What's wrong with capitalism? Ego, dragline and jacob have it right, above. This is an enormous waste of time and energy. However, it's one I enjoy. Optimization of a theoretical system? I'm in!
First, your example issues:
Wolff, and other light socialists, just want to impose their feelings about justice on the current system. Nothing wrong with that, but it's no way to come up with a working solution. I'd say overall the system is awesome, with a few tweaks, it could be better.
By that I mean it is comparatively awesome. Look at the standards our poor have, and that is the true measure of the system. Don't judge by the winners, judge by the losers, the disenfranchised. If you are going to be poor, here and now is the place and time. While income inequality is getting worse, I don't think it's a real problem. It's part of the politics of envy, but in absolute terms, it is the standards of living at the bottom that matter, not how high the peaks are.
Heinlein is awesome! However, he is a military academy grad, who stepped into a lucrative career as a writer. I imagine he felt held back by the lesser achievers his whole life, and that comes out in his writing. Plus, he is writing sci Fi, where all his characters are exemplary, they would succeed in any system. Read "the man too lazy to fail" for some insight into how life should be, if you're smart.
The problem with Heinlein and libertarian solutions are the general public. I get reminded about this every once in a while. I tend to be fairly isolated, with little contact with average Americans. It is shocking to spend time with the stupid, the lazy, and the broken, and see how many of them are out there!
Any improvement of capitalism has to be measured in how it improves the life of the disenfranchised.
Toward that end, I have a few tweaks I think would make things better overall.
I think the way things are is pretty good, on a historical basis. But there is a sense that cheating is going on. That the the rich don't pay enough taxes, buy politicians, cheat the markets, etc.
So, I would hold elections on April 15th, and multiply everyone's vote by their tax bill, as paid. No payment, you can vote next year, with interest and penalties! This eliminates voter fraud, as every vote is literally accounted for. It's only fair that the ones footing the bill get the Lion's share of authority to spend.
Suddenly the complaints would be that the rich pay too much tax! And we could stop talking about tax cuts for the rich, as if they pay income tax.
Buying politicians is false on the face of it. No CEO can show a Senator on the quarterly report. I'm not saying money doesn't change hands, or that it lacks influence. I'm saying that it is extortion, as in "nice business you got there, be a shame if someone regulated it..." The idea that these crooks are the good guys, tempted by evil CEOs is laughable. It comes from a world view based on watching too many soaps. In the real world, there isn't a good twin in a white suit and an evil twin with a goatee. Cut the regulation, and you cut the "incentive for bribes" or "power to extort" depending on your view. Also, why are corporations so big? Economies of scale only go so far, before the Dilbert principal kicks in, and things are less efficient. But at about the same point, efficiency in dealing with government kicks in. Remove the regulatory efficiency, and mid caps would eat large caps.
The view that the rich are cheating could be greatly diminished by a simple NYSE rule change. Right now, corporate boards and executives get their big bucks from pushing up stock prices, and selling options. This causes some decisions that are bad in the long term, for good in the next quarter. We've all seen this in our office lives. Simply require that stock options not be cashed out until 1-5 years after being vested, not more than 10% in a year, and not more than 10% while still in a position of authority. Align the interests of the officers with the long term interests of the business.
Honestly, I think public school teachers are a huge part of this problem. Not having public school teachers, but the making and retaining policies means we only have one political ideology present. I went to 20 schools from california to alaska, before I graduated early. I had one, very old conservative christian teacher, one moderate Democrat, and ALL the rest were various flavors of progressive. This means only one viewpoint when teaching and discussing any subject outside of math. I cabled a lot of schools in the 90's, and lost all the respect I had for the profession in those years. Teachers are a lot different when evaluated by independent adults as independent adults.
Teachers that knew enough of the world to go beyond the soap opera viewpoints could be useful to a class trying to figure out the world.
So there is my cocktail napkins level solutions, but really, focus on fixing my own situation is where I try to keep my focus.
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