Industrialization as a democracy (Chile, to be specific)

[GAGA Extrem]

(1) If capitalists lack capital to invest into factories, I'd suggest to lower their taxes and set a promotion NF to convert mid strata pops - they will start off with some cash reserves that they will dump into the current project, speeding up the process quite a bit. (But I guess that's not your problem atm.)
(2) It seems that capitalists do not extend factories under certain circumstances. Not 100% when and why, but a regular problem is that they build a late game factory (electric gear, cars, etc.) where they cannot get the needed construction materials. Might that have happened to you?
(3) If you have interventionism, subside all factories. It seems that capis do only expand / build new factories if the total capacity of the state is used by a certain %, so if you have an unprofitable factory that is barely alive with 80% of the workslots empty, that *might* cause a problem.
(4) Long-term solution: Set NF to promote an ideology that has a party with State Capitalism. It will take a while, but after a certain time, the elections should turn out in favor of that ideology.

Lastely, if you can upload the savegame, I'll have a closer look to see if I can locate the problem.

 

[GAGA Extrem]

Forget it, only state capitalism works in this game, the AI is too stupid, they always choose the worse factory to build, I hope Vic 3 will have it worked out, the game needs a decent AI.

Nah. If your country is big enough, L-F will yield quite impressive results. Granted, it lacks a bit when it comes to late game factories, but its not *broken* by any means.