In the global poll for the BBC World Service, only 11% of those questioned across 27 countries said that it was working well.
Most thought regulation and reform of the capitalist system were necessary.
There were also sharp divisions around the world on whether the end of the Soviet Union was a good thing.
In 1989, as the Berlin Wall fell, it was a victory for ordinary people across Eastern and Central Europe.
It also looked at the time like a crushing victory for free-market capitalism.
Twenty years on, this new global poll suggests confidence in free markets has taken heavy blows from the past 12 months of financial and economic crisis.
More than 29,000 people in 27 countries were questioned. In only two countries, the United States and Pakistan, did more than one in five people feel that capitalism works well as it stands.
Almost a quarter - 23% of those who responded - feel it is fatally flawed. That is the view of 43% in France, 38% in Mexico and 35% in Brazil.
And there is very strong support around the world for governments to distribute wealth more evenly. That is backed by majorities in 22 of the 27 countries.
If there is one issue where a global consensus seems to emerge from the survey it is this: there are majorities almost everywhere wanting government to be more active in regulating business.
It is only in Turkey that a majority want less government regulation.
Opinion about the disintegration of the Soviet Union is sharply divided.
Europeans overwhelmingly say it was a good thing: 79% in Germany, 76% in Britain and 74% in France feel that way.
But outside the developed West it is a different picture. Almost seven in 10 Egyptians say the end of the Soviet Union was a bad thing and views are sharply divided in India, Kenya and Indonesia.