I have never done sufficient research on the topic, but I know that some thinkers have defined our current system as shareholder capitalism and have argued that we should move to a system of stakeholder capitalism that involves collective ownership, profit-sharing, a cooperative labor process, and guaranteed incomes. Some people propose that we move to a system of economic democracy with socialized markets and employee-managed work.
My mind tends to run to less grandiose, more bandaid-type solutions: We need more regulations, better enforcement, and tax reform. (For two of my earlier posts about this, see In Praise of Regulation and Employee Protection.)
When playing around with ways that capitalism could change, it's interesting to think of the outcomes we would like to achieve. Economic growth and prosperity, for sure. High productivity. Less poverty. Environmental improvements. But what about the ways our system shapes us: the sorts of people who are rewarded, and the sorts of people who are marginalized. For example, in our current system, arrogant, ambitious men tend to be the most successful, regardless of their relative qualifications or benefit to the organization. It's a pipe dream I guess, but it would be nice to think that one day the system wouldn't tip in their favor.
Anyway, on to ways we could change the system...
Tax reform is an important part of improving our system. Currently, the highest tax bracket in Canada is $120,888 to infinity, and the marginal tax rate is 46.4%. The next lower tax bracket is $74,358 to $120,887, and it is nearly the same rate (43%), so you could say that everyone over $74K is in about the same tax bracket. People who make $15,099 pay 22%. These tax rates hardly meet the goals of progressive taxation. We need lower rates for low income, and we need tax brackets over $120K that get progressively higher. (Remember that rich people pay tax on only 50% of their income from capital gains and that they have other loopholes like trust funds.)
One part of moving to a more enlightened form of capitalism is to move to more enlightened corporate environments: places that have more respect for their workforce and operate less to make the top six executives richer than Croesus. The odd company may become more enlightened (probably due to employee ownership) but it won't be the norm without regulation and public education to support the movement.
We need much more heavily regulated markets to protect citizens from pollution, the exhaustion of resources, fraud, inflated prices, and so on. Think of it this way: one of the most highly regulated markets in the world is the financial market. The people who are most involved in the financial market tend to be pro-free market, anti-regulation... except when it comes to protecting their money. In the same way, we need to protect the health and prosperity of all citizens.
How to get it done
I know, I know, usually at this point is a posting I invoke the name Bob Rae and do a little hand-wringing about what-might-have-been. But really, none of this will ever happen unless the electorate demands it. I wish I understood how the French did it.