profits.
2. Deferred Consumption
If the economy is to grow, someone has to set aside resources today and, instead of consuming them, use them to try to increase future production. Anyone could do that, but, empirically, most people don't want to do it, or don't want to do very much of it. Most people, if they acquire some extra money, will shortly spend it.
So it falls to a small group of people to do most of the investing. In return for forgoing immediate consumption, they get a little bit more expected money at a future date.
3. Evaluation and Allocation
It is not a simple matter to have a productive, functioning society. It's not sufficient to just tell everyone, "Okay, go do some productive work." Someone has to decide what work should be done, and as a matter of fact, most ideas about that will not work. Most business plans will destroy value rather than create value. I.e., the economic value of the goods or services they will make available will be less than the value of the resources they will use up.
(Note: this is true in an advanced, prosperous society. In a primitive society, it would be much easier to find straightforwardly useful things to do. In an advanced society, there are many more bad business possibilities.)
Because business is risky and most possible business ideas will not work, someone has to evaluate business ideas and decide to which ones resources should be allocated. This, by the way, goes not just for new business proposals, but also for existing businesses. Even a business that has been around for a long time needs constant reevaluation -- maybe resources should be diverted away from it to other businesses.
Most people don't want to do that. Moreover, most people cannot do that -- if they try, they will do a very bad job of it. Some relatively small group of people are interested in doing this task and are good at it. In the capitalist system, they will be rewarded with more resources, which they can also direct in efficient ways, and so on. The people who are bad at this task lose their resources and then have to stop doing the task.
The above is the basic theory of capitalism. Of course, there can be failures in practice. It's possible for an individual or business, in some cases, to acquire resources not through productive activity but through scamming or stealing. The real world is always imperfect, whether it's a capitalist, socialist, or other system.
We could try a different system. We could have government officials evaluate business ideas, and allocate taxpayer money to the ones they consider worthy. That would be the state socialist system. Most government officials, though, are not very good at this, and the socialist system does not have a credible mechanism for stopping people who are very bad at this job from continuing to do it.
What's It Worth?
You might be tempted to say: "Okay, so the capitalists are doing something useful. But the workers are still doing the main productive activity. Surely the capitalists are not doing so much as to justify their making millions or billions of dollars."
No, it's plausible that they actually are. Two important points about this:
The activity of the capitalist is leveraged, so to speak -- i.e., a capitalist's actions affect what many other people are doing. If an individual blue-collar worker does a good job or a bad job, it makes a small difference to that company's productivity. But a capitalist's decisions can easily make the difference to whether that entire company exists or not. They affect the disposition of much larger amounts of resources than the actions of an individual worker. So the productivity benefit of having a single skillful capitalist, rather than an incompetent one, can easily be many times greater than the productivity benefit of having a single skillful worker rather than an incompetent one.
Also keep in mind the role of supply and demand. There are many more people who are willing and able to do blue collar work than there are people who are willing and able to serve the functions of the capitalist. As with anything else, scarcity drives up the price of capitalists.
Conclusion: Our objection to capitalism is misguided. Capitalists serve crucial productive functions, and their wealth is plausibly explained by their large contributions to productivity.