It demonstrably isn't.
Norway, Finland, Sweden, Denmark, Iceland have strongly socialist systems. The state, on behalf of the people, owns a large percentage of the economy. It spends a large portion on education, housing, and public welfare. A large percentage of its workers are unionized, granting them greater power. Last but not least, these countries are democracies, allowing the general population input into decision making.
World's 20 Happiest Countries
1.Finland
2.Denmark
3.Switzerland
4.Iceland
5.Norway
6.Netherlands
7.Sweden
8.New Zealand
9.Austria
10.Luxembourg
11.Canada
12.Australia
13.United Kingdom
14.Israel
15.Costa Rica
16.Ireland
17.Germany
18.United States
19.Czech Republic
20.Belgium