#2 is completely true- but there is a third option between capitalism and socialism- Caritas.
Capitalism and socialism can be thought of as being approximately at opposite ends of the spectrum of goverment intervention in peoples' lives, financially. Where in capitalism people are left to work out amongst each other who gets how much (i.e. the many, for the many), in socialism the government decides (i.e. the few, for the many).
You may object and say only "1%-ers" -- i.e. also "the few" -- can afford to hire people, but in pure capitalism there's nothing stopping the little guy from trading goods produced and services performed with each other. I'm guessing that would be your idea of homogeneous-minded and -cultured small communities engaging in your "distributism".
Charity is not really on this spectrum (except so far as socialism is forced "charity", which is not really charity at all). I don't see anything in capitalism that *requires* one to maximize profits. In pure capitalism, the government stays completely out of our financial affairs, so I'm free to give away some of my services, or charge someone less because they've fallen on tough times and I want to. (And charge someone else more, because I feel like it. That would be freedom.)
And of course outside of the business of my livelihood, I think even in socialist societies you can give away money any time if you really want to. Well, except if it's for "subversive" causes, like religions or opposing political idealogies.
So I see charity as not between them, but on top of them.
#1 requires a belief in free elections. I'm finding it harder to believe in the system anymore.
Luckily reality doesn't require your belief. And the reality still is, you get a vote. Don't like the candidates, then run yourself. Or get someone else you know to run. The political party won't pick your kind of candidate, then start your own party. Just because something takes a lot of effort doesn't mean it's not available. It's not illegal to have candidates you like on the ballot. It's legal, it's just not easy. (Thank goodness; I for one like a lot of inertia in our system, overall, even though I'm one who wants things quite a bit different than they are today.)