Rotate the compass 45° clockwise, name the new vertical axis to state economy vs private economy, and name the new horizontal axis to left and right. At the far left(green) you have total destruction of hierarchy and flattening of power inequality, while at the far right(blue) you have absolute hierarchy and centralized power.
State centralized economies(red) lead to increased hierarchy by empowering government officials to become powerful lords. Privatized economies(purple/yellow) lead to increased hierarchy by empowering capitalists to become powerful lords. Trying to reach either the top or bottom tip of the diamond leads you the right tip.
Horseshoe theory kind of applies to Marxist-Leninists like its pro-capitalists creators imagined, but they didn’t realize that they were the other end of the horseshoe. This is because both capitalism and the state are the dangers. The problem with both stems from allowing the unrestricted accumulation of power.
Government officials use political capital, while capitalists use economic capital. They can feed off of each other, with the rich helping politicians and the politicians helping the rich. My preferred solution to both is to redistribute capital from the rich directly to the poor, growing the middle class by putting a ceiling and floor on the rich and the poor.