<p>This article analyzes the paradoxical interplay between capitalism, mimetic desire (Girard’s theory), and intermediary institutions. It argues that while family and community initially foster capitalism by strengthening social bonds, late capitalism paradoxically erodes them. This dynamic leads to observable social fragmentation and demographic decline, evident in Western fertility rates, undermining capitalism’s long-term success. The article proposes a new theoretical capitalist framework, “Neo-Jerusalemite Republican Capitalism” (NJRC), a novel model. Using Israel as an illustrative case, the article suggests that sustained economic growth can coexist with resilient mediating institutions, potentially moderating mimetic rivalry and correlating with higher fertility rates. It advocates for strategically limited state intervention to preserve vital institutional frameworks, fostering community cohesion and demographic stability. This model offers a practical middle ground, addressing capitalism’s inherent contradictions and pressing Western demographic challenges.</p>