6 ms·

>Markets are necessary for successful diversification - avoiding shortages and economic collapses when key industries suffer downturns. Out of interest, why do

by ue_ 9y ago

>Markets are necessary for successful diversification - avoiding shortages and economic collapses when key industries suffer downturns. Out of interest, why do you think this is true? (Edit: Why does this comment have a score of -2? What can I do to improve the quality or relevance of my comments? Will the downvoters explain, please?)

padobson 9y ago
Theoretically I think it's true because there are far too many variables at play in economies of any decent size for a national government to efficiently organize it. Historically I think it's true because broad central planning has generally led to unstable economies. I think the Nordic states best figured out how to provide widespread social programs funded by taxation of market economies - with national programs working alongside of self-organizing markets instead of trying to organize production directly.
- ue_ 9y ago
  > Theoretically I think it's true because there are far too many variables at play in economies of any decent size for a national government to efficiently organize it. This has been a common complaint, though it's not without response. As to what variables need to be taken into account, there's been discussion that not every product made would have to be. Here's a comment by "Keshav"[0] on Cockshott's input-output tables idea of economic planning, which came about in 1995: "On a related note, Cockshott and Cottrell have a number of papers arguing that central planning is feasible with modern computer technology. As I understand it, the algorithm they present (e.g. in “Towards a New Socialism”) does not consider a linear programming problem; rather, it takes as given a target for final goods production (determined elsewhere in their model, which includes some markets for consumer goods) and solve for the gross output levels required to meet this target. They exploit the fact that the input-output structure of the economy is sparse (only a small fraction of the goods in the economy are directly used to produce any single good). Their algorithm’s complexity increases with n*m, where m is the number of direct inputs for each product, which seems manageable even with n=12 billion." Cockshott talks at length about "The problem of scale" (the one which is your theoretical agrument) in his book in the chapter of the same name, which is downloadable for free as a PDF in its LaTeX glory here[1]. I last read it many years ago and refutations of it exist, though it's worth a read in my opinion. [0] http://crookedtimber.org/2012/05/30/in-soviet-union-optimization-problem-solves-you/#comment-415949 http://crookedtimber.org/2012/05/30/in-soviet-union-optimiza... [1] https://www.researchgate.net/publication/299519892_Towards_a_new_socialism_Cockshott_and_Cottrell https://www.researchgate.net/publication/299519892_Towards_a...
  - padobson 9y ago
    I suppose it's reasonable to suggest that if all of the variables in an economy could be identified and quantified, then it could be fed into central planning software. But that's a very big if. Furthermore, I'd suggest "If it ain't broke, don't fix it" applies here. We already know markets are good at organizing production, we should use them to do that. Any social ills that result because or alongside of markets should be addressed directly.
    - ue_ 9y ago
      >Furthermore, I'd suggest "If it ain't broke, don't fix it" applies here. We already know markets are good at organizing production, we should use them to do that. Although not broken (if we're talking in terms of commodity production excluding what is necessary to cure social ills) then it could be greatly improved, though I'm not sure how, or rather, I haven't decided on an answer. At the moment several firms repeat the same research over and over again in order to research new product development in secret to stay competitive; this is clearly an inefficient use of resources, and this is seen by the fact that there are two government-granted monopolies created in order to sustain this system: copyright and patents, which have come under criticism and scrutiny even from libertarian (Rothbard not Proudhon) authors. There are also problems relating to how volatile the market is, held to the whim of mostly speculators, with the strong ability to throw out scores of workers onto the streets, depriving them of what they need to survive if not for the chrity of the State. There is also the problem of nurturing genuine science and the advancement of culture which is hard to commodify; even State-sponsored research projects have their funding pulled if they go off track or try to find results the government doesn't like. This applies doubly for companies. Likewise the artist is controlled not by his own will but by the will of the market, having to restrict himself in materials and creativity in such a way to please rather than to advance culture and indviduality. There are problems relating to the psychological effect of the market economy on its participants, both workers and capitalists both of which must make it their top priority in life to rack up sufficient money to stay afloat in their respective spheres, compounded with the worker's alienation, that he does not see himself in the products he makes beacuse of the excessive direction of the capitalist. There is the problem of education in which students must become indebted to the State or a loan organisation unless already having enough capital on their parent's side in order to pursue education which in many cases is necessary to land a job, some of