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I'm not seeing a definition of capitalism here.
To my knowledge, capitalism is defined as a market economy where the means of production are privately owned by investors and operated for a profit. It fundamentally concentrates money to a small number of investors, who are incentivized to use that money to more efficiently concentrate money in their pockets (e.g. influencing politics).
Whether it's the intended outcome of capitalism, it's certainly an inevitable one. Which is why I asked, how you would define capitalism such that it doesn't inevitably lead to the mega wealthy with power to influence regulation.
Capitalism is the private ownership of property.
Dictionary Definitions from Oxford Languages · Learn more noun an economic and political system in which a country's trade and industry are controlled by private owners for profit. "an era of free-market capitalism"
Not sure what you mean by a small group. Anyone who a pension, a 401k, etc is an investor. Almost every American is an investor. It’s how we fund our retirements.
None of that contradicts the observation that, over time, the accumulation of capital through profit incentivizes private owners to reinvest that capital to increase the profit potential of their business. Passive investors (e.g. pension-holders) don't do much of this, that much is true. Even small-scale investors (e.g. small business owners) typically only do this in positive, productive ways we like to see (e.g. reinvesting in the means of production to create more valuable products).
But large investors (e.g. corporations) inevitably bubble up. That's what capitalism "selects" for, over time. They are heavily incentivized, at the demand of shareholders, to maximize profit. Profit = Revenue - Expenses, which means maximizing profit requires maximizing revenue and minimizing expenses.
Maximizing revenue eventually leads to suppressing competition through market forces (e.g. selling at a loss to drive smaller businesses to failure a la Walmart) and regulation (e.g. the aforementioned political influence through ~~bribery~~ gratuity), as well as directly exploiting monopolies to raise prices (e.g. Ticketmaster). Then there's the many other mechanisms used to increase sales without increasing value (e.g. planned obsolescence, subscriptions, etc). Minimizing expenses eventually leads to cheaping out on quality (which nicely dovetails into increasing revenue through planned obsolescence) and minimizing wages.
So what you get, in a model based on private investment and driven by profit, is an environment where the most successful investors with the most capital at their disposal to reinvest will be the ones who use every tool in their arsenal to maximize profit. Sure, there will be plenty of other small businesses and individual investors getting by, but the mega wealthy are an inevitable by-product. It's natural selection.
And as the mega-wealthy get wealthier, they siphon wealth from down the food-chain. Wage suppression and price increases mean less disposable income for the average person to reinvest. Regulatory capture, as you said, sets a barrier to small businesses in entering the market. Even if a small business makes it to market, corporations are comfortably poised to undercut them.