CCCP was bankrupted by trying to keep pace with western deficit spending. With no built in economic security like that of the capitalist system they were unable to run the same level of deficits - check out the debt/deficit history of the US from 1950-2000, quite the rollercoaster and almost broke their back too.But Communisium backrupted them so it was not going so well for them. However the Chinese learned that they can combine Communisue with capitlism to have a thriving economy so at a point (about the time that Hong Kong went back to the Chinese) they keeped thier 'Civic' but changed thier 'policy' to avoid going down the same path that the Soviet Union did.
Damn we should have both it would make the game even more fun.
China has combined Communism with Free Market, not Capitalism. Communism and Capitalism are mutually exclusive (being polar economic theories) so there is no way to have both at any one time.
As has already been mentioned, it is possible to change policies provided one accepts an enormous waste of culture (ex. Piety to Rationalism). Why not have a more detailed (read: complex) system of interdependencies with a partial refund when selecting newer trees?
It is generally not a problem at Prince and below since you can easily win with only a handful of cities but with higher difficulties the settler spam becomes mandatory just to keep up science wise thus removing any and all natural development of policies. Forcing a player to use gimmicks, loopholes and borderline exploits just to play a game is a clear sign of crappy design .. that is what is wrong with the policy implementation.