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An additional problem is one of economic calculation. Mises argued one hundred years ago that a planned economy where the state owns the means of production and

An additional problem is one of economic calculation. Mises argued one hundred years ago that a planned economy where the state owns the means of production and arbitrarily sets prices without an open market to determine prices by supply and demand would result in economic waste and shortages. He was largely proven right by the disastrous Soviet experience. https://www.libertarianism.org/publications/essays/excursions/ludwig-von-mises-economic-calculation-under-socialism-part-1 https://www.libertarianism.org/publications/essays/excursion...

jjoonathan 9y ago
In a capitalist system, a zero sum game in which titans buy ads to pull marketshare back and forth between each other creates value, yet feeding a starving person does not. That's a ridiculous statement, of course, but it demonstrates that the economic notion of value can diverge wildly from most other reasonable notions of value. The seemingly inoffensive "economic value = value" approximation is actually a trojan horse used by libertarians to sneak the more objectionable aspects of their theories past casual observers and put a tautological halo over markets and their preferences. It's a point worth keeping in mind when considering complaints that X system doesn't optimize economic value.
fuck_google 9y ago
There were however plans to move from 5 year plans to realtime planning with the help of computers, which would have probably worked a bit better as the planning could have been automated, made better use of optimization and react to changes much faster.
TFYS 9y ago
While he might have been right one hundred years ago, the economic calculation problem might not be a problem anymore. We're starting to get to the point where we have enough computing power to simulate the world economy. Everyone also now has a way to communicate their needs instantly to a computer. Compared to what could be achieved with todays technology, the price mechanism is inaccurate and slow.
- ZenoArrow 9y ago
  > "Everyone also now has a way to communicate their needs instantly to a computer. Compared to what could be achieved with todays technology, the price mechanism is inaccurate and slow." The price mechanism means that people have to make trade offs, and for anyone living outside of poverty, that's often a good thing. To use a simple example, if you're a gamer you may want both a PS4 and an Xbox One, but if you only have the money to buy one, you have to choose which one you'd rather have. If you remove the price mechanism you've absolved the individual from making that choice, and you'll get greater demands for material goods as a result.
  - TFYS 9y ago
    Of course you'd have to somehow set limits on consumption in any system where resources are limited. The price mechanism isn't the only way to do that. You could for example have only one game system to begin with so there's no reason to own two. Or you could have public "libraries" for things like gaming systems where you could borrow anything you need, reducing the need to own things. Resources should be allocated where they are needed the most. The price mechanism doesn't do that. If you don't have any money, a system based on the price mechanism doesn't know you exist no matter how great your need.
    - ZenoArrow 9y ago
      > "Of course you'd have to somehow set limits on consumption in any system where resources are limited. The price mechanism isn't the only way to do that. You could for example have only one game system to begin with so there's no reason to own two. Or you could have public "libraries" for things like gaming systems where you could borrow anything you need, reducing the need to own things." Okay, but putting aside shared ownership and artificially limiting choice, how do you set limits on consumption? Let's use a different example. Someone owns a car that they maintain themselves. Their car breaks down, but instead of requesting a new part to fix it they request a new car. How does the government choose which is the appropriate action to take? Before you answer, consider that this is just one decision out of millions that a government would have to make within the space of a month.
ZenoArrow 9y ago
> "would result in economic waste and shortages" Capitalism frequently also results in economic waste and artificial shortages, it's not like communism has the monopoly on that.

jjoonathan 9y ago

In a capitalist system, a zero sum game in which titans buy ads to pull marketshare back and forth between each other creates value, yet feeding a starving person does not. That's a ridiculous statement, of course, but it demonstrates that the economic notion of value can diverge wildly from most other reasonable notions of value. The seemingly inoffensive "economic value = value" approximation is actually a trojan horse used by libertarians to sneak the more objectionable aspects of their theories past casual observers and put a tautological halo over markets and their preferences. It's a point worth keeping in mind when considering complaints that X system doesn't optimize economic value.

fuck_google 9y ago

There were however plans to move from 5 year plans to realtime planning with the help of computers, which would have probably worked a bit better as the planning could have been automated, made better use of optimization and react to changes much faster.

TFYS 9y ago

While he might have been right one hundred years ago, the economic calculation problem might not be a problem anymore. We're starting to get to the point where we have enough computing power to simulate the world economy. Everyone also now has a way to communicate their needs instantly to a computer. Compared to what could be achieved with todays technology, the price mechanism is inaccurate and slow.

ZenoArrow 9y ago
> "Everyone also now has a way to communicate their needs instantly to a computer. Compared to what could be achieved with todays technology, the price mechanism is inaccurate and slow." The price mechanism means that people have to make trade offs, and for anyone living outside of poverty, that's often a good thing. To use a simple example, if you're a gamer you may want both a PS4 and an Xbox One, but if you only have the money to buy one, you have to choose which one you'd rather have. If you remove the price mechanism you've absolved the individual from making that choice, and you'll get greater demands for material goods as a result.
- TFYS 9y ago
  Of course you'd have to somehow set limits on consumption in any system where resources are limited. The price mechanism isn't the only way to do that. You could for example have only one game system to begin with so there's no reason to own two. Or you could have public "libraries" for things like gaming systems where you could borrow anything you need, reducing the need to own things. Resources should be allocated where they are needed the most. The price mechanism doesn't do that. If you don't have any money, a system based on the price mechanism doesn't know you exist no matter how great your need.
  - ZenoArrow 9y ago
    > "Of course you'd have to somehow set limits on consumption in any system where resources are limited. The price mechanism isn't the only way to do that. You could for example have only one game system to begin with so there's no reason to own two. Or you could have public "libraries" for things like gaming systems where you could borrow anything you need, reducing the need to own things." Okay, but putting aside shared ownership and artificially limiting choice, how do you set limits on consumption? Let's use a different example. Someone owns a car that they maintain themselves. Their car breaks down, but instead of requesting a new part to fix it they request a new car. How does the government choose which is the appropriate action to take? Before you answer, consider that this is just one decision out of millions that a government would have to make within the space of a month.

ZenoArrow 9y ago

> "would result in economic waste and shortages" Capitalism frequently also results in economic waste and artificial shortages, it's not like communism has the monopoly on that.