The problem with modern capitalism is that there are not enough capitalists. We need a system that encourages diverse ownership of capital if we want to build and support the middle-class. My worst fear is that we are transition towards a polarized economy - an economy where you have a small group at the top that owns most of the capital, and a large low-skilled, low-paid working class. For example, replacing a family owned grocery store with a chain store would be polarizing as the capitalist that owns the store and the building is no longer the local grocer, but a parent company in a far off city. The parent company pays a manager, but that manager is merely a salaried position, not an owner - their wealth does not include the business and the premises - so the mean wealth may be the same in both scenarios, but the median wealth shrinks as the wealth accumulates in the hands of a few.
We are not in that extreme state yet. There are plenty of startups, entrepreneurs, and small business owners. Right as I am typing this, I'm trying to schedule a plumber to move a gas line in my kitchen, and every plumber I find in the phone book is either self-employed or works for a small business. Drive around town, and you will see antique stores, local pizzarias, and attorneys. These people are capitalists; they own their buildings, their equipment, their vehicles, and that is keeping the wealth and capital in the local community. These people are the middle class. Capitalism needs more capitalists.
The industries that tend to be the most diverse and least polarizing are those that require the smallest amount of capital to start in. For example, with a plumber or electrician - if you have the required skills then starting your own plumbing or electrical business is as simple as buying the tools and the vehicle to get around in. If you already have a car and tools laying around - the cost of starting your business might be close to free. The software industry is another example. If you have the skills and a computer, you can start a business out of your living room.
A fine grained economy is contrasted with a polarized economy that takes a lot of upfront capital (or a lot of high risk debt) to start a business, so those that start a business (to build their wealth) will tend to be those that already have a lot of wealth. The wealth and capital ends up accumulating in the hands of the already wealthy, rather than being distributed more evenly. An extreme example of this is the story on Strong Towns that mentioned you need a net worth of half a million dollars to open a Dunkin Donuts.
Selling doughnuts should be one the cheapest business ventures to try out. In my ideal city, I should be able to ask for a permit, set up an old table from home on the street, bring a doughnut maker or a portable oven, and spend the day making and selling doughnuts. It should be extremely cheap and low risk. Even if I had to borrow $300 from family and friends to get started and it fails, I can easily repay them.
Setting up a food truck, street cart, or a stall in a public market is a low cost and low risk alternative to opening a store on a quarter of an acre, complete with landscaping, parking, a drive-through, and a tall sign.
Great cities are incubators of capitalism - where everyone has a fair chance to move up the economic ladder, not just the ones that started out at the top. How easy it for someone that likes cutting hair to open their own barber shop or salon? What does it take to start selling groceries in your area? What about some light manufacturing (such as making dolls or bird houses?)
Cities are the physical manifestation of the economy. A fine grained city represents a fine grained economy. Early American towns and cities have a lot of buildings and streets that are very fine grained - in that each building itself is narrow and small - and I can imagine that a century ago the average person within their lifetime could afford to buy a plot of land about 20 feet wide and open a shop or lease out the bottom while they lived upstairs.
But it's not uncommon nowadays to see a single developer with a lot of capital (and probably a lot of tax subsidies) come in and build these monolithic developments that are often the size of entire blocks;
And cities seem to be happy attracting and encouraging this sort of development. Very few would say no to that. However, just like the economy, we risk creating a polarizing environment where only those with a lot of wealth and capital are the ones that are able develop and own real estate.
Can I afford to build that? No.
But, if you look at how traditional urban areas were platted, the blocks were often sold and divided into many small lots;
If we imagine we jumped back 100 years ago, it wouldn't seem unfeasible for us to purchase one of these lots and develop something like this on it;
There would be a dozen owners with a moderate amount of capital developing and building their personal wealth, rather than a single developer with a lot of capital (and likely other properties) using it to further just themselves. It's up to you whether you consider this a good or a bad thing.
The other thing I'd like to point out is that many of these new urban developments I encounter;
..tend to feel very faux-urban, and they lack the authentic feel of an urban place that has incrementally grown over the years.
There's a complex system of lenders, zoning and land use regulations, and cultural attitudes at play here, but we need to focus on becoming more fine grained. Creating a fine grained economy and fine grained urbanism run hand in hand with lowering the cost of entry - be it for starting a business or for developing property. By doing so, we will create an environment that better spreads the wealth that is created, will allow us all to become more prosperous, and gives everyone a fair chance at achieving the American Dream, not just those already born into it.