How do you propose to control the almost universal tendency of socialist systems to control competition, both economically and ideologically, by use of force? The Soviet gulag comes immediately to mind. If you haven't read Alexander Solzhenitsyn I would recommend you do.
I don't think it can be controlled. That's one reason I don't support pure socialism. Every modern industrial society, from the US to Europe to Asia, has some socialist policies. I don't see much Ivan Denisovich action going on in countries like Sweden and France, which are more socialist than the US. It's important to draw the distinction between socialism, which is an economic system that may exist under any type of government, and communism, which is socialism plus a "dictatorship of the proletariat" that inevitably degenerates into pure tyranny.
The key phrase here is "while capitalist in name". I've noticed in this on-going debate that many times fascist oligarchies are automatically labled capitalist when they really aren't. We have a defination problem to overcome before we can even get to the meat of it.
I see "true capitalism" as a system under which anyone who can make a quality product and promote it well can compete in the market. Corporate monopoly and state monopoly both prevent this. This is the type of capitalism Adam Smith advocated in "The Wealth of Nations;" unbeknowst to many libertarians, he opposed things like trade secret law and economic concentration (i.e. big corporations) on the grounds that those things stifled competition.
I think regulations on business should be structured so that they maximize competition and minimize the power of industry to manipulate the government. A small government with no restrictions on campaign finance, lobbyists' conduct, etc. will be easier to corrupt, not harder, than one that places some controls on how business can interact with the state.
Here's some more in-depth analysis of Adam Smith's ideas:
http://www.pcdf.org/corprule/betrayal.htm
To Hawkeye:
Microsoft is a good example of how monopoly is possible without government intervention. One of the main reason Windows is still the standard OS is that Microsoft requires PC builders who put Windows on their machines to sign contracts saying that they won't sell computers with any other OSes installed. MS has also conducted hostile takeovers of many small competitors, all with no government help.
That aside, the computer and software industries are relatively resistant to anticompetitive practices because anyone with the knowhow can design a computer system or computer program. The creators of Linux are battling Microsoft with a product they built from scratch in their spare time. But in other industries, a monopoly is harder to beat. Wal-Mart is a great example; they are essentially impossible to undersell. Agricorps are another, since there's no way individual farmers can survive on the thin profit margins that sustain those companies.
Given enough time, every monopoly will eventually fall; Microsoft is now declining, and Wal-Mart's policies have generated tons of ill will among the public. But whenever a monopoly does fall it deals tremendous damage to the economy; imagine what will happen to the computer world when Microsoft finally goes down and everyone has to adjust to using new software. This is another reason that it's best to stop monopolies from happening in the first place.
