The Australian entrepreneur spoke to an audience at City Impact Church in Queenstown on Friday, a talk labelled "Tomorrow's business", which organisers planned to repeat elsewhere.
Mr Smith spoke after Student Volunteer Army founder Sam Johnson, and said he hoped young people such as Mr Johnson would steer the economy in a sustainable direction.
Despite earning $20 million from the sale of Dick Smith Electronics in the 1980s, he told the crowd he "got a hard time" for benefiting from a system against which he is now rallying.
"In a shopping centre about half the stuff isn't necessary, but if you stop buying it, it will collapse," Mr Smith said.
"We are reaching the limits of growth. It's leading to extremism, and extremism in anything is bad."
This "profit-driven market" led Mr Smith to create Dick Smith Foods in 1999 which sourced all materials from Australian farmers and asked Australian shoppers to spend a small amount extra to ensure profit remained in the country.
"In Australia, 85% of the products in a typical supermarket trolley are made overseas."
Instead of the current economic system, which requires "perpetual growth" the world should adopt a sustainable system which is not necessarily focused on profit, which would mean removing GDP as an indicator, he said.
"My belief is that we can have a fantastic system of capitalism without growth," he said, since a "stabilised" system was a sustainable one.
Audience members took the chance to ask Mr Smith about business ideas and predictions.
