Free market economy promotes higher return on capital

Wealth creation occurs at fast speed in a free market economy where the intervention by the government is to the bare minimum extent. Capitalist economies support free-market system as entrepreneurs take major decisions based on expected return on capital. This is the reason that the capitalist economies of the world are generally better off compared to countries that try to follow the socialistic model. Capitalistic countries encourage entrepreneurs through lower tax rates and easy regulatory compliance processes. They reward innovation and enterprise through appropriate patents and wealth accumulation. 

On the other hand, socialistic countries put a lot of emphasis on redistribution of wealth through high tax rates and discouraging wealth accumulation. This often creates scarcity of goods and services as socialistic economies operate at less than potential due to deadweight loss on account of higher tax rates. Large scale central planning by governments often results in poor allocation of capital and that leads to low return on capital and ultimately perpetuates poverty.