Dr. Martin Hash Podcast

Capitalism works because it's based on adversarial relationships, which have the advantage of speed & efficiency, and self-interest, a source of tremendous motivation. Capitalism is the economic manifestation of individual liberty, which means individual rights are paramount, and rewards benefit individuals. However, society, though composed of individuals, operates for the group's best interests, via a kind of enlightened paternalism, where the needs of the group supersede the wants of any one individual. A purely socialist society takes complete control of the means of production to ensure the needs of the group are being satisfied, and economic rewards accrue to The State, or Workers via The State, obviously severely constraining individual liberty.

Mathematically and ideologically, Capitalistic economies have the advantage when it comes to progress and improving the well-being of its citizens, but functions such as protection, welfare, healthcare, environment, and law perform better under a socialist umbrella that favors the good of the public over the enrichment of individuals. This is primarily how America is now, but the more socialist-leaning a nation becomes, usually through self-interested democracy of the lower tiers of the population, the more industries are subsumed by The State. Determining those functions is the purview of politics, and hotly contested.