Nancy Folbre has a post on NY Times blog asking what is alternative to capitalism. My immediate thoughts went to "nothing is wrong with capitalism per se, it is simply today's capitalism that is the problem". However, I thought let me expand on that idea a bit and explain it in detail. So here goes.
We must look at economic systems in broader range. At one end we have law-of-jungle style systems with basic legal structure and not much else - lets call it North side*. (I don't want to use left and right as it may cause confusion). On the other we have an equitable society with perfect equality - this becomes the south side. Within such a spectrum, let us imagine a center. Usual capitalistic systems (the most perfect we had), I venture, lie to the north of such center but never to the extreme. Socialist systems lie to the south of this center and still never to the extreme.
One can debate how far North the capitalist systems are currently, or how far south are the proposed socialistic alternatives are. But best option, I believe, is to create a balance that is possible at the center. It means we need a capitalistic society that is more south than what we like or we need a socialistic society that is more north than we assume.
The point is further complicated because capitalist systems tend to move Northwards easily. Conversely, Socialistic systems tend to move southwards easily. "More of what works" seems to be driving force. It means when we adopt a capitalistic system, we must focus on adding clear, precise, boundary regulations to let markets function effectively. Conversely, if we adopt socialistic system, we must focus on deregulating regulation in spheres that can stand on its own. As a metaphor, capitalism is like an open field game (soccer) and referee must move along with the ball. Socialism is like lawn tennis, you play where referees sit. Thus, moderation is best solution.