Small business guy here. When abusive employment practices give you a competitive advantage and nothing stops you from doing them, you can indeed go and be virtuous and make less money for yourself and your business and lose all day long.
At the scale of publically held companies, your bossy evilness is virtue signalling that tells the market that you are viable in the era of Uber and Amazon. Right now, as things stand, wrecking things and your own employees is expected and you will get no support and no investment from breaking ranks. That's just how it is.
In my field, I ended up just flipping the table and switching to Patreon so I could dump free competitive product and better serve my own userbase. My income got literally decimated by this decision but has rebounded to about a third or half of what it would have been, but I'm totally exempt from having to behave like a vulture: it suits my market positioning quite well, though if I was a really serious threat to the market leaders in my sector, I'm pretty sure they would come up with a way to sabotage me. That's also why I MIT license: I can funnel good stuff to poor musicians if I also let already-rich people steal it in exchange for only publicity. The alternate is they steal it anyway but with no publicity, or simply try to wreck my operation so there's less competition.
The narrative of the evil capitalist overlord persists for good reason: in the absence of a working society it's down to power and power alone, and only winning and getting the most capital allows you to continue to win and get more capital. It's a feedback loop and there's no reason 'salaries would improve' barring outside interference, which is less likely by the year.
Go ahead and do your thought experiment, but it doesn't map to the real world of 2018. To survive you've got to think more disruptively: your axioms here are pretty naive. For instance, what is actually important: your clients being happy, or your clients paying more money?