What do you want to replace it with?
What would I replace it with or what it will be replaced with. Two different questions.
Let’s analyze an example: Should the free market be allowed to set the price of water during drought?
The free market advocates will say yes, because the price will go up, and the demand will drop. What they don’t tell you is that after the non-essential water use is cut, any further drop in demand will have to come from people dying of thirst because they cannot afford water. Problem is that people don’t really like dying, so before that happens, they will simply start a revolution. So while the free market in principle can alleviate resource shortage by arbitrating price, the proces involves a price overshoot phase, which is enough to destabilize the system, i.e. cause a revolution. Now, a revolution will not increase the amount of water, but it will provide an excuse to set up a quota / rationing system which will at least ensure that people are not dying.
A more forward-thinking leader facing a permanent drought will realize that the quota / rationing system is inevitable anyway, and introduce it before the price spike triggers a revolution.
There is another problem though, because under both scenarios you end up having the government decide how much water you can use. That will inevitably lead to the rise of
hydraulic despotism.
Capitalism requires growth, and further growth is impossible because we have reached resource limits, both geological and climatic.
The whole “capitalism/socialism” divide is mis-named. It’s a conflict where one faction is made of capitalists who want to continue the business as usual until the system unevitably collapses, and then bail out with the money (naively hoping that they can make it to the rescue helicopter in time). The other faction is made of government technocrats who realize that if the system collapses it’s their heads who will roll (because a government employee cannot afford a rescue helicopter), so they are trying to seize control of economy and turn the unmanaged collapse into a managed one.