(Well that and collusion)
You get market signals that the demand is there, you acquire the necessary capital, you spend 5 years to build capacity, but guess what, 5 other market players did the same thing. So now you are doomed, because the market is flooded and you have low cash flow since you need to drop prices to compete for pennies.
Now you cannot find capital, you don't invest, but guess what, neither your competitors did. So now the demand is higher than the supply. Your price per unit sold skyrocketed, but you don't have enough capacity!
Rinse and repeat.
Capitalists claim that this is optimal.
If anything, it shows it's possible for you to arbitrage this and in doing so help "smooth out the cycle."
We don't even expect companies to plan long-term anymore, it's just moving wealth as fast as possible.
That isn't really a change, very few people could ever have been said to be ideological capitalists. (capitalist is not a word with a hard definition, but I'm considering it a different thing than the more modern pure libertarian zero-regulation ideology)
Because that does not happen exactly as you say for all players. The demand signals will be processed and long-term risk is balanced against short-term gain in a distributed fashion, so not everyone will do the same.
At least with capitalism you have many different people with different perspectives on the risk making independent bets. That mitigates the more extreme negative outcomes.
It's more optimal than planned economies until we have AI planned economies with realtime feedback, I guess.
Consumers get cheap goods during oversupply and most inefficient companies get elliminated during bust while consolidation leads to economies of scale.
There is an alternative where legislation dampens this behavior but the short term profits will be lower. Hence the hawks don’t like it.
Potentially. Well meaning and thought out legislation still distorts the markets, possibly making things objectively worse.