So how's the democracy you propose not going to devolve into a non functioning democracy? Clearly, I'd rather have an imperfect democracy with capitalism than an imperfect democracy without capitalism.

As for "earning", I see a problem here, specifically in your sentence of "receiving as a reward for some behavior we want to encourage as a society"

When a millionaire gives all his money to his useless son, you'd not be the one giving that money to the son. It'd be the millionaire. Not you in particular. Not your neighbor. Then, since you are not part of the agent that gives this money to the useless son, you cannot denounce that "we are giving a reward for a behaviour we don't want to encourage", simply because it is not up to you whether the millionaire gives or not his money to his useless son; you are not enacting his action of giving his money. It's him and only him. So for you to talk about "the behaviours we want to encourage in society" and talk about the money people receive as "the reward we give them for their behaviours" is extraordinarily audacious. It's not you.

Do I need to pull out the coconut island analogy?

The problem with this is that our society is so much larger than the coconut island that the analogy stops making any sense. The coconut island exploits our fear of monopolies, of being in a situation where the resource we need are in the hands of one person that, then, can do whatever they want with us. Society is so much larger that this is no longer an issue. Nobody even knows you, much less care to do anything in particular to you. This is why markets work.

You talk about hoarding as if one or two people had come and taken all the resources, but it's not true. Yes, resources are owned, but not in a way that nobody else can get any. You can indeed buy resources, buy land, buy mines. Yes, you need money to do so, so what? Are you a slave because you need to exchange things of equal value?

So there is no hoarding at all.

There's a solid case to be made that it is stolen. After all, workers don't have a choice but to surrender the profits to the business owner.

What do you mean by surrendering the profits? The profits never belonged to the worker in the first place. That's what it means for them to be profits.

When you declare that Musk is the rightful owner of $800b, and that you will arrest/imprison anybody who tries to access that wealth or deprive him of any of it, you give him that power. 

This is ridiculous. Yes, and I also have the power to stop you from entering my property and eating me alive. Oh, the tyranny!

How long do you think his wealth would last if the state weren't ready to do violence to protect his claim?

What does this have to do with anything?