As said above, no economies are perfectly efficient, and traders make their money improving that efficiency. This is not a new revelation: we have over a millennium of history of people hating traders, moneylenders, etc. for "getting rich doing nothing" while they provide valuable efficiency improvements.
It gets especiallly blatant when a trader buys and sells the exact same good to generate a money advantage from its price fluctations.
Price fluctuations indicate real problems to be solved. That is what traders and middlemen do: resolve those problems. Prices fluctuate because the need for things varies over time and space and between individuals. "Buy low, sell high" means "buy something when there is so much that people want to get rid of it and sell when there is so little that people want more." The profit in between is (1) recognizing that difference over time and (2) being willing to buy something you don't want, hold it when you could be using that money for something else, and then sell it to people who want it more. If there were not value in that, you would just hold your surplus until you needed it. You can capture all the benefits that traders provide by just never trading (note: this is a bad idea).
The same applies with trading goods over space (excess in one area, dearth in another) or between individuals (finding the people who want to buy what you want to sell). The economy is not perfectly efficient, so the trader makes money by smoothing those inefficiencies and incurring the transaction costs of moving things across time and space, along with the risk of ''being wrong'' and losing the investment.
I would like to understand what is the efficency they provide, if they in fact do. I guess it is that Bob effectively makes Charlie appear in Alices world. Hopefully one would go from isolated individuals to individuals connected via traders to individuals connected directly to each other. Still it is in the traders interest to not tip off the existence of Charlie to Alice.
I do have a qualm about there being no upper limit how valuable this "organization" work is.
Note: I'm terrible at making up titles, and I think that the one I gave may give the wrong impression. If anyone has a suggestion on what I should change it to, it would be much appreciated.
As I've been reading articles on less wrong, it seems to me that there are hints of an underlying belief which states that not only is capitalism a good economic paradigm, it shall remain so. Now, I don't mean to say anything like 'Capitalism is Evil!' I think that capitalism can, and has, done a lot of good for humanity.
However, I don't think that capitalism will be the best economic paradigm going into the future. I used to view capitalism as an inherent part of the society we currently live in, with no real economic competition.
I recently changed my views as a result of a book someone recommended to me 'The zero marginal cost society' by Jeremy Rifkin. In it, the author states that we are in the midst of a third industrial revolution as a result of a new energy/production and communications matrix i.e. renewable energies, 3-D printing and the internet.
The author claims that these three things will eventually bring their respective sectors marginal costs to zero. This is significant because of a 'contradiction at the heart of capitalism' (I'm not sure how to phrase this, so excuse me if I butcher it): competition is at the heart of capitalism, with companies constantly undercutting each other as a result of new technologies. These technological improvement allow a company to produce goods/services at a more attractive price whilst retaining a reasonable profit margin. As a result, we get better and better at producing things, and it lets us produce goods at ever decreasing costs. But what happens when the costs of producing something hit rock bottom? That is, they can go no lower.
3D printing presents a situation like this for a huge amount of industries, as all you really need to do is get some designs, plug in some feedstock and have a power source ready. The internet allows people to share their designs for almost zero cost, and renewable energies are on the rise, presenting the avenue of virtually free power. All that's left is the feedstock, and the cost of this is due to the difficulty of producing it. Once we have better robotics, you won't need anyone to mine/cultivate anything, and the whole thing becomes basically free.
And when you can get your goods, energy and communications for basically free, doesn't that undermine the whole capitalist system? Of course, the arguments presented in the book are much more comprehensive, and it details an alternative economic paradigm called the Commons. I'm just paraphrasing here.
Since my knowledge of economics is woefully inadequate, I was wondering if I've made some ridiculous blunder which everyone knows about on this site. Is there some fundamental reason why Jeremy Rifkin's is a crackpot and I'm a fool for listening to him? Or is it more subtle than that? I ask because I felt the arguments in the book pretty compelling, and I want some opinions from people who are much better suited to critiquing this sort of thing than I.
Here is a link to the download page for the essay titled 'The comedy of the Commons' which provides some of the arguments which convinced me:
http://digitalcommons.law.yale.edu/fss_papers/1828/
A lecture about the Commons itself:
http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2009/ostrom_lecture.pdf
And a paper (?) about governing the commons:
http://www.kuhlen.name/MATERIALIEN/eDok/governing_the_commons1.pdf
And here is a link to the author's page, along with some links to articles about the book:
http://www.thezeromarginalcostsociety.com/pages/Milestones.cfm
http://www.thezeromarginalcostsociety.com/pages/Press--Articles.cfm
An article displaying some of the sheer potential of 3D printers, and how it has the potential to change society in a major way:
http://singularityhub.com/2012/08/22/3d-printers-may-someday-construct-homes-in-less-than-a-day/
Edit: Drat! I forgot about the stupid questions thread. Should I delete this and repost it there? I mean, I hope to discuss this topic with others, so it seems suitable for the DISCUSSION board, but it may also be very stupid. Advice would be appreciated.