It is generally assumed without proof that the status quo, the current economic system in America, is capitalism. In the current political climate, the political left accepts this assumption and concludes that capitalism is bad because they see some negative things going on in the current system, some real and some entirely imagined. The political right accepts this assumption and concludes that the current system is good, that it is a free market economy, and they tend to have high confidence in the state of the economy because they see some good things going on in the current system, some real and some entirely imagined.
The trouble is, both of them are wrong. The left is under the illusion that the system they're attacking is capitalism. The right is under the illusion that the system they're supporting is capitalism. But the economic system of America is not free market capitalism, and argueably never was. If capitalism could be said to have ever existed as a system in America, it was roughly between 1750 and 1850, and it was never fully implemented, so we couldn't even say that the free market has ever really been implemented in full. That's because in order to get to the point of a pure free market, the state cannot exist.
This is important to point out. To the extent that there is a state, to the extent that there it has power over the individual, is the extent that the market is not free. To the extent that the government taxes, borrows, inflates, spends, legislates, subsidizes, prohibits, colludes, etc., is the extent to which the market is not free. To the extent that the government confiscates, claims ownership of or regulates property is the extent to which the market is not free. Every service that the government tries to provide, and monopolistically so, is a disruption of the voluntary economy. The enterprise of law and arbitration itself is a scarce resource like all others, and the existance of a government represents a disruption of a free market in this area.
So how can economic and governmental systems be evaluated? Boiling everything down to capitalism vs. communism is a bit oversimplistic. There certainly are systems that are somewhere in between the two. And it's not wise to red-bait people who are not necessarily red. However, it also must be emphasized that there is no such thing as a static equilibrium. Because no system is completely static, it is impossible to genuinely be "perfectly in the middle" of a political or economic spectrum. The advocation of such a position is contradictary and most certainly disingenuous.
One way to classify systems of economic organization would be to use a general spectrum of more vs. less economic control. A sensible interpretation may look as follows, in the order of the least economic control to the most:
The Free Market - No Economic Control. The free market is a system in which there is no government control of the economy. It is an economy based entirely on the voluntary decisions of those taking part in it. The free market is based primarily on private ownership of property, obtained through homesteading and voluntary exchange between property titles. To be carried out in practise, there can be no government in the commonly understood sense of the word.
Laizzes-Faire - Very Little Economic Control. Laizzes-faire is a system in which the government has strictly limited control over the economy. In it's most pure form, the only government services allowed is police, courts and defense. A laizzes-faire system largely has private ownership of the means of production and minimal if not negligable regulation.
Interventionism - Moderate Economic Control. Interventionism is essentially the process that leads towards socialism. It is not a permanent, static system perfectly in the middle, but rather a transatory system.
Socialism - Heavy Economic Control. Socialism is a system in which the government has considerable control over the economy. The government may own a significant portion of the means of production and it tries to centrally plan the economy.
Totalitarianism - Total Economic Control. There is no economic freedom in totalitarianism. The entire "economy" is completely determined, owned and regulated by the government. The state, in essence, replaces the economy entirely. There can be no "economy", in the commonly understood sense, to speak of.
But there are also various types of economic control. Economic control can be split up into government ownership and government regulation. Communism specifically involves government ownership, while Fascism specifically is based more on government regulation and collusion between private interests and the government. There are also various types of economic organization that are more specific than socialism or interventionism, which are forms of socialism or interventionism, or alternate forms of economic organization for stateless societies.
Syndicalism, for example, is a system based heavily or entirely on unions and worker-directed communes. Some anarchists believe that they can set up syndicalist and communist economic systems without a state. Pure free marketers tend to disagree, pointing out that both systems require force and confiscation, wether through a state or not, in order to be brought about. On the other hand, communist or socialist anarchists tend to make the claim that the free market is inherently coercive, and will lead to dictatorship. But in reality the free market is simply whatever the outcome is of people's voluntary labor and exchanges.
It should be clear that, no matter how totalitarian the government is, some degree of voluntary economic activity is going to take place, even if it is illegal. This is particularly obvious when we look at the case of prohibitions. It is illegal to voluntarily buy or sell certain drugs, but people find ways to do it anyways. It is impossible to completely stamp out free economic activity. On the other hand, illegal economic activity cannot be considered a true free market, because it is the consequence of government intervening to prohibit and/or limit the supply of a good or service. It becomes a free market as soon as the government ends the prohibition, and abstains for regulating it or claiming ownership over it.
