Your assumption that selection of a system is binary, as in you either have an absolute unrestricted free market or you have uncompromising centralized state co

Your assumption that selection of a system is binary, as in you either have an absolute unrestricted free market or you have uncompromising centralized state control of the entire economy is missing the question. We don't have either of those things now (neither does China). Control of the economy exists on a multidimensional spectrum, of which there are many possible options; blaming "capitalism" for a problem is shorthand for noting that, in some situation, the unrestricted free market is leading to negative externalities or a poor use of the commons.