At it’s core, capitalism is system of resource distribution. It’s in contrast to other resource distribution systems, such as how indigenous people and early human tribes are often thought of as using various system of resource distribution that are collective in nature, where everyone shares all resources and people take only what’s needed (though this was far from the only resource distribution system used by those peoples), and it came about primarily in contrast to feudal systems of resource distribution, where powerful kings and lords would collect resources from the broader public and then spend them however they wanted.

Sorry, that’s just not correct. Capitalism and feudalism are the same thing. If you let capitalism run unchecked, you get feudalism. A company town is essentially a feudalistic construct, if there’s no government around to keep capitalism in check.

These systems fundamentally lead to game theory coordination problems, and inefficiencies because resources aren’t shared.

Nope, these systems lead to the capital taking over. You will have one group of people who fare better than the others, so they will end up buying everyone’s land and will hire them to work for them. Money is power and power makes money. So as soon as not everyone is perfectly equal in what value they can create, someone will make more, thus be able to hire more people and buy more and, which will make them more money and the loop continues.

Capitalism on the other hand promises to be a distributed, decentralized resource distribution system. Everyone just has to behave according to their own self interest, and resources will flow to where they’re needed. If I make a better product than you, that should prove out that I’m better at making products, and should thus get more resources so that people who are better at making products make more than those who are worse.

This is flat-out wrong. Nothing in this paragraph is correct.

Read up on e.g. Standard Oil if you want to know why there’s no need to make a better product or be more efficient to become a monopoly, and why once there’s a monopoly, it’s super easy for the monopolist to suppress any new competitors, no matter how much more efficient or better they are.

Does it work out that way in practice? No, not always, this is an incredibly simplified model system, but the core idea behind capitalism, is basically the same core idea that’s behind lemmy and the fediverse. Decentralized, distributed systems. They’re hard to design, and they require everyone agreeing on standards, but they are more flexible and don’t have the fallibility of central authorities.

That is not what capitalism is or does. Capitalism is not an inherently distributed system. Capitalism is a system where the one who has the capital can use it to make more capital, thus massively advantaging someone who already has capital over someone who doesn’t.

Money is power and power makes money.

The only reason a capitalist system doesn’t instantly collapse into feudalism is if there’s a strong opposition against it which operates outside of the capitalistic framework. Namely unions and democracy. That’s the only way the many people without capital can counter-balance the few with all the capital.

Have you ever looked at wealth distribution charts, like ever? The US is well past a healthy capitalist society and pretty close to a feudalist one, or as we call them today, a fascist one.