Capitalism can create innovation, but capitalism is not necessary for it. The very same innovation could have happened if the state spent a fraction of this money on R&D, without all the insane Terraform Mars T-shirts and 3 companies wasting resources to do pretty much exactly the same thing three times. Sadly the american government is not an effective redistributor of wealth, and any NASA budget comes with a million (dumb) strings attached, like spending it on certain projects that benefit the state senator who voted for it.

In this situation, the state LITERALLY spent more money developing the SLS rocket, and it is going to be a colossal failure and waste of money compared to the rockets that can be reused.

Three companies trying to produce the same thing is not a waste, it's literally the defining feature of capitalism and why every government, including the Chinese Communist government, still uses capitalist systems. Multiple entities competing to do the same thing gives you more variety and diversity, and hedges your bets in case one of them is wrong or corrupted by flawed people in it.

Also, I don't know where you get that 50x number, SpaceX lowered the launch cost maybe by about 3-4x compared to contemporary chinese rockets.

Compared to SLS, the literal state funded alternative.