On Capitalism and Socialism

One of the curious characteristics about debates about Capitalism and Socialism is the tendency for those on both sides of the debate to assume a system can't have elements of both.  The Capitalists argue ferociously that a little bit of socialism will undermine Capitalism, the economy (and freedom).  On the other hand those of a Socialist bent are equally vociferous in arguing Capitalism has no redeeming quality's.


In my experience either/or choices are seldom imposed by reality, they are imposed by our own desire for simple answers.


What sparked  a recurrence of this thought in my mind was reading a book review (Economist, July 14, 2012, p.74).  The book is "Why Capitalism" by Alan Metzger.  As the Economist characterizes Mr. Metzger's argument, he believes Capitalism is the only system that leads to freedom and economic growth.  I assume Mr. Metzger isn't arguing there has been no society in history that wasn't free that experience economic growth, so I guess he is somehow arguing you can't have freedom without (pure?) capitalism.  


I wonder what the people of Sweden, or the other very successful and happy denizens of  Northern Europe that have created pretty successful amalgams of free enterprise and socialism would say to him?


As summarized by the Economist Mr. Metzger evidently argues the problems in Capitalism aren't from the theory, the problems are a result of the "elements of state control" and that get grafted onto the capitalist systems that always lead to corruption, waste and excessive regulation.  I wonder if he was paying attention in the last decade to things like Enron, Lehman Brothers, or if he has any friends or relatives who got sucked up by sharp real estate people selling nonsense loans to buy overpriced houses.


What strikes me as most startling is his assumption freedom and capitalism go hand in hand - that you can't have a free society that isn't capitalist.  Modern free societies are scarcely 2 centuries old, a fraction of the history of humanity, and up until the last 50 years you could count the "free" countries on one hand.   In my estimation a truly free society does not yet exist.  Even in the US if someone wants to make stupid personal decisions that affect no one else, government often steps in.  In the scope of human history the democratic free society is a pup just beginning to develop.  Mr. Metzer seems to be stuck in a mindset sort of like the ancients convincing themselves the earth is flat because they wanted to be an expert and did not have the powers of observation and imagination to conceive of any other explanation.  


Another book reviewed at the same time (same cite) - "A Capitalism for the People: Recapturing the Lost Genius of American Prosperity" by Luigi Zingales - is focused more narrowly on what the problem is in the US (and most other countries).  Government focuses on being pro-business instead of pro-markets.  US Law is riddled with complex subsidies that favor certain businesses to the detriment of the market - and the detriment of taxpayers.  


Overall these reviews seem reflective of a tendency in public dialogue to assume we have to be either capitalist or socialist, we can't choose different systems for different parts of society.  I do not believe it is impossible to develop a system that combines the best attributes of Capitalism and Socialism in a successful free society.  I do believe it won't be easy, but few things worth having are easy.