Nobody's suggesting we get rid of capitalism. But effective participation in capitalism requires quite a lot that capitalism itself isn't good at providing. Government, for example. Freelance government, like warlords and mob bosses, isn't great for economic development. Good parenting and a stable home life are not things that capitalism is producing a lot of. Education and public health have very long payback times and difficult-to-capture benefits, making the ROI pretty low. That's made worse by people using capitalism's mechanisms to profit from destroying value, and a very short-term focus driven by public markets' focus on the next quarter's earnings.

As an example of what a more subtle approach gives you, look at Brazil's Bolsa Familia: http://en.wikipedia.org/wiki/Bolsa_Fam%C3%ADlia

They are basically giving money to the poor: $13 per month per kid who stays vaccinated and in school. Studies suggest it's having a substantial impact on poverty and inequality. So yes, giving modest amounts of money (0.5% of Brazil's GDP) can reduce poverty because helps recipients to prepare themselves to participate effectively in a free-market economy.