What that means is that votes, a constitution, or whatever formal instrument is supposed to vest power in the people does not actually make policy. Money, land ownership, or whatever the actual embodiment of power is, makes policy in the interest of its holders, somehow. If policy does not change for the better, it's not because the system is inflexible but because power wants it the way it is. To be democratic, some intrinsic power must be vested in the citizens (labour, knowledge, disruptive power, arms, compassion, vigilance) and the result would not be perfectly democratic but it would be fairly egalitarian and good. Actual successes with democracy were so founded.
The canonical argument for capitalism is it's good because it motivates everyone to work hard. Actually, I think it is good because it's the best known system for containing corruption. Communism fails not due to idle masses or inept administration but due to runaway corruption of power. Seen as outlined above, to achieve an alternative to capitalism one must devise a system that gives ordinary people more power, and it cannot be institutional power. It has to be real power of some kind.
Today the trend is to take real power away from ordinary people while leaving institutional power intact, and that is a terrible thing. People do not seem to object much, perhaps because they believe formal power is worth something. I'm at a loss to suggest what form of real power ought to be redistributed, or how, or how it should stay distributed (although cultivating the general intellect seems like a good start).
What I can volunteer is a measure: A better political system must be as credible as capitalism when explained to people who are not idealists, and who do not really believe in institutions either. Altruistic systems and super-democratic systems fail these tests, unless you can present the "gold standard", the real power behind them and how it stays with the multitude. I think when you come up with a better system by that reckoning, you'll know it.