That irrational behavior in the wasteful allocation of resources doesn't generate a negative feedback loop that causes even more waste?
Who said it didn't? I think you're missing my point. The irrational behavior is a flaw. But it's not fair to call it a structural flaw of capitalism. The flaw is prior to capitalism. It's like saying toilets are flawed because people piss on the seat.
Yes, because it's pretty easy to imagine a functioning social system based upon people not being people.
>that's expecting too much of capitalism.
That irrational behavior in the wasteful allocation of resources doesn't generate a negative feedback loop that causes even more waste?