On a grand scale, Capitalism leads to giving away things to people who don't earn them, and Socialism leads to forcing people to earn everything they are given.
That's my bold thesis.
Here's how it works:
In a capitalistic world, entrepreneurs assume the risks. To counter risks, entrepreneurs band together--in a sense--and slowly get bigger and bigger to make sure that they are always profiting and that competition gets snuffed out. Competition is bad to a capitalist because it means part of their profits are lost and the risks are higher because there isn't a guarantee that they will sell the inventory they spent so much of their capital on. So in a capitalistic world, there is really only one megacorp because it is in their benefit to form a horizontal and a vertical monopoly.
The problem, as many social philosophers have pointed out, is that it becomes a form of monarchy. History has proven that, left unchecked, a capitalist will become the equivalent of a king, and in some centuries that's exactly what they became. Owning the "means of production" led them to hold a power position and they leveraged their power to become the supreme ruler.
In the modern world, to prevent entrepreneurs from becoming kings, the government has stepped in. After all, it is the business of the government to be the ruling body, not the wealthy and powerful.
The problem with this is, that instead of the government stopping megacorporations from getting any bigger, they cater to these corporations and not to the population at large. Yes, they instigate laws that prevent monopolies and they furiously tax megacorps, but--they furiously tax megacorps. The government gets their money from megacorps. They pay for things like infrastructure and the military using money from megacorps. A very small percentage of income tax money comes from personal income of the middle and lower class and even the lower-upper class. The rest of it comes from corporations--businesses.
Also, who has the power to influence the laws? Individuals? No. Corporations who can afford lobbyists.
So what kind of laws do you think they write? Do you think they write laws that seriously cripple their megacorp? OR, do you think they write laws that benefit them?
In America, the federal reserve hands out money to giant banks. Then, when they need a loan, they borrow money from those banks and pay those banks interest. I.E. Banks receive money for free, then they lend that money back to the government and collect interest on it. --Does that sound like it hurts these big banks, or helps them? Is there a way I could start a bank, receive the free money from the government, and then loan back to them and collect interest on it? No.
How about if I loan money to someone to buy a house, can I get insurance that when they can't pay that I'll get 80% of my loss back --paid for by taxpayers? because that's what FDIC does.
In short: Capitalism leads to giving handouts. Sometimes (usually) those handouts are given to people with means of production, and sometimes (very rarely) they are given to startups who are trying to compete but aren't doing a good job (*think government bailouts or grant money).
Now lets look at Socialism. (not communism, though that's a good example of socialism).
Socialism says that the means of production are owned by the people for the people, and not the individual. The land in a socialist society--owned by the people and not an individual. Depending on how socialized a society is, other things can be owned, such as "commerce" or the "financial market". Meaning, any transaction that is made using money, is owned by the society, so if you sell food you grew on the community land, then the community is entitled to a share of it. Or if you sell a patient, the patient is owned by the people, or the product produced off of that patient is owned by the people. You could extend socialism to say that ideas are owned by the people as well, but personally I think that's a stretch because no one can pry them out of you.
Because everything is owned by everyone, there is an urgency to make every member of a socialist society productive. Many socialist countries give you a test early on that determines your job function for the future, or at least assign you a job for the rest of your life. On a grand scale, they assign some people to labor and others to regulate/manage/police in order to ensure that everyone is earning their share.
Do they give out handouts? Yes. Do they give them out when they aren't needed? No. Because there is no assumption that any one person is assuming the full risks as there is in a Capitalistic society. Capitalists will reward you for taking risks, even if you take stupid risks. Socialists will prevent you from taking stupid risks because they evaluate the risk to society and not just to the individual. They'll also support you in your risk taking because they stand to benefit when you benefit, but you still have to earn it.
I don't know which is better: Socialism or Capitalism, but when I hear most people support capitalism they support it because they think it gives them control over what they earn, when in reality, other people are getting things they don't earn. And, Socialism isn't the giving out of things for free as people generally think it is.
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