Capitalism has always sounded great in theory, just the way you described. But in practice it has never worked, it always results in the accumulation of wealth in few hands, who can then use that power to subvert democracy and get their way.
Why do you think inheritance, wealth, etc is taxed too little? Because wealthy elites have abolished and prevented those taxes through lobbying/corruption. Many countries had the exact social democracy model you describe, but abolished and privatized these systems because rich people paid the media and politics to make it happen.
Not to mention this analysis focuses only on material wealth. Capitalism brings with it a complete alienation, communities don’t own their land, people don’t own their work, and everything that was once a common good is slowly commodified and robbed of its soul. Art, music, relationships, capital fijds a way to monetize it eventually. But now we have online shopping and fast food! Hooray, happiness achieved!
we have not theorized a better system yet
That’s an incredibly offensive claim. You just spat in the faces of nearly two centuries worth of academics and thinkers in myriad disciplines that have worked tirelessly, in the face of often violent or even fatal backlash from capital powers, to create and implement alternative concepts. Not to mention humans have experimented with various ways of living together for our entire history before capitalism.
??? are you writing from a parallel universe or is this just “socialism is when the government does stuff”