In contemporary wester societies there is a battle between so called free market capitalism and socialism. This is not the case. Certainly socialism is at one end of the spectrum, but the other end is not free market capitalism. The other end can more appropriately be called corporatism. I would argue that a truly free market capitalist society, much like a true Marxist society, has never existed in the history of the world, at least never on a large scale for a sustained period of time. Furthermore a free market economy is impossible so long as we maintain our conceptions of what it means to be a capitalist. Once we establish a new perspective upon which we can base our understanding of capitalism we can achieve a free market capitalist economy, and many of the problems that socialism attempts to fix on the government level can be fixed in ways the do not interfere with the celebrated efficiency of capitalist systems. Both socialism and corporatism can become obsolete.
The core principle behind capitalism is the exchange of capital for goods and services, rather than subsistence farming systems, a barter system, or a colonial mercantile system. A common extension of this core capitalist principle is the addition of the concept of the capitalist. The capitalist is one who holds capital and uses it to attain more capital. This kind of mentality leads very naturally to the desire for monopolistic control of some aspect of the economy. This is what happened during and just after the industrial revolution when the big names in wealth and power were born, replacing the old wealthy and elite landowning nobility as the primary power holders. Even this kind of monopolistic capitalism is not what we currently live with, back then the power holders were still human.
The word corporation comes form the word corporeal which means something that is tangible or physical. A corporation is an abstract concept that has been manifested into an entity that is given rights similar to a human, though the entity is actually just a collection of property, investors, employees, and executives, all of which can change as per the internal mechanisms of this incorporated entity. Most of the power and wealth in the world belongs to corporations. While there are powerful executives that direct the actions of these corporations, they almost always do so in a manner that serves the interests of the corporation. The interests of the corporation is an interesting concept, seeing as the corporation is neither sentient or human. A corporation is, in essence, a completely and utterly soulless capitalist, rather than the merely selfish and self-interested capitalists of yesteryear. A corporation exists solely to expand, to control more resources, and the consequences are irrelevant. Of course these executives have a lot to gain from this, as the success of a well managed corporation means nearly unlimited personal wealth, but in truth the executives are servants of the master that gives them their wealth. Corporations hold overwhelming economic power while special interest groups, funded primarily by corporations, hold unbelievable quantities of political power. It is almost unfair to call our society even democratic with how much power these special interest groups hold, and certainly it is completely daft to call such a system a free market economy. Of course there is currently only one force that stands against the monopolistic power of corporations or capitalists, and that force is most certainly not a free market force.
Socialism is an economic system whereby the government interferes with the economy with the intention of correcting the balance of power by empowering the disenfranchised. With all the power in the hands of corporations, socialism tries to ensure that the common man is not trampled. Unemployment benefits, minimum wage, welfare payments to the poor, and socialized medicine are all examples of this. The common man may be protected by these practices, but opponents of socialism argue that these practices hurt the economy and have unwanted side effects. This is undeniably true. Unemployment benefits, particularly when the company is required to pay them, discourages firing employees, but also therefore discourages hiring employees because the company had better be sure they want that employee for the rest of his natural life since they can't afford to fire him. Minimum wage ensures that everyone who works gets a comfortable amount of money, but it also means that companies may not be able to afford to hire as many workers, which means companies that rely on cheap labor may go out of business, but even if they don't they will hire less employees, which mean higher unemployment. Welfare takes the edge off of poverty, but gives the poor money for nothing, an act very much in opposition to the old saying of teach a man to fish. Socialized medicine ensures that everyone gets taken care of, but also expends huge quantities of government resources, which leads to a raise in taxes, which leads to economic inefficiency. Those in favor of socialism believe that the benefits outweigh the side-effects, those against it feel the side-effects are overall worse than the benefits gained from socialism (or they just don't like the government butting its nose where it doesn't belong).
Free market capitalism sits in an uncomfortable and unexplored middle ground. On the one hand investment capitalism puts all the power in a select group of elites while corporatism does one better by putting all the power in the hands of soulless machines that live only to consume. On the other hand socialism tries to fix corporatism by throwing government money at the problems corporatism causes, or passes laws that only treat the symptoms while inevitably creating new problems for our economy. Free market capitalism seems like it would be nice, but many people seem to think it is an impossible ideal. A free market economy leads to some capitalist consuming more resources, gaining more power, and eventually gaining overwhelming control over the economy. Free market capitalism is like anarchy, it inevitably leads to gang warfare which inevitably leads to some kind of dictatorship. If this is true then a free market is an impossibility because it destroys itself and replaces itself with corporatism which then must either be accepted or mediated with socialism. Then again, is this really true? Certainly our contemporary definition of capitalism seems to lead to this, but remember that capitalism is merely a theory of capital as the central workhorse of the economy. It is our view of what capital is, what capital is for, and why we have, need, and use capital that determines how we use that capital. How we use that capital then determines what manner of capitalism develops. It is only reasonable to assume, therefore, that a significant and culturally sweeping change in perspective would change how capitalism evolves.
If we want to have a real free market economy, we have to understand what a real free market economy is. It is a kind of economic democracy. Every dollar you spend is a vote. If everyone votes for plastic surgery, plastic surgery becomes more plentiful, usually resulting in cheaper and eventually better plastic surgery. If everyone votes for fancy cars, then cars will look fancier and more car companies will invest in designing sweet rides. Of course people tend to buy these things because the overall cultural view of capital is not democratic. For most people money is not a vote, but an entitlement. Obviously if one is entitled by money, then one will spend money selfishly. The problem is that whether people see it that way or not, every dollar is a vote in any kind of capitalism. Feeling entitled we tend to buy the cheapest things we can regardless of the impact on society, or the flashiest things we can, but again without any thought to the future consequences. As a result we are all voting for the cruel efficiency of corporations on the one hand and personal consumption and acquisition on the other. The question is, do you really want to vote for that? Obviously most people will vote for survival first, but survival is easy. People survive in this country making minimum wage or less, so for a majority of Americans survival is not an issue. After you vote for your own survival though, what do you vote for next? What do you want the world to be like, what do you want your life to be like? Seeing every dollar as a vote doesn't fix everything, its just the start. What it does do is shift our mindset away from the capitalist where money is the means and the end. It also shifts our mindset away from entitlement, that we are entitled to money and that we are entitled to the expenditure of money. If we can replace these two perspectives on money with a healthy democratic attitude we can move away from consumerism and corporatism and towards a way of life where we consider what we truly want out of our lives, rather than just considering what we are entitled to, or how we can acquire and consume more resources. Yes, a different kind of infrastructure is needed to replace the mega-corporation model, but a change in infrastructure is impossible if we don't understand the cause of our current situation. The answer is not putting a band-aid on a head wound, which basically the effect of socialism, the answer is finding the core of the problem and fixing that first. The core of the problem is the capitalist and the consumer. Eliminate these attitudes from our collective consciousness, and lets start again, and maybe we can finally get this free market thing working. Maybe we can have a democracy for our economy as well.