Capitalism isn’t predicated on anything. Simply, capitalism is free market economics. If you invest capital in a product, and take that product to market, you are entitled to any profit or losses resulting from the sale of that product. So, if a watchmaker invests money in acquiring the base materials and tools to make watches, and hires someone and pays them a wage to help make the watches, then sells those watches for a profit, he is entitled to the profits because without those base materials and tools, those watches would not have been made.
The issue many socialists/communists seem to have a problem with is the pay scale offered to employees and their ability to meet basic needs. However, this is also a result of their ability to put meaningful value into a product. So using the watchmaker example, the watchmaker may have designed the watch and developed the parts, and the employee simply assembled the watch. In this case, the watch was at the point of being finished. All the widgets simply needed to be assembled, and it was more efficient for the watchmaker to hire someone to do it. In this case, that employee provided little value to the company, as they did not do anything to make the watch work better, looks nicer, sell easier, etc. Simply, they provided little value to the company, and their job as such was easily replaceable.
Now had that same employee been involved in the design process or helped to design components, they would be providing additional value to the employer. Then they may be entitled to a higher wage. However, as they did not invest capital in the original materials and tools, they cannot have a say in how much they earn. The employer is free to set a wage that the employee will work at, and that employee is free to accept it or look for other work. That same employee can also, through careful spending and investment, start his own company and thereby become the employer.
In a socialist system, whereby the workers as the state control the means of production, there are a considerable number of problems. First, how are scarce resources distributed? How do the workers decide whose work is most valuable, and then efficiently distribute materials? Capitalism has solved this problem with the “user pays” system - if you can buy it, it’s yours. Second, how do you manage oversupply? Oversupply is a waste of resources, as those resources are not used by society. Capitalism has a solution to this: investor’s risk. If your product does not sell, you do not gain a return on your original investment. Third, how do you encourage efficiency and success? Communism has proposed “rewards” such as awarding honours and such, but as soon as you begin to slip into providing more resources (income) to someone, you begin trekking down the road back to capitalism. Capitalism simply says the most successful will bear the fruits of their labour and their luck - it is why people can either become rich or crash and burn.
Capitalism has side effects, but has also contributed the most to the greatest improvement in human quality of life over any single system. Without it, we would not have computers that continually are improved upon, cars that run efficiently and have parts readily available should they malfunction, houses that can vary widely in shape, design, colour, size, etc.
Simply, capitalism rewards those who are willing to work and take risks, and does not reward those who are not willing to work or take risks. Not only that, capitalism does not dictate a certain distribution or societal structure - it is simply an economic structure within which there are a great variety of solutions to an equally great variety of issues. Communism has not offered a solution to the dillemma of fixing the inequality between the bourgeoisie and proletariat that it seeks to eliminate, without risking a return to the class divisions which it fought against. Nor has it offered any system that can produce an effective communist state except for the vague “dictatorship of the proletariat”.
The most efficient systems are those in which there is drive and incentive to succeeding. That system, for better or worse, is capitalism, as it plays off of humanities greatest emotion: fear. Fear of failing. Fear of going hungry. Fear of everything.
Communism, by its very nature, advocates for the elimination of the fear of wanting, but by doing so eliminates humanity’s greatest driver of action. And that, ladies and gentlemen, is why Communism cannot and will not work without becoming that which it sought to destroy.