> Given the tremendous increase in the standard of living of so many people, Capitalism does a pretty darn good job. I think in that by grouping it in a pair where "neither system really works very well," you and LeGuin would be "doing it a disservice to characterize it in that way."
It worth noting that Marx was tremendously excited about capitalism: The first part of the first chapter of the Communist Manifesto contains a lot of praise to capitalism - some barbed, some delivered straight. For example:
> The bourgeoisie has disclosed how it came to pass that the brutal display of vigour in the Middle Ages, which reactionaries so much admire, found its fitting complement in the most slothful indolence. It has been the first to show what man’s activity can bring about. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals; it has conducted expeditions that put in the shade all former Exoduses of nations and crusades.
and:
> The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces to man, machinery, application of chemistry to industry and agriculture, steam-navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalisation of rivers, whole populations conjured out of the ground — what earlier century had even a presentiment that such productive forces slumbered in the lap of social labour?
Socialism was conceived in it's modern form as a direct result of optimism over the rapid growth in productivity brought about by capitalism, and Marx shared that view: He saw capitalism as both absolutely necessary to bring the material wealth that could make redistribution possible, as well as the eventual catalyst for socialist revolution (and in doing so repeatedly warned against trying to push or socialism in poor underdeveloped countries other than as part of a larger wave of revolutions). He also praised capitalism for doing away with a lot of other outmoded aspects of society: to him it was the best so far, and a tremendous step forward for humanity.
The idea that wanting socialism necessarily means thinking capitalism is awful needs to die. But neither is there any reason to think that socialism in any form will be perfect either, even if you want socialism. Any given system can have flawed implementations, or outright fail. Marx himself as early as 1845 (in The German Ideology) warned, for example, that socialist revolutions somewhere underdeveloped would be doomed to failure: If you redistribute somewhere where redistribution just makes want common, he said, the old class struggles would just reassert themselves. Anyone who seriously cares about any given system needs to be open to considering how and why it might fail if they want to make it a success.
As such, Le Guin stands with people like George Orwell in an important but small tradition of socialist literary writers open to showing the dangers too.