As a self-avowed socialist, I have to say that Chavez gives me great pause and that if he fails, Venezuela will be used as an example of the “failure of socialism” because of faults found in socialism, instead of the egomania and (justifiable) paranoia that I think is the true cause that will make him likely to fail.
In regards to socialism in general, I think the simplest definition and its greatest contrast with capitalism is that it believes that the public interest outweighs private interests, and that the best means of ensuring the public interest is through democratic government ownership, control or regulation of industry. Thus it is explicitly both a political and economic ideology and does not try to separate the two fields as capitalism has.
For better and worse, socialism has also evolved over the last 150-odd years since it was first put forth as a philosophy. Marx and his bastard child of communism was the worst thing that ever happened to it. I do not agree with his conclusions (though I do agree with some of his criticisms). Socialism requires a liberal democracy, not the ‘dictatorship of the proletariat’. Too many autocratic regimes called themselves socialist with no desire of actually implementing the democratic side that it needs to truly work. Marxism also has an irrational hatred for the middle-class bourgeois. I think socialism works best in a bourgeois society such as found in the Scandinavian social democracies. In this sense, Chavez leans uncomfortably Marxist.
Also, the experiments with “state socialism” failed miserably because they not only tried to control the means of production, but the means of exchange as well. Modern socialist theory has (mostly) conceded the argument in regards to the market. The market is the most practical means of allocating resources. But socialism still does not trust it to behave at all times and reserves the right of government to intervene in cases of market failures.
Socialism is now more concerned with the equitable ownership and distribution of capital and the rewards from its use, which does not preclude government ownership, but does preclude the setting of prices through government fiat.
I personally think that the next stage in socialism will not be direct ownership and control, but a regulatory structure and institutions (as defined by Douglass North) that will ensure that the public interest trumps private interest when they come into conflict. And I am sure that it will not be a smooth ride. And there have to be guarantees that minority rights are protected against majority rule, something that the United States has made great progress towards.
In regards to capitalism, I think “laissez-faire” capitalism failed just as miserably as state socialism. For the first hundred years of capitalism, government mostly let it alone, and we got the wonderful business cycle of boom and panic, leading to the Great Depression. When business is allowed to regulate themselves, they rarely do so to better society unless under extreme political pressure, but more often to raise entry costs and keep out new firms from entering the market. The rewards under capitalism go to far too few and the pain shared by far too many.
Given the choice between the two and looking at the historical record of each, I chose socialism. I also know that the streak of individualism is too strong in the United States to ever allow a socialist government. I’ll just be content when they stop trying to overthrow those governments that do decide to try socialism.