Capitalism: Friend, Foe or Somewhere in Between?

When we were young, our mothers used to tell us not to eat too many sweets. Likewise, if we ate only vegetables, our bones would grow thin. However, there is a medium between all of the food groups that has to be met in order to have a healthy diet. I believe the same is true for the extent of governmental control. Neither extreme is the answer.
The problem with capitalism is that it can hurt people who are being controlled and abused by companies that are solely interested in money. Such companies include Wal-Mart, which has oppressed its workers for years, never paying for overtime and even employing illegal immigrants (to whom they pay less than minimum wage) just to save money and get ahead with business. In addition to this, Wal-Mart practices racism and sexism towards the workers wishing to pursue a higher ranked job in the business, such as store manager. Not only do certain corporations behave this way, but there are also people who are homeless and have no food while others live in beautiful houses with a three-car garage. It seems silly that people are allowed to have an abundance of unnecessary luxuries while others can not afford the bare essentials of life.
The main alternative to capitalism, socialism, has its own set of dilemmas. Socialism is one of those ideas that looks great on paper but doesn't work out so well in real life. This is largely because of the fact that humans are, well, humans, not machines. If we realize that no matter how much work we do, we will still get paid the same amount as someone who gets hardly anything done, we will become less motivated to do better; and there is no longer any incentive for us to strive for perfection. In addition to this, the government generally becomes a dictatorship, which means that the dictator has complete power and there is no shred of democracy—a risky position to be in.
Both versions of government have positive aspects as well, and if we combine these to create an effective equilibrium, we get a sort of a hybrid between capitalism and socialism. This would enable individuals to climb the rungs of the ladder of success if you choose to be productive and work hard, and yet it could also mean higher taxes to accomplish universal health care, an issue that has been plaguing Washington for some time now. To ensure the distribution of wealth is even, the rich could be taxed in higher quantity, and the money could go to welfare given to those who are struggling. This, however, should not go so far as to make every income the same. The rich would still be able to acquire a fortune while still being good Samaritans by having part of their wealth go to the less fortunate. The other parts of this system would work in a similar way by making sure that no one goes hungry, while keeping the motivation of a good life for those who are hard workers.
A mild government would be the ideal for any developed nation such as ours. Too much of one thing is never a healthy choice.