I will suggest a different course of events: In the 19th century the welfare of common people (in the industrializing countries) started to increase exponentia

I will suggest a different course of events: In the 19th century the welfare of common people (in the industrializing countries) started to increase exponentially. Education, property ownership, economic activity, nutrition, energy availability and productivity absolutely exploded within a single generation. Many of the capitalists during that era were aristocrats of some sort, because they already had capital. The rest of the old aristocracy felt threatened however, they could see that all these newly enfranchised and confident people would soon kick them out of their comfortable positions. So they started movements like the Labour movement (which protested city living/working conditions that were leagues better than peasants') and Socialism (which puts an aristocracy of party officials in charge). Worst of all, they managed to somehow implant the idea that markets only work when severely constrained by suffocating regulations and dictates, which was extremely effective in killing small businesses. Really what we have now has very little to do with capitalism, how else would you explain the surge in things like stock buybacks which are essentially capital destruction (converting capital to paper valuation increases) or the insane growth of states towards 100% of GDP (which is decidedly not the most productive use of that capital).