always seemed to me "externality" was just a euphemism to cover up the fact that capitalist enterprise requires <em>massive</em>--not a hand out here or there--state support (and planning) to functional at all.

Externalities pre-date the modern capitalist system. For example, in England, well before modern capitalism, restrictions on smelting and similar industries existed to prevent them from polluting surrounding neighborhoods. These concerns are even older than that. The Talmud discusses the legality of farming flowers that make for bad tasting honey when bees use them to make honey, and when one can plant such flowers near the property of someone who owns beehives. Similar issues with water rights also date to the early Middle Ages in some respects. There's nothing inherent about "capitalism" here, merely economic activity as a whole.