whose wages go back to repaying that debt; a student thus finds it is in his interest to optimise for a degree which will land him a job, regardless of his passions and interests - if this does not crush individuality, what does? Then there is the effect on our human nature, the system which encourages greed at almost any cost in order to rack up capital, forcing our nature to see people as means to an end rather than people in themselves, I will relate this to the idea of commodity fetishism which proposes that rather than seeing the distinctive labour content of commodities, people only see the commodities themselves, focusing on the exchange value rather than the utility. People must search for social connection through commodities while ignoring the massive wastage and environmental damage that their production takes. Relations between people are swapped by relations between commodities, although we see that capitalism has very greatly increased standards of living, its effect on quality of life is often ignored at the expense of the freedom to buy whatever goods one pleases, this freedom is taken to be the only important element of a society but close investigation reveals that it is a very hollow freedom. I have avoided talking about sweatshops for they are an unfortunately contentious issue, but I hope that can be included in my analysis. I probably haven't explained this very well, so here is a short list of books, mostly be Marxist or neo-Marxist authors who, rathear than focusing on Marx's primary mode of attack (exploitation via extraction of surplus value) they look at other elements of capitalist society: - Guy Debord - Society of the Spectacle (philosophy-economics): https://www.marxists.org/reference/archive/debord/society.htm https://www.marxists.org/reference/archive/debord/society.ht... - Herbert Marcuse - One Dimensional Man (sociology): https://libcom.org/files/Marcuse,%20H%20-%20One-Dimensional%20Man,%202nd%20edn.%20(Routledge,%202002).pdf https://libcom.org/files/Marcuse,%20H%20-%20One-Dimensional%... - Erich Fromm - Escape From Freedom (social psychology): https://libcom.org/library/escape-freedom https://libcom.org/library/escape-freedom - Habermas - The Structural Transformation of the Public Sphere (sociology-history) - https://en.wikipedia.org/wiki/The_Structural_Transformation_of_the_Public_Sphere https://en.wikipedia.org/wiki/The_Structural_Transformation_... - Peter Kropotkin - The Conquest of Bread - https://theanarchistlibrary.org/library/petr-kropotkin-the-conquest-of-bread https://theanarchistlibrary.org/library/petr-kropotkin-the-c...
hueving 9y ago
There has never been a successful centrally planned economy. Perhaps with the assistance of massive computation and information spread via the Internet it could be conceivable. But without that it seems like every toy model a central planner uses is going to fail miserably.
- nopatternhere 9y ago
  That's a WHAT, not a why. You aren't wrong, just answered the wrong way around. The why is because it is just too hard for any centralised group to know enough to plan a large economy adequately, for two main reasons (to keep an already long post short): 1. It is too much information for any group to consider and get any significant chunk of it correct. 2. Innovation is the opposite of planning. "Lets try this unproductive waste of time to connect college students and see what happens. Oh, we are worth billions" is not the way anyone would plan an economy, let alone the problem to assign smart people to. Innovation, unfortunately, can't really be planned. Central planning fails for the same reason scaling in tech is so difficult. When you have one server, a monolith (planned, organised) is great. All the code is in one place, one database, super easy to reason with and manage, no need for cludgey hacks, perfect code etc etc. But when you beyond that single server, another layer of complexity arises. How do we set up our infrastructure? How do we optimise long running tasks? How do we make sure everyone knows what everyone else is doing? Should we split code into smaller, harder to understand chunks? Planned economies fail because what the planners are optimising for - as a reductio ad absurdum - is protecting their own skin, and that means avoiding failure much more than encouraging success, especially in innovation, where > 90% of new ideas ultimately fail. Markets work because failure is a part of the puzzle, and markets optimise for success, not avoiding failure. As VC firms show, a lot of failure can be overcome with a tiny percentage of great successes, and these great success spur on growth. Markets also succeed because the conditions on a micro-level - i.e. a street - vary wildly. King Street in Newtown Australia - https://www.google.com.au/maps?q=king+street&um=1&ie=UTF-8&sa=X&ved=0ahUKEwjt2vLB-rTWAhUEurwKHWS9AFUQ_AUICigB https://www.google.com.au/maps?q=king+street&um=1&ie=UTF-8&s... - is a long, winding, inefficient mess of op-shops, restaurants and weirdness. No one would plan a street like that, but it works. However, the elements that make up King Street - what the actual shops sell - is different to what makes say the Haight-Ashbury in San Francisco sells, or what is available in San Telmo in Argentina, despite all three being similar in what they represent in each city (an area for alternative types). The flipside to these three places is Brasília - the capital of Brazil and a planned disaster. TL;DR markets optimise for success while accepting failure happens, whereas planned economies optimise to avoid failure above risky practices that may lead to success, and markets allow micro-optimisations, whereas planned economies end up one size-fits-all.

