The idea behind capitalism as an economic philosophy is that humans are competitive in nature and also inherently lazy. Without a personal benefit people wont do any work and society will crumble.
While that is a bit exaggerated (we all know people who volunteer) it does however have a lot of truth to it. People are generally far more motivated if there is something in it for them.
This is a hybrid government and economic philosophy and all governments are to some extant socialist in nature. The idea is that by banding together for the collective good the society provides benefit to everyone. Examples include the military for defense, public roads and utilities, fire and police departments, etc.
Difference in Goals
Capitalism is a predator vs. prey relationship, where the strong get stronger and feed off the weaker. In this case wealth is the measure of power. Socialism is a grassroots community building process where the whole is grater than the sum of its parts. By helping those less fortunate than you you help society as a whole.
By allowing those who work hard or come up with new ideas to personally benefit society becomes stronger, However if the majority of the society feel to put upon they may revolt, also they are needed to provide labor and consume the goods the wealthy are selling.
Socialism provides a safety net to keep exploitation low enough to prevent civil war and help more people become contributing members to society.
Both sides can go too far or not far enough, the best approach is a middle ground.
Getting to the Middle
To function America needs both ideas, Capitalism encourages development and growth, but socialism evens out the playing field through education and basic services so everyone has the hope of opportunity. As the money gets more and more focused at the top its easier for them to maintain power even without working for it (Inherited wealth, racial privilege) and harder for those born poor to get wealthy (or even middle class). Socialism tries to even this out by ensuring everyone is equal and starts off with the same resources, then its up to the individual what they do with it.
If the average American is one step away from losing their home, job, or life with a single stroke of bad luck society as a whole suffers.
A Prosperous America
America was at its most prosperous after WW II in the 1950s.
We had a strong rising middle class due to a souped up manufacturing industry and the world needing rebuilding, also consumer demand was high. The GI bill helped a lot of service members and their families get better jobs and offered affordable housing which also meant more jobs. The goodwill and economic prosperity brought to other countries by the Marshal Plan helped foster good will towards America, increasing overseas demand for its products. Strong labor unions helped workers get better pay and benefits which increased consumer demand as more people had more money to spend.
The marginal tax rates were far higher than they are now, though not at historical highs. The highest rates were after the Great Depression and helped get us out of it faster than many other countries. Still it was as high as 91% in 1960 for $200,000 single filers (today that would be 1.5 million dollars) and that also helped spread the wealth around.
As corporations and the wealthiest gained more and more power they have worked to undo a lot of those gains, lowering their tax rates substantially while lowering the average Americans far less in comparison, destroying unions, and lobbying for massive deregulation.
They also went for consolidation resulting in less competition and fewer jobs.
Getting Back to a Prosperous America
In order to get back to a prosperous America for all we need to promote job growth, not by adding more part time jobs for minimum wage and no benefits but by adding good full time jobs at a living wage. As more and more people make a decent living and have money to spare they spend more which in turn creates the need for more jobs.
To do this we need
- Minimum wage to be tied to inflation. Most people get raises that are lower than inflation, which means year after year even though they make more money it does not go as far.
- Quality Education for all. Education is stacked towards the wealthy in America. That means those born wealthy have a tremendous advantage over those not so lucky. By making more people able to have the same opportunities to make a better life for themselves and their children everyone benefits. Its simple Demand Economics. If you have more customers you can make more money.
- Health Care is a huge cost for most Americans. If you get sick even with insurance you may lose your job, and its the number one reason for bankruptcy in America. Americans pay more for less than any other industrial nation. Taxpayers pay for medical advances at universities and trials yet the drug companies sell the same drug for thousands of dollars to Americans that they sell at a profit overseas for a few dollars. If this is not changed America will fall.
- Climate Change is a hge problem.It costs billions of dollars in tax subsidies each year for disaster relief and the amount keeps growing. Meanwhile fosil ful jobs own most politicians despite hiring fewer workers than renewable jobs (Look it up Bureau of Labor Statistics) which hurts our economy now and even more so going forward. We used to lead in solar cell production but have surrendered that to China due to government policies purchased by the fossil fuel industry. Addressing this while the window is still open means more American jobs.