Capitalism is fine in the many aspects of society, especially when we are dealing with wants as opposed to needs. So long as the workers are treated fairly and the businesses are honest with their clientel I have no problem with them. For luxuries, capitalism is excellent; go Adam Smith! That being said, in a society where neighbors and families are increasingly detached, one can not rely on charities and market driven economics to take care of everyone's needs.
Socialism, to one degree or another, seems a necessary tool to help fulfil the basic needs of society.
Education is already largely socialized in this country, but it is done so in an inequitable manner. It is part of our civic responsibility to provide a decent education to the youth of the nation. We have always had "school choice" in the sense that it is often used today. One is free to send one's children to certified private schools or to educate them at home. If one provides tax relief to families who choose to send their children to such schools, and who don't use the public education system, what about for people who don't have children in school at all? If none of these people pay for public school education, we run a serious risk of underfunding our public schools. Arguably this is already the case. It is our duty as citizens to educate the children of this country. If one would prefer to send one's children to a private school and can not afford it, then the private school and it's proponents should help to raise scholarship money for those students. Otherwise, this would detract from the basic education of the students in the majority of the populace who go to public schools. Private school education is a luxury item. A properly cared for public school system should fill the needs of education as a necessity.
Healthcare: Luxury healthcare constitutes elective surgury and treatment and choice in providers, doctors, nurses, name brand pharmesuticals, et al. Necessary healthcare constitutes emergency care, and treatment of other ailments, both mental and physical, which left untreated would lead to a significant deterioration in the patient's quality of life, and conversely, that if treated would lead to a signifigant improvement in the patient's quality of life. Obviously that's a rather broad statement and needs more refining than I can do here. Necessary healthcare should be socialized, that is, everyone should be able to receive it and the only institution I see capable of providing or insuring that this takes place is the state. Luxury healthcare, should be able to be purchased at market value. Does this mean government subsidization of insurance companies? I don't know. I haven't thought this one all the way through.
Related to healthcare is the issue of food, housing and welfare. No one should go hungry, or go without a roof over their heads. Job placement and training are excellent ideas in helping welfare recipients, but the recent welfare bill seems too absolute in when it cuts off aid. I'll probably add more to this part later
Scientific research. At some level this is a luxury item and one can expect a certain level of market driven research - society wants an AIDS vaccine, a university wants prestige, an auto manufacturer wants a more efficient engine. At another level though, is the basic quest for improving the knowledge of how the body, the world, the universe works. Market applications of such research is not always apparent, but the knowledge is important none the less. Some portion of the nation's budget and resources should be devoted towards research whose motivations are in the expansion of humanity's knowledge, regardless of economic applications.
Defense: Unless we hire mercenaries, we have socialized armed forces. As a state we need direct control over our military. I don't think that this is a terribly contentious issue. Municiple services - police, fire, et al.: I understand that some cities and towns are privatizing their emergency services. This strikes me as rather odd, that a service with the potential benefit towards all would be farmed out to a private company, instead of being controlled by the people through the state.