I used to think mostly along those lines. I have since been persuaded that while capitalism has allowed us to be exceptional in the ways you have pointed out, it cannot work for providing public goods, and unregulated seeking of profits has all sorts of horrible downsides (e.g. the awful water quality in our state, the state of our food ecosystem, etc.). So, capitalsim yay!, but also let's have the necessary regulations in place so that we are not just making corporations our monarchy. Figuring out where to draw that line has to be a negotiation between the 2 sides, and if neither side ends up happy, it is probably in the right place.
There are a couple of issues but I mostly agree with your points.
1. When I look at examples of both capitalism and communism/socialism (one in the same, just one is a lighter version of the other), I would never and never have thought to myself that I'd want to live or raise a child in any of the communistic societies I mentioned above. Are there some happy people there? Sure. Would they all be happy here? I'm not so arrogant to think so.
But, at the end of the day both systems have lots of faults and I know where I'd choose to remain living. Call it a gut hunch, call it a smell test, call it whatever. When I compare the lifestyles, quality of health care systems, and national security, I'm choosing capitalism. Of course there are tradeoffs.
2. I agree with your statement about negotiation between the two sides. However, just because there's a possibility of that happening, doesn't mean it's realistic. People talk about the disfunction of our two-party system and I cou;ldn't agree more. But communism or socialism isn't the answer to that problem.
Look at any countries who've tried communism and/or socialism. One of the main tenets is that there is no ruling class. No different classes at all. The president is as equal as the lowliest peasant. He or she will have the same amount of money, same access to education, same access to healthcare, and will work as hard. No mansions and Ferraris while the farm workers live in ghettos and walk everywhere barefoot. It's quite literally never worked in any form. No matter what they say, Let's compare Gorbachev/Medvedev/Putin/Yeltsin/Hitler/Chavez/Zedong/Jinping/Il Sung/Jong Il/Castro's lifestyles with their citizenry. How many Mercedes Benzes and mansions and personal servants and personal teams of doctors and airplanes and gourmet food has been consumed by that group? You could make a good argument about Castro in that regard, but I'd then direct you to the violence he oversaw against anyone he didn't like. And on the topic of violence, none of the other people in that group are any different. How about the oppression of the billions and billions of people under their respective rules? Are you really "free" under communism? It's just a different kind if rule under a different ruling class.
So, fix the system, right? It's just bad "execution" of communism and socialism that goes against the principles of those systems, right? Welp...I'd agree with the theory (kind of), but it's literally never worked. Ever. And it's never worked because Marx and Engels and Lenin and Trotsky weren't aware enough of one small little issue. At the end of the day...when the rubber meets the proverbial road, human beings are animals with two instincts that can't (at least currently) be bred out of us...self-interest and self- preservation. Lock two people in a room with a gallon of water and a loaf of bread, and they might share at first. They'll probably share for a really long time. But when it starts running out and the stomach starts to hurt and they don't know if anyone's coming to let them out, there's going to be a fight to the death if it goes on long enough. It's nature. Same thing happens on a macro level. The reason that long list of leaders turned what were supposed to be equal, loving, idyllic communes where everyone is equal into disasters is because in the real world bread and water are the same as money and power and humans all have an innate need for those things as much as they can get. Maybe not at a micro, personal level, but you don't have to get too far into the macro level for that to be true.
So is capitalism the perfect solution? Absolutely not. But it's a better one. People are allowed to have money and power, and even those who really don't have it are allowed to
think they do. Letting someone own a Pinto and go to a job hopefully to be able to afford a Benz if they work harder than the next guy is an illusion of money and power and it works. It's just fancier bread and water. It has a side effect that benefits quality of life for the greatest amount of people too, and that's innovation. People design comfortable and convenient and innovative things because you have a chance to make a lot of money (and power) doing so. You think the car would've been invented if there was no money in it? MRI machines? Cancer drugs being worked on? Happy Meals? Nope. All of those things are sold. For profit. They would not exist if there was no opportunity for profit. Generate a list of things that have improved the human condition that weren't intended to be sold for profit, using technology that wasn't developed for profit.
There are a lot of people who fall by the wayside in a bad way in capitalism. I'm not so stupid to not see it. But there are a whole lot less than any other system we've put into practice (regardless of the 'model' form of communism). You have to choose the lesser of all the evils and as bad as things can get here, I'm picking this place 10 times out of 10.