Four years ago I considered myself a socialist. I voted for Bernie Sanders and supported policies that would raise the minimum wage, make college and healthcare free, and more. Today I am convinced that these well-intentioned policies have a variety of negative unintended consequences (see Thomas Sowell’s Basic Economics) and that capitalism is generally better able to address the problems these policies are meant to address, as I’ve argued here. Capitalist solutions also have the benefit of being non-coercive, the value of which I’ve elaborated on here. In addition to these other factors, libertarianism is also superior to socialism in that it is pluralistic: socialists are free to construct socialist institutions within a libertarian society, while the reverse is not true.
Socialism is not inherently immoral in the sense of being a system in which people share means of production. Roommates and families share cooking appliances, furniture, plumbing and other means of production, and it is possible for this to be of benefit to all involved. Socialist systems are only immoral to the extent that they are enforced through violence, as is the case under socialist political systems which manage or redistribute the means of production according to democratic or dictatorial decree. A socialist political system would entail something akin to the expropriation of property deemed to be means of production, a policy necessarily containing ambiguities and immoral consequences. Whether or not personal computers used by writers to produce books or articles, or a personal food garden are means of production to be expropriated is unclear. Whoever the authority making these decisions would be would subject many others to the consequences of their fallible judgments. Even if many offered their possessions up willingly, there would undoubtedly be some who would prefer to keep them, and these cases would require violence or the threat of it.
So, the only moral forms of socialism are those in which people can voluntarily participate. Businesses that are employee-owned and -run are of course fair game and nothing in a capitalist system prevents their creation. Any group of people are free to create a business, create or purchase means of production, and operate cooperatively. What does contradict libertarianism is the idea that the means of production should only be managed democratically or centrally, as would be true in the case where a coercive government plays a part in managing them.
In a capitalist society there would still be constraints on all businesses, including those operated according to socialist principles. Most businesses fail, and this would no doubt be the case even when all employees own the means of production, or when income is redistributed equally throughout the organization. It is possible that these sorts of companies would have a distinct advantage over those operated more traditionally, in which case a libertarian society could also be a socialist one, in which most or all organizations would be what we call socialist. People would still be free to join or create organizations that were not socialist, of course, but under this theoretical future no one would want to because the relative disadvantages would be clear.
While it is of course impossible to predict the future, I would guess that significant proliferation of most forms of socialist organization would not occur in a libertarian society for economic reasons. The case of Jamestown illustrates the problems with voluntary socialism of a redistributive kind. According to Michael Huemer in The Problem of Political Authority (p. 193):
[Jamestown’s] founding charter stipulated that each colonist would be entitled to an equal share of the colony’s product, regardless of how much that individual personally produced. The result: the colonists did little work, and little food was produced. Of the 104 founding colonists, two-thirds died in the first year – partly due to unclean water but mostly due to starvation. More colonists arrived from England, so that in 1609 there were 500 colonists. Of those, only 60 survived the winter of 1609-10. In 1611, England sent a new governor, Sir Thomas Dale, who found the skeletal colonists bowling in the streets instead of working. Their main source of food was wild plants and animals, which they gathered secretly at night so as to evade the obligation to share with their neighbors. Dale later converted the colony to a system based on private property, granting every colonist a three-acre plot to tend for his own individual benefit. The result was a dramatic increase in production.
Hundreds of lives in this local case and undoubtedly millions on a larger scale throughout history might have been saved by a better understanding of economics. Individuals tend to work harder and smarter when they can benefit from that work (by having more food to eat or more food to trade) than when their work benefits them only through the positive feelings of having worked and contributed to the stockpile (if that!) and the fractional increase to be received in distribution. As evidenced in the example above, provided there are no other incentives for working, one may prefer to go bowling knowing that the fruits of one’s labor will be redistributed, and that one will still receive one’s “fair share” of others’ labor from the common store.
The Jamestown example is of course an example only of a specific type of socialism in which food is included among the resources redistributed, and there are many examples of employee-owned and -run businesses around the world which may serve as examples of ways in which socialist (in at least some sense of the word) cooperatives may develop and succeed. The example only serves to illustrate that the popular variety of socialist utopian vision involving complete redistribution of resources is unlikely to be feasible and could lead to disastrous consequences.
Capitalism, as I use the term, is the voluntary interaction of individuals for purposes of trade or cooperation. To the extent that someone opposes it, they are advocating for violent aggression. There are a variety of arguments for violent aggression, but the ones I am aware of have been refuted. There is a contradiction between socialism and capitalism only to the extent whatever system of socialism under discussion advocates the theft and forceful redistribution of property. Unfortunately, most popular forms of socialism advocated today are of this coercive sort.