Interesting topic, it could take us hours and hours to finally come to a conclusion (if ever) of whether capitalism or socialism can be a better option. The discussion between freedoms VS equality or community VB the individual is longstanding.
It is evident, as you have pointed out that capitalism has failed in many ways, inequality being just one unattended issue. I do not discard socialism as an option, as @MariaFernanda does (although I recognize difficulty of transition/secession), but I would rather stress that alongside the economic model, politics have a decisive push in the outcomes we desire or consider repulsive.
Let me go point by point:
On the first one, it is vague to my interpretation why can´t we have a “system of risk-pooling and income distribution” without the profit pursuit the author assigns to capitalism. As income redistribution is usually done by a central authority (such as the government) in a capitalist society, I do not see the necessity of a socialist system to have it. We can even recall the Second Welfare Theorem to get to another efficient equilibrium with redistribution.
It is hard to contradict that the profit pursuit and the prospect of altering redistribution of surplus are not a main drive of capitalism that can lead to bad outcomes; but instead of completely eliminating them, I would emphasize on a very important precondition: equality of opportunities. Even in a completely meritocratic society (desired by many fellow itamitas), it can be considered unfair to compare the “achievements” of different people with such different and unequal backgrounds since they are born.
On the second point, I do not know if there is evidence that in a Socialist community it is more evident which members of the electorate are left behind. And even if there is evidence, it is not clear if the signals or information can be fully understood by the politicians that take decisions. They can have selfish intentions to stay in power and pretend to be blind to the electorate’s wishes if it helps them stay in power.
Is it really about capitalism and socialism, or politicians and human nature? Or is it something else? Maybe groups of people need class consciousness, as Marx would say, or any kind of consciousness (in either a capitalist or socialist society) to achieve a political change, reforms that privilege equality or a revolution.
The third point can only make stress once more that there is something more than economics that is on the game: politics, and as I have said maybe human (selfish) nature.
The debate certainly addresses liberties, and their privileged position over equality in capitalist societies. In theory, the core and Walrasian equilibriums are voluntary (Theorem 4.3 of the book). But are we really free having so many economic, political, social constrains? Can we be free and still make involuntary decisions? Do we desire unlimited liberty on the cost of social benefits? I don´t intend to find an answer for these questions but to the least, I consider that equality of opportunities a fundamental principle for whatever economic or political system we desire to have.