Capitalism Is Not the Problem 

Capitalism isn’t the problem. The problem is that the rules of the game are rigged–and they don’t have to be.
If we were playing basketball and, because I was able to modify the rules (because I had bribed the officials) such that my basket was five feet tall while yours is standard regulation, I get 20 players on my team while you get the standard five, I get to recruit players from Planet Watusi where everyone is over eight feet tall but you don’t, and the refs make every call in my favor because, again, I bribed them, it’s a fair bet that I’d win every game.
Capitalism as practiced now in the US is the same way. Decades of neo-liberal, supply-side economics bullshit have rewritten the rules so that only a few people can win and everyone else loses.
Citizens United, the latest in a long line of assaults on ethical governance, has made it legal to bribe politicians. And, the come cheap. Donations in the millions to political campaigns yield billions in return. That’s how the officials are bribed. And, they are bribed to implement at least the following policies.
Tax policy is insanely weighted in favor of the rich. Most people pay income tax, which is graduated so that the more you make, the more, percentage-wise you pay in tax. The rich don’t pay income tax. They pay capital gains tax, which is not graduated and which is far below the maximum tax rate for income. That means they generally pay less, percentage-wise, than people who work for a living.
Budget policy is likewise skewed in favor of those who are able to bribe politicians. Military spending–the lions share of which goes to private interests–is more than half the federal discretionary budget (which doesn’t include Social Security and Medicaid–but, remember, social security is essentially a pension fund that we all pay into and will, hopefully, all draw from–so it shouldn’t figure into discussions about the budget). On top of that are the billions of dollars carved out to subsidize industry–like agriculture, pharmaceuticals, oil, etc.
Anti-trust regulation and action is virtually non-existent, which allows large interests to corner markets, raise prices and fail to innovate (banks, internet service providers, giant retail chains, etc).
Labor policy is massively weighted in favor of corporations. Trade agreements like NAFTA and the upcoming TPP allow offshoring of jobs without guaranteeing the labor protections afforded to domestic workers. The minimum wage is far too low–lower than what is needed to live above the poverty line in every state. Minimum wage workers are thus forced to rely on federal and state welfare, which is an indirect subsidy for their employers. Union membership is at an historic low, now at 10%, down from a high of >30%.
This is how the game is rigged.
The shrinking of the middle class and the reason you feel fucked is not because of capitalism, just like my rigged basketball game isn’t unfair because if the fundamentals of basketball.
Capitalism isn’t working because the rules are unfair. 
To make it fair, we must first reform political campaign finance so it is illegal to bribe officials.
After that, we must reject supply-side economics bullshit and return to new deal policies. It’s no accident that the two decades after WWII saw the greatest creation of wealth shared by the greatest number of people in American (arguably world) history. 
The economic policies implemented by FDR *worked*! We should be doing that, not the con-game we have now.