An explorer discovers an iron mine. Society wants to promote exploration so it decides to reward the explorer.
There are two main ways of doing this.
Capitalism. The explorer KEEPS the mine. He hires workers from society to mine the mine, and sells the iron to society. The explorer keeps the profits.
Socialism. Society keeps the mine. The explorer is paid a finders fee. A manager who specializes in managing iron mines is hired to hire workers from society to mine the iron. The iron is sold to society. Society splits the profits.
Notice a couple of important points. One, in both scenarios, everybody is being paid for their work. There’s no “free stuff” in socialism unless you count the windfall of the iron. But if you do, the same is true of capitalism, it is just the explorer who gets the free stuff.
Two, its important to understand where the profit comes from. Its LABOR the town must provide to the explorer. Not the mining, that happens anyway. But to pay the profit, society must do more labor to get the same iron. More doctoring, tailoring, farming, etc. To the benefit of the explorer.
Lastly, its more than just the profit. The explorer gets “property rights” that don’t exist under socialism. He gets to direct the workings of the iron mine, despite his lack of expertise. And the operation of the mine VERY MUCH affects society.