by ue_ 9y ago

padobson 9y ago

Theoretically I think it's true because there are far too many variables at play in economies of any decent size for a national government to efficiently organize it. Historically I think it's true because broad central planning has generally led to unstable economies. I think the Nordic states best figured out how to provide widespread social programs funded by taxation of market economies - with national programs working alongside of self-organizing markets instead of trying to organize production directly.

ue_ 9y ago
> Theoretically I think it's true because there are far too many variables at play in economies of any decent size for a national government to efficiently organize it. This has been a common complaint, though it's not without response. As to what variables need to be taken into account, there's been discussion that not every product made would have to be. Here's a comment by "Keshav"[0] on Cockshott's input-output tables idea of economic planning, which came about in 1995: "On a related note, Cockshott and Cottrell have a number of papers arguing that central planning is feasible with modern computer technology. As I understand it, the algorithm they present (e.g. in “Towards a New Socialism”) does not consider a linear programming problem; rather, it takes as given a target for final goods production (determined elsewhere in their model, which includes some markets for consumer goods) and solve for the gross output levels required to meet this target. They exploit the fact that the input-output structure of the economy is sparse (only a small fraction of the goods in the economy are directly used to produce any single good). Their algorithm’s complexity increases with n*m, where m is the number of direct inputs for each product, which seems manageable even with n=12 billion." Cockshott talks at length about "The problem of scale" (the one which is your theoretical agrument) in his book in the chapter of the same name, which is downloadable for free as a PDF in its LaTeX glory here[1]. I last read it many years ago and refutations of it exist, though it's worth a read in my opinion. [0] http://crookedtimber.org/2012/05/30/in-soviet-union-optimization-problem-solves-you/#comment-415949 http://crookedtimber.org/2012/05/30/in-soviet-union-optimiza... [1] https://www.researchgate.net/publication/299519892_Towards_a_new_socialism_Cockshott_and_Cottrell https://www.researchgate.net/publication/299519892_Towards_a...
- padobson 9y ago
  I suppose it's reasonable to suggest that if all of the variables in an economy could be identified and quantified, then it could be fed into central planning software. But that's a very big if. Furthermore, I'd suggest "If it ain't broke, don't fix it" applies here. We already know markets are good at organizing production, we should use them to do that. Any social ills that result because or alongside of markets should be addressed directly.
  - ue_ 9y ago
    >Furthermore, I'd suggest "If it ain't broke, don't fix it" applies here. We already know markets are good at organizing production, we should use them to do that. Although not broken (if we're talking in terms of commodity production excluding what is necessary to cure social ills) then it could be greatly improved, though I'm not sure how, or rather, I haven't decided on an answer. At the moment several firms repeat the same research over and over again in order to research new product development in secret to stay competitive; this is clearly an inefficient use of resources, and this is seen by the fact that there are two government-granted monopolies created in order to sustain this system: copyright and patents, which have come under criticism and scrutiny even from libertarian (Rothbard not Proudhon) authors. There are also problems relating to how volatile the market is, held to the whim of mostly speculators, with the strong ability to throw out scores of workers onto the streets, depriving them of what they need to survive if not for the chrity of the State. There is also the problem of nurturing genuine science and the advancement of culture which is hard to commodify; even State-sponsored research projects have their funding pulled if they go off track or try to find results the government doesn't like. This applies doubly for companies. Likewise the artist is controlled not by his own will but by the will of the market, having to restrict himself in materials and creativity in such a way to please rather than to advance culture and indviduality. There are problems relating to the psychological effect of the market economy on its participants, both workers and capitalists both of which must make it their top priority in life to rack up sufficient money to stay afloat in their respective spheres, compounded with the worker's alienation, that he does not see himself in the products he makes beacuse of the excessive direction of the capitalist. There is the problem of education in which students must become indebted to the State or a loan organisation unless already having enough capital on their parent's side in order to pursue education which in many cases is necessary to land a job, some of whose wages go back to repaying that debt; a student thus finds it is in his interest to optimise for a degree which will land him a job, regardless of his passions and interests - if this does not crush individuality, what does? Then there is the effect on our human nature, the system which encourages greed at almost any cost in order to rack up capital, forcing our nature to see people as means to an end rather than people in themselves, I will relate this to the idea of commodity fetishism which proposes that rather than seeing the distinctive labour content of commodities, people only see the commodities themselves, focusing on the exchange value rather than the utility. People must search for social connection through commodities while ignoring the massive wastage and environmental damage that their production takes. Relations between people are swapped by relations between commodities, although we see that capitalism has very greatly increased standards of living, its effect on quality of life is often ignored at the expense of the freedom to buy whatever goods one pleases, this freedom is taken to be the only important element of a society but close investigation reveals that it is a very hollow freedom. I have avoided talking about sweatshops for they are an unfortunately contentious issue, but I hope that can be included in my analysis. I probably haven't explained this very well, so here is a short list of books, mostly be Marxist or neo-Marxist authors who, rathear than focusing on Marx's primary mode of attack (exploitation via extraction of surplus value) they look at other elements of capitalist society: - Guy Debord - Society of the Spectacle (philosophy-economics): https://www.marxists.org/reference/archive/debord/society.htm https://www.marxists.org/reference/archive/debord/society.ht... - Herbert Marcuse - One Dimensional Man (sociology): https://libcom.org/files/Marcuse,%20H%20-%20One-Dimensional%20Man,%202nd%20edn.%20(Routledge,%202002).pdf https://libcom.org/files/Marcuse,%20H%20-%20One-Dimensional%... - Erich Fromm - Escape From Freedom (social psychology): https://libcom.org/library/escape-freedom https://libcom.org/library/escape-freedom - Habermas - The Structural Transformation of the Public Sphere (sociology-history) - https://en.wikipedia.org/wiki/The_Structural_Transformation_of_the_Public_Sphere https://en.wikipedia.org/wiki/The_Structural_Transformation_... - Peter Kropotkin - The Conquest of Bread - https://theanarchistlibrary.org/library/petr-kropotkin-the-conquest-of-bread https://theanarchistlibrary.org/library/petr-kropotkin-the-c...

