While various countries have come close, no country can boast of being a purely capitalist or socialist country, not in the purest form anyway. There are aspects of socialism in capitalist countries and there is enough evidence of the price mechanism at work in socialist countries. l do agree with some of the points you make, but the conclusion is overly simplistic. NO, true power doesn't lie behind the barrel of a gun. This was the thinking behind to race to amass weapons in the 70s and 80s, but going by that the USSR would still be existing. l could go on, but you get the drift.
Power can be amassed behind the barrel of the gun but it will not last for too long as people will realize that the real power is with them and there can be the time when people will use that power against the very government that they assume should be protecting them. Capitalism and democracy can be considered as bad systems but the problem is that many other contender ideas can't be considered as better alternatives. There are actually good ideas for governance but when they are applied human nature gets in the way leading to massive failures. We saw this with the communism in the 70s and 80s. In the end, there is no perfect system it is how we use the system that matters most. In addition, the end should not be used to justify the means.