Capitalism is for solving problems of scarcity, and for that it worked quite well. It's quite useless for dealing with problems of abundance. All our biggest problems today are problems of abundance.
Absolutely! It optimizes around the rules we place on it. That's why this idea of 'free' capitalism that is popular in some circles is terrible. We tried it and it worked worse than dictatorial communism.
What we need to do is to update the rules of Capitalism to internalize the externalities. Make carbon expensive. Make environmental destruction expensive. Make exploiting labor expensive.
Do that and you'll see extremely rapid changes for the good. Only it will never happen because the people and countries currently profiting from coal / oil will fight it with the enormous $$ they have (and they are; people like the Koch brothers are always babbling on about how the government is run by a shadow 'deep state' - that's clearly true, and they're clearly being greased by oil money).