That is American capitalism where lobbyists have taken the stage away from the true purpose of a government, which is to protect the common people. Capitalism itself, which is a system that rewards wealth accumulation through innovation, does not have to go unchecked like in the US. One can accumulate wealth without having the political power to threaten the national interest for it.
The greed of capitalism wanted slaves but it didn't need any black slaves. Modern capitalism is about enticing people to provide manual labor for a smaller piece of the pie while those who with the ability to innovate and make big decisions take a much larger slice. This creates a system that rewards and nurtures innovation over drone-like labor, which, unfortunately, most people are only capable of.
In order for socialism to truly function efficiently, the human psyche has to completely change. People have to think more like ants and be self-sacrificing for the collective good. With most people thinking independently and coveting their own welfares and desires above all, capitalism is what is needed to harness the power of the masses. It doesn't look like this will change anytime soon.
The definition of Capitalism is "an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state."
What you are describing is more like the concept of market economy, which is defined as "an economic system in which production and prices are determined by unrestricted competition between privately owned businesses."
The two are not interchangeable.
Capitalism just means private owners (i.e. "Capitalists") control society's economy, which in practical terms, is a sliding scale. For example, Capitalists control a larger part of the economy in the US than in some European countries.
Racism, due to the colonial history of Europeans, is one of the ways Capitalists in the West exercise their control of the economy. In other parts of the world, Japan for example, they might use other methods.
While Market Economy can lead to innovation through competition, this is not necessarily the case with Capitalism. You could have an Oligarchy with a few billionaires controlling most of the trade and industries, which is what the US is heading towards. You're not going to see much innovation in such an environment.
Consequently, the definition of Socialism is "a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole." The caveat here is what is meant by "community as a whole". In the case of China, that is the Dictatorship of the Proletariat.
