Most Revd Justin Welby was writing in The Daily Telegraph and argued against the idea of deserving and undeserving poor, saying it goes against basic Christian teachings.
He also rejected the idea that capitalism will bring a better life for all because it is at its most basic "selfish in nature", but stresses it can bring "huge" improvements in people's lives.
He has been speaking as he prepares for a London conference 'Inclusive Capitalism' with speakers such as Bill Clinton, former United States President, and Mark Carney, Bank of England Governor.
The Archbishop has been setting out what he sees as the Christian take on capitalism, rejecting the idea that redistribution of wealth or charitable giving, will solve the rich-poor divide.
"Inclusive capitalism will not happen by accident.
"Adam Smith was perfectly clear about the selfish nature of capitalism - trickle down is not inevitable, and, to use another cliché, a rising tide does not float every boat.
"Rather than just seeking a return on investment, there has to be generosity that reaches out.
"If we relied solely on self-interest our society would collapse."
He emphasised that employers too often hire from middle class backgrounds, as shown by the Social Mobility and Child Poverty Commission, and that they should look for potential in everyone.
Borrowing a line from Pope Benedict's encyclical he spoke about gratuity, Caritas Vertate, a generosity that reaches out.
"God who acts in love that does not seek return, is a crucial part of a stable and functional society."
Justin Welby stressed the government must provide opportunities for altruism to maximise human flourishing.
He added that: "Any human structure that calls itself moral must seek to include anyone who wants to be included, whether they are considered to be deserving or not.
"A society like that is truly one worth living in."
