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Doesn’t innovation suffer under this model?

No. Incentives to save money via innovation can be paid to whoever comes up with something "new and different" that actually works. If tied to the amount saved (say 3%-10% for 10 years, with lower % for larger absolute savings), it can have a big payoff for everyone.

Is there a country implementing the economic principles that you describe?

No. The nearest would be a few of the Middle East countries--Qatar, etc. They are really hereditary monarchies and the govt provides everything because the alternative would be they all have nothing (and the oil companies keep the money). Note many of the Middle East countries were created after WWI (breaking up the Ottoman empire), so they are not long-existing countries. Hence, the many problems in the various countries due to somewhat arbitrary boundaries created then.

Are there some texts that you would suggest to somebody looking to learn more about the inherent problems with capitalism and the benefits of socialism? And vice versa.

Not really. When a govt supposedly becomes socialist, it is really a variation on a dictatorship. Iran, Iraq, Libya, etc.
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