It's a socialist utopia.
But the thing is, within any utopia there is always some sort of fascist price to pay. And that means keepiong the unwanted people out.
That's one of the things I find highly unrealistic about Trek, is that humanity is incapable of overcoming it's petty jealousies and xenophobia.

I hate when people trot this nugget out
As I've explained before, Utopianism is all relative, Europe would be a utopia compared to someone from Somalia, our time would be a utopia compared to the 15th century.
When dictators set out to create a utopia it usually ends in disaster, but it's not the goal that made them dictators, it's that they were already dictators.
Nowhere in the show did they show a historical figure saying they wanted to create a utopia, just that the current federation consider themselves a uptopia comapred to the nasty places humanity has been in the past, and they'd be right.
Even with all our problems today, we could make the same claim in relation to 400 years previously, theres nothing wrong with setting aspirations for ourselves.
As for us overcoming our problems, we've overcome dozens of others why not poverty and xenaphobia? If you told someone 500 years ago we'd have the internet, no slavery, social welfare, the internet, universal sufferage etc they'd have thought you were insane.
Try to zoom out people, don't look at our poitential future through the context of our own time.