Is capitalism morally flawed or is it a good thing that needs a bit of humanity?

Capitalism has no moral outlook - it is just an economic system. I think your real question is whether or not humanity is morally flawed. The morality of capitalism comes from the individuals who participate in it. Having an immoral people would make a society function poorly no matter the system.

The best system allows for the most freedom of the individual. Socialism may "care for the poor" but does so at the expense of the freedom of the individual. This is why the United States was so unique in its founding: it made the people as free as possible and trusted in the individual to do the right thing.

And remember, history is full of governments that promised to care for their citizens at the expense of individual freedom. At best, they ended up with slow wealth creation and a moderate loss of liberty. At worst, they became North Korea or the USSR.

"If one rejects laissez faire on account of man's fallibility and moral weakness, one must for the same reason also reject every kind of government action." -Ludwig Von Mises

Dr. Redthumb's answer is wrong. Capitalism does not promote greed - it is a system of economic freedom. If individuals chose to be greedy, that is their right. Of course, if we play devil's advocate and say capitalism DOES promote greed, at least it allows for every individual in the society to be greedy. Other systems (like socialism) allow only for the few rulers to exercise their greed, only in socialism's case, they have the rule of law to aid them. Do you think the rulers of the Communist party in Russia or the Socialist party in Germany had to worry about bread lines or personal wealth?

In economics,competition means cut throat. But there are a bail-out and safety-net for the looser. It needs growth, development and evolution. Dog will eat cat until one day it will be a prisoner dilemma and Nash equilibrium.It will lead to a moral bankruptcy and violate at least 4 of the 10 commandment.

It's the only system that generates the necessary wealth to permit resource's to be diverted into 'supporting the sick' etc.

Those that think otherwise should go visit some of the countries that have other systems (North Korea, China ..) ..

NB what we have today in most countries is 'mixed economy' whereby some percentage of the economy is capitalist (private directing and use of resources) and the other 'communist' (i.e. government directed use of resources)

HOWEVER since 'Government' CREATES NO WEALTH they have to obtain resources using 'taxation' i.e. theft from capitalists (the higher the level of theft the fewer resources are available to create wealth and thus the lower the efficiency of the economy)

I think that people should care for the needy and sick just as much as anyone else but the difference is that I am not willing to force someone to care for the sick as the government does through things like taxes.

"Virtue only comes where there is free choice".

it's swings and roudabouts.

As a system it is inherently flawed because it promotes and rewards greed, to the detriment of the majority. However, with limited resources it is probably the most effective method of driving innovation and technological progress. So it depends upon your goals really.