I think I get what you're saying here. Early socialism wasn't so much about economics. As you say, there was a social vision there as well, a desire to turn back the clock, escape the urban slums and the sweatshops, and "recreate the pastroral, village, small township communities." Early Socialism theory contained a huge component of idealism about the perfectibility of man, and how mankind could be brought to an ideal state of happiness if we could just escape the shackles of capitalism.
In fact, the same could be said about Capitalism--Capitalism is in fact a theory about the perfectibility of man. It's about more than just money and profits. Capitalist theory contains a big idealistic component as well: new technologies and labor-saving devices lifting the masses out of poverty, bringing transportation, leisure, cleanliness, and better health to the people, creating a stable, healthy, educated middle class to act as both high-tech workers and willing consumers, etc.
Same with early theories about Democracy, the division of power among the three branches of government, federalism, etc. If you read the original papers of the U.S. Founding Fathers, you see that same idealism: The perfectibility of man, if you can just find the right political formula.
Capitalism, socialism, democracy: All talking about achieving the same goals. The perfectibility of man, the betterment of mankind. So what's the common thread here? Answer: Romanticism.
The Romantic movement started with Rousseau in 1750 and officially lasted about a century. It was all about the perfectibility of mankind if you could just find the right formula that would allow mankind to flourish: Small peasant communities, nature, democracy, whatever. The Romantic ideal was alive and guiding the thinking behind all the great documents and movements of the 1700s and 1800s. Capitalism, Socialism, Democracy, and so on.
In many ways, the Romantic movement is still alive today. The title one of Ayn Rand's books is "The Romantic Manifesto," where she talks about how her political theories are outgrowths of Romanticism: Give man his economic freedom, and he will flourish.
The trouble with Romantic ideals is that they are mostly just ideals. Romantic ideals are very tough to translate into reality. So when you say that Capitalism is a failure, you are correct: It's a failure of early 1800s Romantic theory. Socialism is similarly a failure. Democracy is a failure at times as well. All three systems are Romantic theories that don't work very well when you try to translate them into real life.
So in the end, you have to jigger them a bit, make adjustments, find compromises, etc. No single theoretical system is going to work and bring mankind to Nirvana all by itself. It's all just Romantic theorizing. Reality says: Find compromises between Socialism and Capitalism so that you can curb the worst abuses of each and enjoy some of the benefits of both. Same with Democracy: Sometimes it works; other times (like right now with COVID-19), emergencies arise and democratic principles get thrown out the window in order to deal with those emergencies.
No theory is perfect. They are just guidelines. Ideals. Ultimately it's compromises that win the day. You tinker about and try to find a workable compromise that gets you a consensus, a daily system that everyone can live with.
So I agree with you: Capitalism fails in some ways. And so does Socialism. But if you make some compromises between the two…
Again, just theorizing off the top of my head. Just some brainstorming on a Sunday afternoon.
I am familiar with the arguments that Marx was part of the romantic movement, or socialism rather than Marx maybe, but I'm not entirely sure about it. The romantics didnt like capitalism, called it the dismal science, but largely because they disliked abstract reason a lot, they championed practical reason if they championed reason at all (a lot of them didnt). Their motive in doing so, however, was seeking to approximate an ideal but rather to challenge or cast down an ideal, which they considered out of keeping with true reality.
A course has to be steered, for sure, between so called realpolitik and idealpolitik but where you draw the lines, anyone's guess, I'm not sure what you describe is realism or reality so much as its pragmatism and pragmatic compromise. Which is fine BTW, its no criticism.