Myth: Laissez-faire capitalism distributes wealth; other systems redistribute wealth.

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Note: This video is part of a series which debunks myths pertinent to laissez-faire capitalism. Many points not addressed in this video can be found at the above link.

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The premise implicit in this claim is that laissez-faire is automatically the default system for the economic operation of any society, and that any variation from this constitutes an affected change to the natural order of things. This is false.

It is true, of course, that some systems may be the result of a series of continuous and often-unconscious changes made by many people over a long period of time, whereas others may be the result of conscious changes by some organized body. Other systems are a combination of both. The way a system develops, however, in no way guarantees its effectiveness or fairness; one need only consider human evolution for an example of organic development leading to results that are wasteful, inefficient, and even downright vicious in terms of the cost to well-being and happiness. Capitalism's history has many of these same issues. Just as human health has benefited from scientific interventions such as vaccination, surgery, and medications, our health as a society can improve with the use of scientifically based social programs. Our current form of capitalism evolved semiconsciously over time as a result of the self-interested impulses of countless individuals. It stands to reason that, just like with the evolution of the human body, a system in which research and conscious thought were applied by those without a disproportionate personal stake in the outcome could produce more desirable results for almost everyone involved.

Another reason laissez-faire is not automatically the "default" is that any possible system, including laissez-faire, must continually distribute and redistribute wealth in one manner or another. Allowing whoever happens to have a resource at a given time to have absolute control over where to put it is obviously a form of wealth distribution, and one that distributes wealth disproportionately to the already wealthy. While there are undoubtedly less fair ways of distributing resources, the idea that this one must always be the most fair and the most efficient is absolutely arbitrary.

The real problem with laissez-faire — as well as with our current system — is that many decisions about how wealth is to be distributed are made by individuals between whom there are vast power imbalances (e.g., workers and employers), all of whom have a vested interest in the outcome. In terms of ensuring a fair negotiation for resource distribution, this is not much different from how it has been historically under some corrupt statist governments, in which individuals running the government have had comparatively greater power than employers and workers, as well as minimal systems for placing checks on their self interest. However, we need not rely on systems — be they statist or laissez-faire — that require people to make fair decisions in situations in which there are clear conflicts of interest. Surely it makes more sense to ensure that those who make decisions about a given instance of wealth distribution are not those who benefit from certain outcomes of it. This would almost certainly lead to more impartial decisions, and most likely much fairer, results.

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[KayamaTakeru]

I've never heard an intelligent argument for laissez-faire capitalism that argued that it was "the natural order of things" so that's why it should be adopted. I've only heard and read that it ends up being more fair and more efficient than the alternatives that try to create fairness. Show me a better way, don't just point out the obvious, that life isn't fair.

Also, trade doesn't distribute wealth, it creates it.