World history is the history of a world not making sane and sensible decisions. Economics is a best a set of temporary, localised, rules of thumb that don't survive upheaval.

Spot on. No matter how sensible economic theory will work in a post-peak world and how other forms of energy will be brought to bear, the underlying presumption of this exercise is that this problem is occuring in its own perfect isolation!

This is a tragically false assumption, albeit not an unsurprising one. Any reasonable assessment of the facts now coming to light about our climate change problem and its unforeseen effect upon the Arctic region -- whether it be the preciptious decline in polar sea ice, Greenland glacial melting, or tundra thawing -- refutes this pure economic stance.

Economists can and do wager what the economic cost of this change will be, but as yet we've done little to alter any of it, be it peak oil, climate change, or most any other ecologic degradation from growing worse with our economic practices that do not accurately reflect the real costs involved.

IMHO, abstract economic theory one thing (of which our GNP, the DJI, and the prices of anything reflects), and messy earthly and human reality is another. Neither are in accord with one another but one will definitely soon strangle the life out of the other.

In either case we are losing badly.