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Lots of shaky assumptions and economic misconceptions in this book. Every decade there is always a utopian or a group of idealists who claim that we have the me

by Qasaur 9y ago

Lots of shaky assumptions and economic misconceptions in this book. Every decade there is always a utopian or a group of idealists who claim that we have the means to meet everyones needs and that capitalism and its economic laws are no longer capable of providing the goods and services that we demand. But these ideas are always incoherent and boil down to arbitrary assumptions about human nature. Let us, for the sake of the argument ignore the fact that capitalism, voluntary exchange, and the free market is the _only_ system that is capable of rationally allocating resources in a society and instead assume that we have somehow surpassed the need for capital-based economics. What do the central planners like the author of the book have in mind to "replace" capitalism? The proposed solutions always boil down to some form of common ownership of the means of production. Private ownership is considered obsolete and common ownership of resources with a rational distribution system where everyone receives what they need. In the past people proposed that this rational distribution system would be controlled by a committee of experts, and today the same people say that a highly intelligent computer system would marshal the resources. Human needs can be objectively determined, and damn those who demand more than what they are entitled to from the rational distribution system. Sounds familiar? That is because it is. Socialism _always_ fails because a central authority cannot, objectively, plan an economy better than the collective decisions by acting men in the free market. Hayek wrote about this in his essay _The Use of Knowledge in Society_ [1] This is the same fallacy that caused the collapse of every single planned economy in the past and will in the future. Without prices there is no economic calculation, and the best pricing system is one that is based on private property. Frankly, after skimming the book, I find that his entire argument boils down to the fact that he believes that certain things should be worth more and others should be worth less, and damn the market for telling me why they cost the way they do. There is a reason space travel costs as much as it does, but luckily for us we have a system that allows for entrepreneurship where innovative individuals and corporations who are able to arbitrage between the cost of factor inputs and the prices of their output get rewarded with a handsome profit. Since it is in their interest to maximise their spread they always tend to discover ways cut costs while still delivering the product that their customers demand (just look at Elon Musk and his space venture). While I agree with the author that enabling people to widely access information will speed up the process of entrepreneurship, time is unfortunately an element in entrepreneurial discovery and there is no coming around that. [1] http://www.econlib.org/library/Essays/hykKnw1.html http://www.econlib.org/library/Essays/hykKnw1.html

erikb 9y ago
> the fact that capitalism, voluntary exchange, and the free market is the _only_ system that is capable of rationally allocating resources in a society Wow. Before one is the _only_ <something> shouldn't one be first _one of_ <something>? Afaik it's quite clear by now that capitalism and free market are not rationally allocating resources, or is your definition of "rationally" equaling "give more to those who already have too much"?
- RickHull 9y ago
  Rationally can be understood to mean something like: * Put goods to their highest use * Allocate capital to those who can produce more rather than consume it In general, nothing is given to anyone. Increasing capital (i.e. by a single individual or within a single firm) is quite difficult and getting moreso every day. If 1% of the population is a super-producer, 9% are regular producers, and 90% are largely consumers, then the consumers are best off when the 10% producers have most of the capital. Allocating capital to consumers starts fun and ends poorly.
  - aninhumer 9y ago
    >* Put goods to their highest use That's just dodging the question. What is the "highest use"? >* Allocate capital to those who can produce more rather than consume it And thus the optimally rational world as conceived based on this premise is one where no one ever consumes anything.
    - RickHull 9y ago
      Everyone consumes. It's the basis of the economy. The producers produce that which is consumed. The best thing for consumers is for producers to produce more goods at lower cost. If one of those goods is a bicycle, then the highest use might be for a nominal consumer to use it to kickstart a delivery service and join the ranks of net producers. The revenue generated by his service, or credit extended on the expectation of future revenue, can allow him to outbid a pure consumer from purchasing the bicycle as a leisure device, leisure being a lower use than that of delivery.

by Qasaur 9y ago

erikb 9y ago

> the fact that capitalism, voluntary exchange, and the free market is the _only_ system that is capable of rationally allocating resources in a society Wow. Before one is the _only_ <something> shouldn't one be first _one of_ <something>? Afaik it's quite clear by now that capitalism and free market are not rationally allocating resources, or is your definition of "rationally" equaling "give more to those who already have too much"?

RickHull 9y ago
Rationally can be understood to mean something like: * Put goods to their highest use * Allocate capital to those who can produce more rather than consume it In general, nothing is given to anyone. Increasing capital (i.e. by a single individual or within a single firm) is quite difficult and getting moreso every day. If 1% of the population is a super-producer, 9% are regular producers, and 90% are largely consumers, then the consumers are best off when the 10% producers have most of the capital. Allocating capital to consumers starts fun and ends poorly.
- aninhumer 9y ago
  >* Put goods to their highest use That's just dodging the question. What is the "highest use"? >* Allocate capital to those who can produce more rather than consume it And thus the optimally rational world as conceived based on this premise is one where no one ever consumes anything.
  - RickHull 9y ago
    Everyone consumes. It's the basis of the economy. The producers produce that which is consumed. The best thing for consumers is for producers to produce more goods at lower cost. If one of those goods is a bicycle, then the highest use might be for a nominal consumer to use it to kickstart a delivery service and join the ranks of net producers. The revenue generated by his service, or credit extended on the expectation of future revenue, can allow him to outbid a pure consumer from purchasing the bicycle as a leisure device, leisure being a lower use than that of delivery.