hueving 9y ago

There has never been a successful centrally planned economy. Perhaps with the assistance of massive computation and information spread via the Internet it could be conceivable. But without that it seems like every toy model a central planner uses is going to fail miserably.

nopatternhere 9y ago
That's a WHAT, not a why. You aren't wrong, just answered the wrong way around. The why is because it is just too hard for any centralised group to know enough to plan a large economy adequately, for two main reasons (to keep an already long post short): 1. It is too much information for any group to consider and get any significant chunk of it correct. 2. Innovation is the opposite of planning. "Lets try this unproductive waste of time to connect college students and see what happens. Oh, we are worth billions" is not the way anyone would plan an economy, let alone the problem to assign smart people to. Innovation, unfortunately, can't really be planned. Central planning fails for the same reason scaling in tech is so difficult. When you have one server, a monolith (planned, organised) is great. All the code is in one place, one database, super easy to reason with and manage, no need for cludgey hacks, perfect code etc etc. But when you beyond that single server, another layer of complexity arises. How do we set up our infrastructure? How do we optimise long running tasks? How do we make sure everyone knows what everyone else is doing? Should we split code into smaller, harder to understand chunks? Planned economies fail because what the planners are optimising for - as a reductio ad absurdum - is protecting their own skin, and that means avoiding failure much more than encouraging success, especially in innovation, where > 90% of new ideas ultimately fail. Markets work because failure is a part of the puzzle, and markets optimise for success, not avoiding failure. As VC firms show, a lot of failure can be overcome with a tiny percentage of great successes, and these great success spur on growth. Markets also succeed because the conditions on a micro-level - i.e. a street - vary wildly. King Street in Newtown Australia - https://www.google.com.au/maps?q=king+street&um=1&ie=UTF-8&sa=X&ved=0ahUKEwjt2vLB-rTWAhUEurwKHWS9AFUQ_AUICigB https://www.google.com.au/maps?q=king+street&um=1&ie=UTF-8&s... - is a long, winding, inefficient mess of op-shops, restaurants and weirdness. No one would plan a street like that, but it works. However, the elements that make up King Street - what the actual shops sell - is different to what makes say the Haight-Ashbury in San Francisco sells, or what is available in San Telmo in Argentina, despite all three being similar in what they represent in each city (an area for alternative types). The flipside to these three places is Brasília - the capital of Brazil and a planned disaster. TL;DR markets optimise for success while accepting failure happens, whereas planned economies optimise to avoid failure above risky practices that may lead to success, and markets allow micro-optimisations, whereas planned economies end up one size-fits-all.