Not exactly, because "governments" are expressly capitalist. While you're right in that governments and capitalists want this type of fodder, OP's nephew is wrong in his assessment of modern capitalists.

As an aside, some religions do teach a duty to be fruitful and multiply. While I don't think capital G "Government" cares who does or doesn't procreate in their country, there are large organized political groups that promote this for strictly ethno-nationalist reasons.