There's absolutely nothing wrong with capitalism, it's the natural state of human affairs if nothing external intervenes where goods and services are exchanged.
But there's quite a lot wrong with capitalism when governments collectively are unable or unwilling to agree effective regulation in order to moderate, alter or restrict how the capitalist system operates.
I completely agree that non-Western nations should be able and have the right to pursue the best of what the advanced modern economies benefit from: good healthcare, a wide range of consumer products, safety and security, excellent education, good housing, effective transportation systems, stable and high quality food supplies. In fact there is more than enough resource available in the world for most if not all countries to have these things and in an environmentally stable way.
There are three core drivers for change to fix all this: technological advance, market regulation and changes in human behaviour.
The technological change is a matter of both government investment and capitalist advance. The sheer volume of innovation and change required globally means that this is an enormous growth opportunity for players in the capitalist system, whether they be makers of low emission vehicles, developers of effective scale carbon capture schemes, developers of alternative food chain development and supply or a thousand other tech/innovation possibilities. Governments need to help make markets in these things - for example as has been done in many places elsewhere with deposit return schemes to support the development of a recycle/reuse economy.
Market regulation is simple to describe and set. Much, much harder to agree. If you can get agreements though on emissions etc the impact could be massive and quite quite quickly too.
Human behavioural change is central in all this - from travel habits through to what and how we eat, consume, reuse etc. Only one thing impacts the capitalist market more than regulation and that's consumer behaviour. That's why so many serious environmentalist voices are now saying that we shouldn't just be waiting or hoping for government action - if every single one of us takes the actions we are capable of in our every day lives then our collective impact upon the global capitalist ecosystem would be enormous.
You're right JMS, the planet will be fine. Humans not so much, unless we get our collective act together. My conclusion is that Western and advanced industrial countries will not take this as seriously as is needed until we take some heavy collateral damage, by which I mean something like serious food shortages or competition over water resources.
If I were a betting man - which I am - my money would be on the majority of the solution to all this coming from two places - western innovation and Chinese state action. The first driven by a desire to capitalise on the economic opportunity and the second driven by both the need to preserve an internal political hegemony and the desire to continue to roll out external global economic influence.