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I don't think anyone denies that omniscient, well intentioned planners would be very efficient, but subjectivism and the calculation problem mean that you will

by nickff 6y ago

I don't think anyone denies that omniscient, well intentioned planners would be very efficient, but subjectivism and the calculation problem mean that you will never have the former, and political economy explains why you will not acheve the latter. Spontaneously ordered systems are also better at dynamic adaptation to exogenous changes (such as technological ones).

foldr 6y ago
No system is perfect. Perfect markets don't exist either.
Barrin92 6y ago
How can political economy explain away something that's already succeeded? It's how Singapore moved from the third world to first, in the words of LKY, how Taiwan and South Korea got rich, how China has dragged people out of poverty, arguably also how the US navigated a huge portion of the cold war, by strategic thinking and determining clear goals, and then leaving the how to less centralised systems to figure out. The 40s to 70s broadly were an era in which there appeared to be a pragmatic balance between strategic planning and decentralized execution, in which markets where tools, serving national interest. It's also probably the era in which we saw more technological progress than at any other point. Bringing up 'political economy' in this context is what produced the old saying 'Economists are the sort of people that see something work in practise and ask if it works in theory', it's exactly a symptom of the dogmatism that I think is plaguing us.
sudosysgen 6y ago
>subjectivism and the calculation problem Every planned economy that has existed has used price signals by the end user in order to fix these issues. Planned economies are made to run an economy without markets, not without prices. As long as you have an end-user price signal, subjectivism is not an issue and the calculation problem becomes a computational issue that can be solved.
socialdemocrat 6y ago
But in many cases the calculation problem is smaller than the problems in a specific market. It seems clear that a whole economy cannot be centrally controlled but that does not mean that parts of it isn’t better controlled by planned economics than be market economics. It would be wrong to assume one size fits all. One can also have hybrid systems. Where the value of market decisions is understood but where a central planner has some important insights which he can use to tweak a market to work better.

by nickff 6y ago

foldr 6y ago

No system is perfect. Perfect markets don't exist either.

Barrin92 6y ago

How can political economy explain away something that's already succeeded? It's how Singapore moved from the third world to first, in the words of LKY, how Taiwan and South Korea got rich, how China has dragged people out of poverty, arguably also how the US navigated a huge portion of the cold war, by strategic thinking and determining clear goals, and then leaving the how to less centralised systems to figure out. The 40s to 70s broadly were an era in which there appeared to be a pragmatic balance between strategic planning and decentralized execution, in which markets where tools, serving national interest. It's also probably the era in which we saw more technological progress than at any other point. Bringing up 'political economy' in this context is what produced the old saying 'Economists are the sort of people that see something work in practise and ask if it works in theory', it's exactly a symptom of the dogmatism that I think is plaguing us.

sudosysgen 6y ago

>subjectivism and the calculation problem Every planned economy that has existed has used price signals by the end user in order to fix these issues. Planned economies are made to run an economy without markets, not without prices. As long as you have an end-user price signal, subjectivism is not an issue and the calculation problem becomes a computational issue that can be solved.

socialdemocrat 6y ago

But in many cases the calculation problem is smaller than the problems in a specific market. It seems clear that a whole economy cannot be centrally controlled but that does not mean that parts of it isn’t better controlled by planned economics than be market economics. It would be wrong to assume one size fits all. One can also have hybrid systems. Where the value of market decisions is understood but where a central planner has some important insights which he can use to tweak a market to work better.