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Uber has solved the economic calculation problem except for that little detail that it loses billions of dollars ever year. In fact, any business that can make

Uber has solved the economic calculation problem except for that little detail that it loses billions of dollars ever year. In fact, any business that can make a profit without subsidies has solved the economic calculation problem, at least on a smaller than nationwide scale. Maybe if Amazon in 20 years has vertically integrated enough that it is the only business operating in the country and it replaces money with just telling everyone what to do and the whole thing operating on pure faith in Amazon's benevolence it would have solved the economic calculation problem.

deleted 9y ago
[deleted]
Animats 9y ago
Arguably, Wal-Mart solved this years ago. Wal-Mart is very centralized. It's so centralized that store thermostats are controlled from Master Control in Bentonville, Arkansas. One of Sam Walton's big points is that Wal-Mart's success was not due to scale. It was because they were moving data around instead of inventory. Retail used to involve lots of product taking up space in warehouses, store back rooms, and shelves in the store. All that costs the retailer money. Wal-Mart was the first big chain to get this under control, so that product flow followed sales flow very closely. This has an enormous financial benefit. Big retailers typically pay 30 days behind shipments. Wal-Mart (and presumably Amazon) usually have sold the product before they even have paid their supplier. So their inventory cost is negative. Now that's cash flow management. Wal-Mart was one of the first retailers to bar-code everything. They meant everything. Wal-Mart has a buying center in Bentonville, known in retail as the Corridor of Doom. They put up signs along the line of "If your product isn't bar-coded, don't bother coming in". In typical Wal-Mart fashion, they made the suppliers apply the bar codes, both at the retail item and case level. (They've been trying to move to RFID, but it hasn't worked out as well.) Gosplan was always very slow. They had a monthly information cycle and an annual decision cycle. Wal-Mart had a daily information cycle and a weekly decision cycle years ago, and it's probably faster now. If Gosplan had made it to the bar-code era, they might have been able to make centralized planning work.

deleted 9y ago

[deleted]

Animats 9y ago

Arguably, Wal-Mart solved this years ago. Wal-Mart is very centralized. It's so centralized that store thermostats are controlled from Master Control in Bentonville, Arkansas. One of Sam Walton's big points is that Wal-Mart's success was not due to scale. It was because they were moving data around instead of inventory. Retail used to involve lots of product taking up space in warehouses, store back rooms, and shelves in the store. All that costs the retailer money. Wal-Mart was the first big chain to get this under control, so that product flow followed sales flow very closely. This has an enormous financial benefit. Big retailers typically pay 30 days behind shipments. Wal-Mart (and presumably Amazon) usually have sold the product before they even have paid their supplier. So their inventory cost is negative. Now that's cash flow management. Wal-Mart was one of the first retailers to bar-code everything. They meant everything. Wal-Mart has a buying center in Bentonville, known in retail as the Corridor of Doom. They put up signs along the line of "If your product isn't bar-coded, don't bother coming in". In typical Wal-Mart fashion, they made the suppliers apply the bar codes, both at the retail item and case level. (They've been trying to move to RFID, but it hasn't worked out as well.) Gosplan was always very slow. They had a monthly information cycle and an annual decision cycle. Wal-Mart had a daily information cycle and a weekly decision cycle years ago, and it's probably faster now. If Gosplan had made it to the bar-code era, they might have been able to make centralized planning work.