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The actual problem, from an anarchist-anarcho capitalist sense, is that capitalism is morally incompatible with the state or a government conceptually, because given the nature of capitalism—and moreover people in general—free enterprise will also take hold of this all powerful monopoly that is the state, and then pervert it to its own ends.
Hence, crony capitalism.
Arguably, whether capitalism or socialism, when combined with a State, both break down rapidly.
Can you explain "the state?" I hear it used so many times and I do not get it. They dont mean the actual state one lives in, like the governor of California etc? I just hear everything blamed on "the state" and I have no idea who they mean.
The state meaning literally the conceptual apparatus or entity that has the legal monopoly to use force in a geographic area. The State can shoot you and not be subject to the same rules as if you shoot another person or agent of the state.
The most basic is example of commingling of the state and free enterprise is Regulatory Capture—a Wall Street corporation has ex-employees join the SEC, which in turn writes rules via the State to benefit that corporation asymmetrically. Because there’s a gun in the room, you’re basically one step removed from giving the corporation itself the legal right to use force.
The most egregious example is obviously the military industrial complex.
However, because in their heads most people will abstract away this notion, they will say things like, “we need to make corporate lobbying illegal,” or “we need to block corporations from donating to political campaigns.” The reality is that the revolving door of regulatory capture trumps all that. If the state exists to write rules, free enterprise will capture it because it has to capture it in order to survive.