The problem with these types of discussions is that everyone has a different idea of what "socialism" and "capitalism" mean. Scandinavia can be very capitalistic. For example, they perform quite well on the Heritage Foundation's Index of Economic Freedom[1]. I consider this is a reasonable metric for how capitalistic a society is.
Some people, as I believe you did, use socialism to describe strong social safety nets and social programs -- essentially strong wealth redistribution. That is separate from the capitalism I mentioned above; with these definitions, capitalism and socialism can work hand-in-hand, whereas they could not if you take socialism to mean what I would call "communism."
It's an interesting problem to grapple with: can you have a dynamic economy with a vibrant entrepreneurial sector, that encourages innovation and growth, and yet have a social floor below which no citizen will fall, therefore avoiding extreme inequality with people living in poverty?
"...when you damp oscillations, you lose the high points as well as the low" [2]
For the most part, successful entrepreneurs are those who had the luxury of experiencing the failure of a business and then still had enough left over to try again. If the worst that can happen is that you hit the socialist rock bottom of only being able to house and feed your family and provide them with last year's models of smartphone, you are more apt to take risks, like starting businesses, or even quitting exploitative labor arrangements.
