Economics for the future

This was posted by Roy Auerbach on our listserv, but I am cross posting it here for public consumption and comment.

I am somewhat of a pessimist about the current state of affairs, but am hopeful for humanity in the long term. You can translate that to mean that we will step into the coming crisis, with attendant waste of resources, death, and human suffering, but hopefully blunder our way through to the other side poorer, but living more in line with our means. In doing so, we will squander an opportunity to better use the easily gained resources we now have.
What I find interesting is that we have had a nearly unbroken rise in technology over the last several thousand years. It is true, we find some interesting artifacts such as batteries and astronomical computers from ancient times, but overall, regardless of the rise and fall of civilizations we seem to progress. I anticipate the same happening, even if we must stop being so proliferate with our carbon resources.
We will eventually deal with climate change, but only when it is too late.

I am reminded of a realization when I was a teenager. I read about a crop failure leading to a rise in a food commodity price (today I can't remember anymore what it was). I saw that supermarkets had marked up the prices in stores. I was puzzled by this as the supermarket had clearly bought the items on the shelves at the lower price. The reasoning behind this change was that the supermarket had to price according to the replacement value of the goods it contained. We find ourselves in the same place which is much of the point of ecological economics. Our current market structure and philosophy seems adamantly opposed to this way of thinking.

I must admit I am not a fan of free market economics. It suffers from two failures. The first is that it assumes the individuals and companies making up the market are rational. It is quite clear that this is a fallacy. There are recent books on real behavioral economics such as "Predictably Irrational" by Dan Ariely that illustrate this. The second is that free market economics is too cruel a philosophy. It may be efficient, but will leave a trail of destruction and death in its wake.