Democratic socialism is more functional. To the person above me who said a balance of both is needed, you have no idea what you're talking about. Most pure socialist countries like those in the Scandinavian region of the world are doing quite well with high taxes and such. They don't use any form of capitalism as far as i know to even anything out and ya know what? The people who live there are pretty happy with pretty much anything as far as i know. It's much better than out broken system that relies on the lottery that is Wall Street to predict our futures.
If you go 100% capitalist you will most likely end up with corporatism (*cough* US) which leads to many bad things and "irresponsible capitalism". However going 100% in the other direction leads to communism (and we can see how that turned out). The answer (despite me clicking "yes") is that both have some great flaws.
First off socialism is ridiculously expensive. Although free healthcare and welfare are all well and good it ends up costing allot of money that the government can use elsewhere. Plus in socialist countries generous welfare grants, and unemployment benefits have lead to billions of government money being wasted on those who don't even need it. The concept of "earn what you work for" is effective in creating innovation and productivity. Socialist countries often run into bankruptcy or high taxation. States in socialist countries are far more prone to bankruptcy since they have to compensate for the ridiculous expenses of healthcare.
On the other hand, going 100% capitalist is a problem because privatizing EVERYTHING creates an extremely hard society for the poor and middle class but not for the rich (especially for those who have families) and not placing any decent labor or environmental regulations on corporations leads to enslavement and severe pollution. The private market may not move at a fast-enough pace to solve things such as global warming and privatizing everything will lead to rural areas being ignored by businesses that provide education and healthcare. Also a businesses is a businesses. Their focus is on the profits and shareholders and the possibility of "cutting corners", scams, and little care for the common people become high.
A balance of both is needed for the best and most fair economic system.
“Socialism works only until you run out of other people’s money.” Margaret Thatcher. Besides, in the 20th century, we tried socialism. It didn't work. Among the socialist nations of the 20th century were Nazi Germany (Nazi being an abbreviation for National Socialist German Workers' Party), the USSR, and Communist China. Between the 3 of them, they slaughtered over 135 million humans. The USSR recently collapsed leaving Russia a poor country and former Soviet satellites environmental wastelands. China has only begun to flourish as they have turned their backs on socialism and embraced capitalism. Simply put, socialism just doesn't work.
It is undoubtedly true that in terms of efficiency capitalism works better. Capitalism incentivises people to engage in mutually beneficial transactions, incentivises to work, encourages people to invest and save. It is due to the profit motive that people respond to the wants of others, and the wants of others will be indicated by their willingness to pay (and their willingness to pay will be transformed into the producers profit).
As Adam Smith once said "By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it."
Just compare North Korea to South Korea, Cuba to Hong Kong. Look at the growth of Taiwan, Singapore and Macau and compare them to socialist countries (e.G. Zimbabwe, Venezuela, Myanmar).
Capitalism is the only free form of economics. Hong Kong is the freest market and Switzerland has the 4th best GDP in the world.. Socialist countries are just not doing well. Also; you gotta love laissez faire. Lastly, I will compliment socialism as it could work but it has not been perfected yet and neither has capitalism but it works the best for how the world's money goes around.