We don’t need to create a new system. Capitalism is perfectly fine with a few tweaks.
So the new system doesn't have to actually be better overall than capitalism, it just needs to provide some competition to light a fire under policy makers.
The countries that have hit stagnation, other than the US, tend to build good public infrastructure. This pumps money into the economy, but not through the banks.
Exactly. This led to much government regulation to keep big business from getting too heavy-handed. See the previous price discussion on insulin pricing for a modern example. Although drug prices have not been regulated, until recently there was an assumption that blatant overcharging would lead to government action. It didn't.
Unions used to have much more power in the US. They had money and votes. Business only had money, and couldn't use it directly without being accused of bribery.
Many little, and not so little, restrictions that used to keep businesses from getting too greedy have been removed in recent decades. Glass-Stegall, which kept banks and brokerages separate. Far fewer restrictions on banks. The removal of the restriction on "gambling" in stock markets, which limited derivatives. Allowing interstate branch banking. Repeal of the Utility Company Holding Act. The NYSE allowing multiple classes of stock (like Facebook, Google, etc.). Weakened telecom regulation. Weakened labor law enforcement. Unregistered hedge funds. Pension funds being allowed to invest in hedge funds. The Interstate Commerce Commission. The Civil Aeronautics Board. The list goes on.
Until you run into a hard wall trying to integrate new features that customers request which break the entire system and before you know it, you're still running on C# 3 while all of the other APIs and companies have long upgraded to C# 8 (or switched languages altogether). Then your wildfire turns into a firestorm and your customers start calling in.
And they're pissed.
The EU has a study which I cited in a previous posting indicating that price competition requires four substantial sellers. One is a monopoly, two tend to implicitly cooperate as a duopoly, sometimes there's competition with three but often two of those dominate as a duopoly, but with four, price competition usually appears. It takes at least four players to have a free market.
So, less than four players in a market, and Government constraints kick in. Breakups, blocks on mergers, restrictions on expansion, higher taxes and closer scrutiny for the top 3. The US used to do stuff like that. The EU now does.
Now that's a free market.
Capitalism is fine but this is not capitalism.
If anything, less so than the 19th Century form for which the word “capitalism” was coined. Capitalism has never been anything but deeply corrupted.