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Planned economy is uncompetitive for more reasons than insufficient computing power. You can't plan innovation. It is hard to plan for knowledge economy in gen
by atemerev 9y ago
Planned economy is uncompetitive for more reasons than insufficient computing power.
You can't plan innovation. It is hard to plan for knowledge economy in general (material production is increasingly a smaller part of total GDP — something that early Communist theorists failed to predict).
Capitalism is automatic, self-correcting, parallel optimization process. It is asymptotically optimal.
- fetbaffe 9y agoYes, real question to ask is, why is a good produced? In a central planned system that is a policy decision based on the knowledge the planners have. In a market based system that decision is decentralized to the actors in that system and therefore the rate of innovation is based on the sum of the actors distributed knowledge, that sum will always be more than that of a centralized body. Hayek described that as the Local knowledge problem. https://en.wikipedia.org/wiki/Local_knowledge_problem https://en.wikipedia.org/wiki/Local_knowledge_problem
- codedokode 9y agoCapitalism has own set of problems like unfair distribution of income, unequal opportunities, patent system that prevents spreading innovation. I think it is used only because we don't have a better system at the moment and because people who benefit from it want to keep the status quo. For example, in a capitalist economy two people that contribute equal amount of time to work can get different rewards for it. And those who get bigger reward would oppose to changes.
- atemerev 9y agoCorrect, but he will eventually be replaced by somebody who can produce the same output and ask for less. It makes all business sense. Opposing market pressure is unsustainable in the long term.
- codedokode 9y agoThen why education or medical care costs do not decrease over time? How do they win against market pressure?
- atemerev 9y agoBecause insurance companies, big pharma and other usual suspects lobbied the government (it wasn't even lobbying; rather, a "mutually beneficial agreement", which is beneficial to everybody except patients) to eliminate competition and lock their profits in various regulated obligatory payments. Being pro-free-markets in not the same as being pro-big-business. Revolving doors are real. Ironically, free markets are fragile and require government protection to set the playing rules and step away. Usually, the government is not particularly interested in doing that. (P.S. while the reason for healthcare inefficiencies looks clear enough for me, the case with education is more curious. I think that US education can be a genuine market failure. Compared to healthcare, it is relatively unregulated, and yet people seem to be OK with paying outrageous amounts for something that is not strictly necessary to choose any lucrative career they want. You don't need college education to become a software engineer or quant trader — I've been both without a completed degree, as there are more than enough materials for self-education in these matters these days. There are some exceptions like medicine, but they are that — exceptions).
- TeMPOraL 9y agoThat's only if you assume that businesses can't influence market forces and the business environment, which is a grossly incorrect assumption.
- atemerev 9y agoFree markets are non-coercive. Anything which is not a voluntary exchange of value is not a free market by definition.
- TeMPOraL 9y agoBut the real world doesn't run on definitions and platonic ideals. There's no perfect "free market" and there will never be, because it's an inherently unstable state in our reality. For the very same reason you can't have world peace by making everyone agree that all conflicts will be resolved by playing chess. EDIT: Here[0] you're actually making the same point as I am. Free markets are fragile. They self-destruct if not externally enforced. Unfortunately, the enforcement itself is not immune to market forces either. -- [0] - https://news.ycombinator.com/item?id=14520747 https://news.ycombinator.com/item?id=14520747
- baursak 9y agoThen by that same definition, free market is so fragile that it's an impossible pipe dream. Any actor that gains enough power to influence the market destroys the free market by its mere existence. To take it to its extreme -- you cannot have a truly free market with existence of the State. However, if you don't have the State, there's nobody to enforce your property rights.
- realusername 9y agoYou mean free-market, not capitalism, they are not synonyms.
- bcherny 9y agoCould you elaborate? What does it mean to have non free market capitalism, or non capitalist free markets?
- realusername 9y agoNon-free market capitalism or heavily restrained free market capitalism is basically the programme of the far-right these days in a lot of countries. On the other side, you have Market Socialists (https://en.wikipedia.org/wiki/Market_socialism https://en.wikipedia.org/wiki/Market_socialism).
- atemerev 9y agoFree markets do require capitalism, but capitalism (as defined by using monetary capital as the primary resource) can unfortunately also operate in various less than free modes.
- js8 9y agoI try to use following definitions (of course, both are fuzzy and apply only to some extent in real world): Free market: A system where the goods are distributed based on prices set through the market mechanism. In particular, anybody can produce and buy anything. Capitalism: A system where there is a private ownership of capital and human labor is being sold/bought for a price. So yeah, in theory, you can have free market without capitalism (for example everybody works for a worker cooperative), and capitalism (almost) without free market (there are distinct capitalists and worker classes, and market is heavily regulated or subsidized from the state).
- atemerev 9y agoPerhaps you are correct.
- ernst_klim 9y ago>You can't plan innovation. This. And by the end of the century technological gap between capitalist countries and USSR was enormous.