I think there are some misunderstandings about what capitalism is and how it actually works as a mechanism of class rule and oppression rather than a neutral system. I absolutely think your heart is in the right place, but I’ll try to help clear up common misunderstanding.

First, you are confusing capitalism with markets. Capitalism isn’t markets, that would be like marketalism or something. Capital is assets that that produce more than they cost to maintain. Basically its stuff that creates profit, not stuff that is sold on a market, though it is the market where a particular transformation occurs, its where potential profit is transformed into real profit.

But what is done with the extra is the fundamental contradiction of capitalism. The production process is socialized, which means that it is many people involved. But the excess, the profits, are individualized, not socialized.

Because of this dynamic, capitalism is not an optimization. It is not efficient, it extracts social productive value, and shunts it into private coffers, or more accurately, private bank accounts. Those banks are part of a global system of finance, that every country in the world is paying into in various ways. In endless ways these banks distribute resources according to a particular set of rules that benefit a particular sort of set of incentives: the incentives of imperialist capitalism.

Every link in the chain of production bleeds money. A parts manufacturer has to turn a profit, those parts are shipped to an assembler that has to turn a profit, the assembled commodities have to be sold on a market that had to earn a profit. The shipping companies that are moving parts and commodities, has to turn a profit. The warehouses that store the goods have to be profitable. Does an object have to be profitable in order to exist in the real world? Absolutely not. Things have to be profitable in order to fulfill a certain set of obligations imposed on the real world.

You want to separate socialism from capital, the social from the economic. This way of thinking creates illusions. Capitalism is not rational, it’s anarchistic. Things are not created and distributed according to human needs, they are created according to the desire for profit. The competitive drive for profit eliminates firms who fail to take more profit, which leads to monopolization, vertical integration, etc., Large firms are able to influence legislation, to create laws which are enforced with violence to make the consequences real.

Your view is not unique. It was the view of the capitalist class during the heyday of the new deal. After pushing workers to the brink of actually overthrowing the capitalist system (see 1934 nationwide rail strikes) in 1935 we got our new deal, and the capitalists were all saying “we just need responsible, kinder capitalism. Social democracy will be a big improvement!” But 90 years later, the new deal is a done deal. Even European social democracies are at least majorly funded by defense industrialists that extract value from the 3rd world, and are experiencing waves of well funded and politically organized fascist movements, like ourselves. There is no profit in social democracy, and it only came about in the first place because of the global expansion of socialism, which actively fought to eliminate capitalism but was defeated in various ways.

Capitalism is in fact extremely wasteful, and is optimized only to move value from workers to owners. A recent study shows that a better way of life for everyone, secure safe housing, healthcare, quality education; could be achieved with 1/3 of our current global productive capacity. That means there is in fact room for luxuries! But not under capitalism. We will have to dramatically change the global order, by the workers coming together and organizing for our own benefit, at the expense of capital and private property. We will have to seize the means.

I think the sort of compromise that you are trying to make is actually a historically settled issue. Concern about what to do about demand for luxury goods is very correct IMO, as well as is the belief that the economy should be organized around human need rather than the hunt for profit. This is one of the pillars of socialism! And I welcome you as a fellow traveller in these spaces. But there will be no compromise with capitalism this time. The new deal saved the ruling class of capitalists from extinction. And that view of having a good capitalism was the justification of the ruling class for their own parasitic existence. The sun has set on even the feasibility of a middle way.

I think if you want to join the movement for democratic socialism, you’ll be able try and work with others for ways to make sure that human needs such as housing, food, education, healthcare are not commodified on a market. But there will be no compromise. That happened before we were even born. Capitalism is more than just markets, it is the way that the ruling class is organized against the working class. This IMO is the missing piece from your analysis, the class analysis. But we live in a time where the class character and distinctions between the owning capitalists and the workers is becoming clear to many many more people. I def sympathise with your urge to find a compromise, I think it is admirable and a quality that our movements desperately need.

But in this particular instance, it is not possible to strike a compromise between the people who get their wealth from stealing the value of others work, and the people who are having their work stolen.