Socialism and Capitalism are not competing baseball teams, they are 2 sides of a spectrum.
There are at this time, zero purely capitalistic countries, and zero purely socialistic ones. Everyone is somewhere on the spectrum. This is because everyone recognizes that both systems have value, and makes at least some effort to use both.
A lot of people say the US is pure capitalism for instance, but what do you call Social Security? Hint: The "social" in the name is not decorative. Likewise, Medicare, Medicaid, the various programs to help pay for college, welfare, food stamps, unemployment insurance... all of these are socialist programs, because we recognize that pure capitalism actually sucks, and we need elements of both systems.
Let's take a look at each "pure" system, and you'll see why either would quickly make a society collapse.
-Competition breeds innovation
-Citizens are encouraged to contribute to society - do more = earn more = be rewarded more
-Citizens can respond to corruption in a direct manner - refuse to do business with evil entities, driving them out and forcing an ethical standard.
-Greed can, in theory, be re-channeled into positive output.
-Democracy through controlled spending - you choose what you want to support with your money
-There is no safety net. One run of bad luck and you're on the streets for good.
-There is no sense of providing basic needs. Can't afford medicine? Go die.
-Many are forced to become wage slaves, creating a power elite and a horrible standard of living for most
-Greed is encouraged.
-People are encouraged to pursue what they can extract the most money from, not what they're actually good at
-Basic needs are sacred, and provided for, period.
-Emphasis is placed on pursuing what you want to do, not just what you'd make the most profit from.
-Greed is not rewarded.
-No one is ever screwed by a lack of education (unless they simply refuse to learn) or health care.
-Everyone is given the time to find their path in life.
-There is zero reward for doing extra work, and therefore little motivation to do so. This limits how much actually gets done.
-With no reason to compete, there's a drive to simply make "good enough" products, not actually find ways to one-up the competition. This greatly slows tech advancement across the board.
-Citizens lose the power of boycott - an evil company will make the same profit with 0 customers as with many.
-With so much less being earned and generated (relative to capitalist countries), the total wealth of the nation plummets. Everyone may be equal, but it's a pretty low standard that they're equal at, likely just barely enough to even provide the basics... and possibly not even that.
The solution, rather than blanket-embracing one of these systems and ignoring the glaring flaws, is to try to intelligently combine the two, creating a system that maximizes the benefits and negates the drawbacks from each as much as possible.
Hypothetical perfect blend of the 2:
-Food, clothing, health care, shelter, education, etc, are considered basic rights, and provided without question. HOWEVER, everything else must be purchased with money which you must earn. You will always have what you need, but you must compete for what you want. Result: everyone is free to live as they choose, but there is a strong incentive to put extra effort in and actually do something of value.
-Companies must profit to stay in business - if your product fails at life or is made unethically, you will be driven out of business by the competition or the people. However, your basic needs are always covered, so feel free to fail a couple of times before you nail it. You'll eventually produce something of great value to society, and you'll be rewarded accordingly. Result: All the benefits of competitive innovation, with not of the usual side effects
Do it right, and we have an awesome society with the best of both worlds, and very, VERY few drawbacks.
Of course, it's very easy to point this out in a forum post. Actually making this work in a real country would be much harder, as we'd have to get people all over the political grid to be willing to give a shot.