The reason direct democracy doesn't work at national scale is that once you've diluted someone's vote by enough (i.e. there are 100 million voters instead of 100 voters), everyone knows their vote has a negligible effect on the outcome and therefore lacks the incentive to spend time researching every individual issue. And at the same time, a larger government is in charge of a wider jurisdiction, and then people in Florida care a lot about hurricane response but can't command a majority and people in Illinois or California have little reason to care about it.
The attempt to paper over this is to get some representatives whose job is supposed to be to do the caring for you, but then they become the privileged elite afflicted with the principal-agent problem and you get a corrupt/captured government.
> It could even be cryptographic voting and traceable blockchain finance (where applicable) could help undo many ills and corruption.
None of that is going to fix the problem that most people don't have time to read about all the details of fisheries rules or the economics of operating a power grid, and then the people who show up are the people with the goal of corrupting the process for their own interests.
Notice that this has nothing to do with capitalism. If the head of the computer science division -- a government department -- wants to do AI stuff, and the most expedient way to generate the power to do it right away is to bring decommissioned coal power plants back online, whether that happens depends on whether the bureau in charge of that has more political power than the one in charge of protecting the environment. There is no magic that makes the trade off go away or requires the alternative you would have preferred to be chosen when people who are better at political games want something else.
> I am proposing a world with an economic system that CANNOT overtake the government AND at the same time where the people are directly the government.
That isn't a thing.
Suppose you have a piece of property, like a house or a phone. If nobody actually owns anything then that isn't your house or your phone, it's everybody's. You come home and there is a stranger sleeping in your daughter's bed and you can't even object to it. If you have naked pictures of you and your spouse on your phone, those belong to everybody. Obviously this isn't the thing that anybody wants.
But as soon as you put anyone in charge of deciding who gets to use what, those people are the privileged elite. They go gerrymander the districts so they can stay in office even after doing things you don't like, or use their existing control over media outlets to convince people to vote for their continued control over media outlets etc.
"Socialism" does nothing against that. It makes it worse; it's why the USSR was a dystopia.
For markets to work you need them to be competitive, which requires you to limit government corruption, and the best way we know how to do that is limited government so that the government doesn't have the power to do the things most strongly associated with corruption, like imposing fixed mandatory fees/costs or onerous regulatory barriers to entry. And that mostly works when you actually do it.
For a command economy to work you need some way to limit government corruption even while the government is fully enmeshed in every aspect of the economy, which no one has ever managed to pull off and there is not even any apparent means to do it.