Psychoserenity wrote:JOZeldenrust wrote:Optimal allocation of resources, just as Adam Smith described.
Well I wouldn't call it optimal - resources are allocated to wherever they are most profitable to those who are already wealthy. Those who find themselves in trouble are forced by their desperation to allow themselves to be screwed over more than they otherwise would be - and the system gets more and more unbalanced. You may well call that neutral, it's certainly very natural - Darwinian even - but in the 21st century with all our science, technology, and understanding of the world - how much longer should we put up with that?
I'll readily admit that money makes it easier to accumulate more money, and also that people with power (money being a form of power) may use that power to accumulate more power at the expense of those without power. Humans aren't omnibenevolent beings.
However, the default economic transaction is one where both parties profit. Of course this is a simplified representation of economic reality, but in most cases the simplification is justified. No market is perfect, however, and those imperfections can be exploited for profit at the exense of others. Those cases should be prevented by adequate oversight, which is why we have governments. I don't think investing in a disaster struck region of the world is such an abuse of market imperfections. All parties involved will benefit from such transactions.
The invisible hand isn't an ideal. It isn't "the way it should be". It's the way rational agents act in an environment with limited resources. It applies to capitalist systems, but it applies to other systems as well. It is simply the way things work. We may not always like the result, but we're stuck with it, because we are at least partially rational agents, and the world we inhabit has limited resources. We can, however, use our non-economic resources - like the political power we wield through democratic representation - to offset the undesirable results of the allocation of our economic resources. We can use progressive taxation to offset the concentration of wealth to a few fortunate people, and we can enforce laws to prevent the powerful to enrich themselves at the expense of the powerless. We do that all the time, though maybe not to the extent I would like.
In tis specific case, though, the result of our economic system is pretty good. Japan gets rebuilt, and the investors supplying the means to do it get a nice revenue. Sometimes capitalism actually works.
