However, is not a perfect system, and does have some problems. Most of them are caused by the government because it is working in tandem with the private sector (see crony capitalism). Even crony capitalism is far better than socialism.
Unfortunately, capitalism has a bad name among young people these days, often associated with the words "pig", "bastard", and "evil." Maybe because they think that America (which is NOT a purely capitalist country, and is still basically the best country in the world) is the only example of capitalism, and they don't like the fact that they have to go out and get jobs.
Socialists advocate redistribution of wealth and worker-run companies. Communists advocate similar things, except enforced by totalitarianism. See Soviet Russia.
Suppose you are a highly intelligent, productive person.
Socialism: You live in a crappy housing block with some other intelligent, productive people, and some disgusting, unintelligent, unproductive bums, who make ABOUT as much money as you. You work a job assigned to you by the state, which most likely does not have anything to do with your skill set. You know you will never become wealthier or improve your lifestyle, so your motivation to work hard is almost nil.
Capitalism: You had a good idea and were good at business, so you live in a beautiful house, drinking expensive Champagne and surrounded by beautiful models, and do whatever the hell you want to all day. Well, OK, not always, but at least sometimes!
Me: I'm an intellectual, and I believe in capitalism.
Stupid teenager: I'm an intellectual, and I'm a socialist because I have read the writings of Marx and believe in public management of business.
Me: No, you're a stupid teenager, and you're a socialist because you don't want to get a DAMN job!
Tim: GET OUT OF MY SIGHT YOU LIBERAL PINKO COMMIE!
Douchebag CEO: "Capitalism."