Capitalism is the voluntary and free exchange of goods and services. There is a misconception that, taken as a whole, the type of economic system we have in the United States is capitalism. However, sticking strictly to the definition, the United States, although leaning towards exchanging goods and services (and apparently drifting the other direction), does not have a completely free and voluntary market.
The type of economy we have is a mixed economy, where business and government collude/collaborate, whether with good intention or ill, meddle in the voluntary and free exchange of individuals, creating a forced monopoly in an industry. A centralized entity has created a forced monopoly, in several industries, for example, education, health insurance, and banking (of which I will detail in further posts.) This is known as corporatism.
Socialism takes the idea of the mixed economy further, rather than just regulating and/or restricting voluntary and free exchange in the market, it attempts to take matters one step further creating centralized control of the market. Socialism attempts to plan not only the means but the ends of production.
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This may be a good time to differentiate between ideology and reality. The ideology of capitalism suggests that a pure market economy is an achievable goal, if only the state did not intervene in the economy. Yet, all modern economies are mixed, with goods and services produced in the private and public sector. In order to implement a market-based economy, a regulatory organ such as the state must not only uphold contractual arrangements and protect and enforce rights such as the institution of private property under capitalism but it must ensure that the national elites are economically competitive on a global scale. The result being increased militarism by dominant economic powers not only by building military bases worldwide, but also by having missiles in space. Hence, the Bush administration's revival of the Reagan's Star Wars program.
Now to address Paul's assertions more directly, he indicates that the U.S. is corporatist where a "centralized entity has created a forced monopoly, in several industries." The history of the term corporatism/corporatist dates back to the mid-1800s where the European working class began to show more interest in socialism due to the harsh working and living conditions under capitalism. The intellectuals of the time, especially the Catholic intelligentsia, wanted to curb the cruelties of capitalism without abolishing private property. As such, corporatism aimed to lure working people away from organizing themselves toward their emancipation, and instead, corporatism, in practice, lead to dictatorial excesses of Mussolini and Hitler and the reluctant reforms of the patrician, the "savior of capitalism," FDR. So while the U.S. economic system does not allow for the "voluntary and free exchange of goods and services," most people would agree with the fact that the U.S. is not only capitalist but one of the dominant capitalist powers. Whether the U.S. political economy actually uses its wealth to benefit the population is another question left to another post.
Paul's definition of socialism may be (subconsciously) utilizing the Stalin's idea of "socialism in one country." This type of political economy is better described as state capitalist where a layer of bureaucrats decided not only the quantity of goods and services but the quality of them as well. As for scientific/revolutionary socialism, please refer to my post for a definition more in line with Marx and Engel's formulation.
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