I always thought that the role of the stock market is the collective intelligence of a large pool of investors, that allocates resources to the most effective or highest performing businesses. Index investing is a blunt instrument that does not allow investors to resource-allocate on the fine-grained individual business level. In the best case, it's more like the Soviet central planning, where a handful of people selecting which stocks comprise an index do most of the financial planning. In the worst case, it causes bubbles- the only decision power there is buy/sell , the detailed microeconomic information about individual businesses is almost irrelevant to the investors.