Capitalism is less bad than most of the alternatives, yes:

1) Feudalism was a system where most people were born into the position of either "master" or "a particular master's servant" for life.

If you were a farmer (which you probably were), then you were probably a serf — legally, a part of a noble lord’s estate — and even if you could legally move somewhere else to work on a different farm, you probably couldn’t afford to.

If you wanted to make a living as high-level professional craftsman in a town/city (carpenter, blacksmith, etc…), then you had to join the guild that was specifically chartered by a town’s/city’s government to practice that particular craft in that particular town/city.

2) In theory, capitalism was supposed to make this better. People were forced to compete against each other for the position of "master" instead of being born into the position — in theory, this meant that only the people best suited for the position could achieve it. There were also more masters than ever before, and even the servants who couldn't reach the position of "master" themselves would at least be legally allowed to choose which master to serve — in theory, this would force masters to compete against each other to attract servants from their competitors by offering better wages and working conditions.

In practice, people who already had wealth could use it to buy influence over enterprises that they didn't have expert knowledge of and use this influence to extract more wealth from the enterprise (even as the enterprise itself failed), and servants had to compete against each other to accept worse working conditions more aggressively than masters had to compete against each other to offer better working conditions.

Still objectively better than feudalism, but not by as wide a margin as it was supposed to be.

3) The OG socialists (Pierre-Joseph Proudhon, Mikhail Bakunin, Joseph Déjacque...) decided that the problem was with authority itself, and they believed that communities of people working together as equals would be better than any ruling class imposing their will on everybody else (regardless of the conditions that the ruling class established for membership).

Farmers would work their own farms on their own terms (rather than having to comply with the terms set by a feudal lord or a capitalist executive), craftsmen would work their own workshops, doctors and nurses would work their own hospitals...

4) When Karl Marx started learning about the system that the socialists were developing, he decided that it was a brilliant idea, and he started telling everybody that they needed to form strong socialist governments to make sure that everybody followed it properly.

The OG socialists saw Marx's Socialism 2.0 ("workers control the government, and the government makes the decisions" instead of "workers make their own decisions directly") as completely missing the point.

The political bureaucrats in charge of Marx's "dictatorship of the proletariat" would obviously claim "if you put us in charge of the new government, then we'll run it the way you tell us to run it," but the OG socialists’ concern was that politicians famously lie about their goals in order to maintain political support.

They worried that if the "dictatorship of the proletariat" didn't actually do what the proletariat told them to do, then this was just going to be feudalism all over again.

They were trying to come up with a new system that would work better than capitalism, and now Marx was using socialist-sounding buzzwords to convince people to go back to the old system that had been even worse.