There are many ways in which a government can erode the free market. To begin with, it's very existance disrupts it, because it's very existance and the continuation of that existance is dependant first and foremost on taxation, which siphons money away from the private sector, away from the original owner of the property. There are all sorts of different taxes. There are income taxes, property taxes, sales taxes, land-value taxes, inheritance taxes, capital gains taxes, and so on. There are also alternative ways for the government to accrue revenue, all of which disrupt the free market. It can borrow credit from foreign governments or banks, which also siphons money away from its private use. It can monopolize banking and print new money. It can also impose tariffs, which are essentially a tax on imports.
How the government spends this money disrupts the free economy, as it determines how the money will be redistributed away from its original owner and use towards new owners and uses. In short, government's revenue devices and it's spending of that revenue inherently creates a network of redistribution of resources. Government spending represents a reallocation of labor and goods and services other than would have voluntarily been chosen. First and foremost, this money goes to the primary functions of government such as police, courts and the military. Beyond this, it also goes to a whole host of other services such as public education, healthcare and roads. As the power of a government increases, it starts taking control of things that blatantly aren't really "necessities", such as space exploration and the arts.
Government services tends to be monopolized over time. The most obviously monopolized of these services would be the police. The government outlaws the private competition to the services that it provides. Furthermore, even if a degree of competition to a particular service is allowed, it is eroded by the spending of tax money on the public sector, which inherently erodes the capital of the private competition and warps the incentive structure. People often try to justify public services with the claim that there is no profitability in it, but they have it backwards. It is the public services that erode the profitability of the competition. If the public services were privatized, they would quickly become vastly more profitable, as well as vastly cheaper and more available to the masses.
Government spending for goods and services comes in all types. There is foreign aid, which transfers money and weapons from government to government. There is personal welfare, which gaurantees a direct redistribution of wealth between citezens. Modern warfare, of course, requires a whole lot of spending that goes to machinery, and to pay those in the army. It comes in the form of subsidies to agriculture, energy and various industries. It comes in the form of government contracts and bail-outs that go to buisinesses. As a piece of the pie, the money for all of this shows up in the paychecks of government bereaucrats. All of this involves a massive redistribution of resources, contrary how they would have been otherwise used and away from original ownership.
There seems to be no area that the government doesn't want to spend some money on, no matter how frivolous the cause in question is and regaurdless of wether or not it is necessary. It funds science, it funds the arts, it funds broadcasting, it funds sporting events. There is almost no special interest that the government does not collude with and redistribute resources to. Internally, the government expands the amount of people working for it, to run all of the departments and agencies, and mega-becreaucracies such as the department of homeland security. It all adds up.
There are many ways in which the government controls the economy without spending money. It can prohibit goods and services outright, or set a limit on their supply. It can impose wage and price controls. It can set minimum and maximim prices and wages. It can set quotas on imports and exports. It can use licensing to bestow the privilege of being allowed to legally work in certain fields. It can set up all sorts of regulations and requirements for goods and services. It can deliberately organize cartels. It can trust-bust buisinesses for having "predatory pricing", which can be defined subjectively however one desires, wether it's super lower prices or high ones. It can impose penalties and give out special rewards. It can control the rate of interest. It can force employers to hire certain people.
Governments can use conscription to either force people to work for it directly or for some other, private group. They can institutionalize and legalize involuntary servitude. They can control the hours of the workday. They can make union membership compulsory. They can impose compulsory consumption. They can restrict immigration, I.E. the amount of people and willing labor coming into and out of the territory. They can monopolize technology and intellectual property through the selective and privileged use of patent laws. They can use eminent domain on one's land and home property to either transfer ownership to the state or to some private lobbying interest and/or buisiness. They can put up barriers to unused resources and claim ownership of unused land. They can try to direct private investment.
America? A laizzes-faire haven? Give me a break. The American state, to varying degrees, engages in all of the kinds of intervention that's been mentioned. At best, it's an interventionist system quickly headed towards right-wing socialism. Perhaps a more sober examination reveals it already to be a right-wing socialist, fascist type of system. While the government in America does not own the means of production to the extent that a communist country would, it heavily redistributes, regulates and controls the economy in all kinds of ways. It has a long history of government-buisiness collusion and protectionism.
It's as if the left doesn't like right-wing socialism, but they think that right-wing socialism is the free market, so they want left-wing socialism or communism. And it's as if the right doesn't like left-wing socialism and communism, but they think that right-wing socialism is the free market, so they want right-wing socialism or fascism. The cliche idea that Republicans are die-hard free marketers hasn't had any truth to it for decades, since the 1950's at least, and even when the cliche had some truth to it, those weren't really the people who were running the party and in the mainstream of it. And the cliche idea that the Democrats are a bunch of commies doesn't necessarily hold up either, as they've historically been quite sympathetic to fascism and conservative brands of socialism.
It's time for people to understand what a free market actually is, in comparison to the current system, and that the current system is far from it.