If you don't mind continuing because I'm enjoying this.
It's really easy to place all the problems of society on some big nebulous concept, like Capitalism. But, I really think that's oversimplifying things. For the most part because the grossest mistreatment of "the other" doesn't come from capitalism. The vast colonial expansion of the European Industrial empires was spread by Mercantilism. The Holocaust was caused by a variant on Socialism. No one wants to go back to Feudalism. And I'm not even going to get into the pure amount of deaths caused by the various attempts at making the Communist system actually function in practice instead of on paper.
Does this make Capitalism good? No. Hell no. In its purest expression of laissez-faire economic systems there is a general trend toward monopolies and exploitation of the unskilled labor force. And so laws and restrictions are added to attempt to mitigate that trend. With mixed success. Perhaps some day we'll figure out a better economic system. But so far our bastardization of Capitalism with a smattering of Socialist laws and restrictions is functional, if not technically optimal.
Anyway, on to technology and magic and what that means for economic systems. There are really only 2 territories explored in the lore thus far that actually do have the ubiquity of magic and tech to get that to work. Ionia and Piltover/Zaun.
The problem though is Ionia's magic seems tied to the land. So while they may make enough produce for themselves, spreading it out would be problematic. And then we get to Piltover/Zaun. Which I'm just going to call Zaun from now on, because it's fewer letters.
In Zaun we are looking at technology that is more advanced than what is available to us in the real world. And it appears to be mass-producible (otherwise the factories setting of Zaun wouldn't make sense).
But here is the problem, which the pre-Colonial European powers soon discovered upon discovering the power of industry. Fueling industry is hard and resource intensive. There's a reason why industrialism only pops up in already established empires (in the strictest sense of the word). England had successfully conquered the rest of its island, and had a nice chunk of France at the start. France had all of Gaul and a bit of what would be present day Germany. Spain had finally gained control of the entire Spanish Peninsula and driven out the Moors. It is in these places that Industry really kicks off. While the far more divided Holy Roman Empire and Italy (both of which were largely comprised of either city-states or feuding sub-territories) took quite a bit longer to get their act together and develop.
Germany, famously, had all the theoretical means of creating a large Industrial powerhouse, but didn't really succeed in pulling it off until Bismark united the German states.
The other time when Industry was close to being developed was during the height of Rome's power. We now know that the Romans had all the pieces of technology that could develop into industry at their disposal. They knew about mechanization and they knew about electricity. Only, they didn't develop Industry because their labor was already done efficiently through slave economies (I'll just add that one to the list of tried and failed economic structures).
Anyway, tangent aside. Zaun somehow developed industry alone. Now, what can they do with it? They need resources to fuel their industry. In the world of Runeterra that's the corpses of Skarner's people or something. This puts a hard limit on how far their influence can spread.
In the real world, industry is run based on steel, oil, and unrefined resources. If the goal is to gain those resources to funnel into industry and create a better life for your people you have two options. Option 1: Forcibly take those resources. Option 2: Trade for those resources.
Option 2 is definitely the nicer option. Unfortunately, you can't really control what your trading partner does with the resources you give them. They may just take everything you give and funnel it all into military tech and then try and use Option 1 on you. And, well, if you've been putting all your resources into increasing your people's standard of living you will lose that war. All the resources you used in medicine and food allocation will not save you, but it will make you look that much more tasty to your more aggressive neighbors.
Alright, so you're planning that you will be attacked in some later point. Probably by one of your trade partners. So, what can you do to save yourself while also helping out your people?
Military technology funding. Going back through time, funding for the military has been one of the most efficient methods of increasing your people's standard of living while also keeping your state defended. Where did steel come from? People trying to make a better armor. And after steel was created to make better armor people realized, hey, it can be used with plows! And suddenly there's an agricultural revolution. Where does the microwave come from? Military funding used to figure out how to fly their new planes in warfare. Now we don't have to cook food for hours every day, so we have more time for work and leisure. Where does the internet come from? Aircrafts? Telescopes? Rockets? More medicines than I can count? All of it military funded, all of it then used to help the civilian population.
Until, finally, military funding developed the bomb. The big one. Nuclear power. Destruction in a way the likes of which the world has never seen before. A technology that doesn't just let you win the war. But if dropped absolutely devastates everything.
Suddenly the idea of being invaded by your trading partner doesn't seem particularly likely. If they do, you can just nuke them. Mutually assured destruction. This, in theory, finally allows us to focus more on civilian advancing technology in earnest. And maybe, in theory, allows us to advocate a difference in economic system.
But it's hard to see where that will go. This is in uncharted territory as far as political, social, and economic history can determine. You'll get optimistic thinkers like Tesla who believed that the creation of such a super weapon would lead to the abandoning of war as an outdated method of establishing foreign policy.
Or you'll get pessimists like me who think we'll just nuke ourselves.
And as to historical people who managed to increase standards of living without conquest. I’ll do that work for you. There are only 2 that I am aware of (pre-Industrialism). The first was a small island chain with no outside contacts, off the coast of Africa so they couldn’t conquer anyone.
The second would be then Iroquois Confederation, if you squint at it. They actually were able to form a mutually beneficial coalition between five city-states (or tribes more accurately in this example) without war and it actually worked for a good while.
That said, the Iroquoians did go conquering at different times in their history. But there were large stretches where it seems they were peaceful and yet growing. Which is pretty good considering every other state roughly their size got that way almost entirely through violence.