"We confuse — or I think are intentionally taught to confuse — production and trade with capitalism itself, thinking we wouldn’t have bread, shoes, or a roof over our head without capitalism, somehow forgetting that humans had production, trade, bread, shoes, and housing millennia before its creation."

Actually, we didn't. As soon as humans moved away from "self-sufficiency" and began trading we had capitalism.

I think you misunderstand capitalism. Capitalism occurred when the first human traded/bartered with another human. Each human felt they were gaining from the exchange (that gain is what we call "profit"). That trade is what we call capitalism.

Now as it turns out some of the people determined that they were better at making stuff people needed than farming or hunting. So, they became small business owners. They found they could increase production if they took on an apprentice and paid the apprentice.

Now we have a vibrant capitalisitic economy comprised of hunters, farmers, and artisans. All this wealth attracted jealous attention. So, the small society began to pool some of their surplus to hire soldiers. That process is called taxing people to pay for "government services".

Later, the society decided it produced enough surplus to care for the widows and orphans in the community. That is called redistributing income.

Capitalism is and always has been the engine of any economy. Societies that don't rely on a capitalistic engine have consistently failed. That does not mean capitalism like any "tool" cannot produce some level of abuse and thus needs enough regulation to limit abuse, but not so much it crushes productivity.

Some very small communities (communes and tribes) have made a more socialistic system work, but those societies have always been limited. Socialism simply does not scale well as the inherent planning necessary can't keep up with the complexity that comes with large "nation states".

People like Adam Smith, Karl Marx, etc. did not invent capitalism or socialism, they simply wrote down their observations. Capitalism describes a system "owners" of a business produce goods and services and sell them in the marketplace. Socialism describes a system where goods and services are essentially the property of the government and distributed according to the government's values, which may or may not sync with those of the people.

The inherent flaw of socialism is unlike capitalism which relies on "self-interest" to motivate production of goods and services, socialism relies on either "goodwill" or if that fails coercion. The former seems to work in very small social groups like families, some communes, tribes, but inevitably the latter gets used by bigger social groups. Not exactly something to look forward to unless you are part of the elite group divvying ups society's goods and services.

I think your narrative is largely about how industrialization changed the power structure in society. Machines reduced many people to nothing more than unskilled labor a level below farming. Unskilled labor had nothing but "time" to sell, while farmers at least had surplus food. As populations expanded, the relative supply of labor compared to other resources declined, making unskilled labor even less valuable and that led to more poverty.

At the same time our definition of poverty has changed. So, what we see as poor today, would not have been seen as poor 200 years ago.

However, the problem is solving itself, it is just taking a long time to do so. Humans live these days for 75 years. So, the over production of humans (what was referred to the pending over population of the planet) is being address and current estimates are by 2060 the world population will begin to decline. Long before that the supply of "labor" will decline. Increasing its value.

Trump for all his flaws illustrated the effect, when he secured the borders and pushed for more domestic production. The result was a declining poverty rate, wages rising faster among entry level workers than upper income workers, record low unemployment, and an increase in the country's labor participation rate.

Anyways, the point is simple, extreme poverty exists when the supply of labor exceeds the demand forcing people to work for almost nothing. The standard of living of people around the globe is more closely tied to the demand and supply of labor than any other variable.

We try to get too complicated. Capitalism is simply trading goods and services besides humans. Industrialization is the process of combining machines and labor to produce more stuff. Socialism is nothing more than an alternative mechanism for distributing stuff allowing people to trade what they made.