As of now the happiest countries include Social democratic Scandinavian countries with small private sectors and legal controls to limit abuses that happen under Capitalism. These countries are also Economically advanced.
Different political systems
Capitalism can exist in many different types of countries governed in different ways, capitalism can also exist with different social systems. The Scandinavian countries have democratic socialism under capitalism, the consensus politics of Japan is also capitalist. South Korea managed rapid industrial growth during a time when there was a military dictatorship and that was also capitalist. (Note: Today South Korea is a democracy). Basically capitalism can exist in democratic systems and in dictatorships. Capitalism is an economic system and it’s not a moral system.
Some people and some groups imagine that Capitalism automatically ensures political and civil rights, Libertarians and Objectivists regularly make that mistake. - Right wing dictatorships like Suharto's Indonesia and Pinochet's Chile had capitalist economies. When investors think it’s profitable to ignore abuse in a dictatorship they do, investors may also actively help abusive totalitarian governments when this is profitable. 
Industrialists under capitalism tend to feel their duty is to provide profits for their shareholders and in many countries the law also insists that business managers provide returns for shareholders if they can. Other moral issues like not helping a dictatorship or avoiding pollution, avoiding general damage to the environment take second place if they are considered at all.
Government restrictions on Capitalism
Almost all governments know that they should control the worst excesses of capitalism. Governments have tried to restrict capitalism in most countries at least since the Great Depression in the 1930s. In the United States, the government uses subsidies, tax credits, incentives, and other types of exemptions to influence the private sector. Germany and Japan, both have central government plans for the capitalist sector and bankers, industrialists, and labour unions meet and try to agree to wage policies and interest rates; these countries don't want the market to determine the whole economy.
The collapse of Communism
Communism has not collapsed. Yes it has fallen in Eastern Europe and other smaller countries across the globe like Cambodia, Afghanistan and Somalia. Despite this there are still communist parties out there and workers often support them. Some Communist parties are really successful like the one in Nepal and others are failing.
The collapse of communism in the Eastern Bloc in Europe devastated the economies there though those countries are now recovering. Russia used to be a super power under communism but now it's far less powerful. In China communism is failing because they export to foreigners and they are used as cheap labour. This is giving China a market economy which is moving them closer to capitalism.
- The Morality of Capitalism (PDF)
- The Social Responsibility of Business is to Increase its Profits, Milton Friedman, The New York Times Magazine, September 13, 1970