This week I debated the Socialist Party of Great Britain on Capitalism or Socialism? I have a soft spot for the SPGB because they share many of my ideals – reducing coercion, class, privileege and inequality, peaceful co-operation and mutual respect. They thoroughly reject the bureaucracy, the concentration of power and the barbarity of countries that call themselves socialist but in fact practice state socialism or worse. And they are genuinely willing to debate. So we had an engaging exchange. But I came away with three disappointments.

First is the tendency of idealists to confuse their own ideal world with their opponents' real one. They are driven to socialism by iniquities of the real world, like the huge wealth of the Duke of Westminster, the existence of monopolies, unemployment, and wasted resources like boarded-up houses. But you can't blame capitalism for creating these things. The Duke's wealth came from historic privilege, monopolies are bolstered by regulation, and human and physical capital are allowed to go to waste only because competition is not active enough.

Second, I just could not get my socialist friends to understand the knowledge problem. They need to read their Hayek. There are millions of production possibilities and millions of ways of producing. Capitalism is a daily referendum on what should be produced: people 'vote' with their cash for the goods and services they prefer – encouraging entrepreneurs to produce more of them. In agrarian societies, the production possibilities are limited, and in small groups, sharing is easily managed. In a technologically advanced world of endless innovation and six billion people, knowing what to produce and how to produce it leaves socialists with a real problem. There will be disagreements: so there will have to be power, and coercion, to resolve them.

Third, while we share many of the same ideals, I think the prospect of personal gain is a more powerful driver of co-operation than the idea of the general good. In exchange, both sides benefit – or they would not do it. We only gain personally if we can make someone else better off too. Exchange, though motivated by self-regard, spreads benefit far and fast across the planet. It encourages people to build up and look after their productive resources, allowing goods and services to be produced ever more cost-effectively. It works, even despite the best efforts of politicians to divert it for their own ends. Plumbers get up at three in the morning to fix people's blocked drains because they get a direct personal benefit from doing it. Would they get up at three out of the goodness of their hearts?