6 ms·

Mises doesn’t say that they can’t produce things of value or innovate technologically. Mises says that what they produce is not going to be what consumers want

Mises doesn’t say that they can’t produce things of value or innovate technologically. Mises says that what they produce is not going to be what consumers want as much as things they would have chosen themselves, and more importantly that price controls prevent the signaling that allows them to correctly allocate capital. The eventual collapse of the USSR is the evidence for this.

lumost 6y ago
The eventual collapse of the soviet union is attributable to dozens of causes, including an oppressive government which lost the support and confidence of it's people, a military budget in excess of 30% of GDP, an expensive and pointless foreign war, widespread censorship, and a crippling bureaucracy. I'd be skeptical that price controls had a larger affect on the distribution of information than censorship and the threat of imprisonment in the gulag.
- mulmen 6y ago
  How are you able to draw this distinction? If price controls are ineffective allocation of capital then surely GDP was depressed? How can you isolate and ignore price controls in such a complex system as the Soviet economy?
  - lumost 6y ago
    I wouldn't ignore them, but I'd suggest that there were other more potent mechanisms for information control which resulted in ineffective capital allocation. Consider that talking about a superior suspension system present in Western cars would have been problematic to the censors. Engineers who pushed such systems could find themselves in trouble, and ultimately cozy insiders could get competitors blackballed for pushing competing programs e.g. Censorship and Corruption did the most damage to the efficient allocation of capital.
    - chordalkeyboard 6y ago
      Certainly the USSR made other mistakes besides price controls, the point is that without market-generated prices, they had no way of knowing which goods were in higher demand relative to their supply in order to invest capital resources in producing those. Many Soviet goods were of high quality but the planners still sought pricing information from their western rivals in order to allocate capital.
    - barrkel 6y ago
      The corruption of nominating a supplier or a design as the only approved design is equivalent to not using price as information - or rather, not being allowed to use price as information. For example, if a supplier is inefficient in a free market, then the prices they charge are significantly higher than the inputs - i.e. profit is high. High profits attract competition; competitors look at the price of the output and the prices of the input and see that they can do better by building something cheaper. This competition drives efficiency and reduces prices. Whether competition is banned, or improvements are banned, or prices are exogenously set, it's all approximately equivalent to mucking with price as information.
- chordalkeyboard 6y ago
  > oppressive government which lost the support and confidence of it's people The oppression was in order to control the economy and the support and confidence was lost because in part because of their inability to provide basic goods and services in a command economy. > I'd be skeptical that price controls had a larger affect on the distribution of information than censorship and the threat of imprisonment in the gulag. Its not about the size of the effect but about the effect on specific information that is needed for capital allocation. USSR was outcompeted by market-driven economies and collapsed due to the unsustainability of the system.
  - hackbinary 6y ago
    Uhm, no. No single factor, but the USA going into an arms race with the USSR combined with the USA in association with Saudia Arabia tanking world oil prices played significant roles in the demise of the USSR and the Eastern Bloc.
    - chordalkeyboard 6y ago
      Ok, why was the mixed economy of the US able to produce all those weapons and all those consumer goods and feed and clothe their people while the command economy of the USSR couldn't compete on any one of those fronts? Oil prices is a distraction from the issue because if the USSR had been able to sell petroleum at a premium then they would have been able to purchase raw materials and finished products from market economies elsewhere and perhaps sustained the system for longer but it doesn't explain why they were reliant on an extraction industry and market-produced goods.
      - deleted 6y ago
        [deleted]
      - hackbinary 6y ago
        I think you're looking at this from a consumerism point of view. The US started a huge build up of arms. eg missiles and destroyers specifically, but also the US had significant advances with tank and aircraft weaponry. The US consumerist system had a positive feedback into the US industrial military complex where advances in manufacturing and information technology lead to huge efficiency gains for arms production even though Western arms production supply chains almost completely isolated. So, the US had a massive technology and manufacturing advantage, then the US tanked world oil prices and other commodities that the USSR required from world markets. Significantly the USSR was buying more grain and food from the world market, so while the USSR was able to keep up with technology, it was not able to keep up with efficiency gains that the US was realising. Corruption was also a huge problem for the USSR, and it still is to this day in Russia. The Americans bankrupted the USSR on multiple fronts. Capital allocation is a capitalist system notion, but, more generally, the US was able to allocate deploy its available resources in a way that out-competed the USSR. The USA was able to organise its society and economy in a more efficient and productive way than the USSR, and that is a Macro Economic argument. Until the 80's the USA had second most equitable distribution of wealth next to the USSR. The USA imposed significant taxes on everybody up to a marginal rate of 80%. If you want to "Make America Great Again", you need to restore taxation to the levels seen between 1945 and 1981; maybe even to the end of the 80's. American government funding through the DARPA project lead to numerous technological advances that most people, worldwide, now depend upon.
- kortilla 6y ago
  > I'd be skeptical that price controls had a larger affect on the distribution of information I don’t think you’re understanding what information is being talked about here. If you don’t let a market of buyers and sellers determine the price of something you can’t discover the supply and demand curves nor the price floor, etc. If the government comes out and just dictates that the price for gas is capped at $2/gal, you just end up with a bunch of shortages, rations, and lost potential oil industries because a ton of market information has bene destroyed. That is entirely independent of censorship.
- nyolfen 6y ago
  the most important immediate causes were a) that it could not feed itself and had to buy food imports with hard currency, and b) that it acquired its hard currency by selling oil, which became unsustainable during the 1980s
  - p_l 6y ago
    Often omitted part of the reason for that was that it had to build itself up, in rather hostile conditions, from much worse state than "the west". Even former Russian partition of Poland, to this day considered (for a reason) a backwards place, was one of the most modern areas of the Russian Empire. Then when post-WW2 the expected disarmament didn't come... well
- petre 6y ago
  You forgot Chernobyl. Gorbachev also lists it as a possible cause in his memoirs. Possibly one of the last straws.
- sofixa 6y ago
  Don't forget stuff like Chernobyl that drained the budget.
socialdemocrat 6y ago
There were many problems with the Soviet system but the collapse was not really related to it not being a market economy. In fact the enormous economic collapse that happened was due to privatization shock doctrine promoted by free market fundamentalists. Ironically free market reforms killed Russia not their command economy.
- mensetmanusman 6y ago
  The system collapsed because their people hated it. It was so inefficient.
  - RealityVoid 6y ago
    Hah, I beg to differ here. I mean, a lot of people hated it, but, a lot of people did not. It is scary how well people bought the propaganda. Even now, in ex communist countries, we have people pining for the "good old days".
    - Spooky23 6y ago
      People always remember the good and compartmentalize the bad.
- chordalkeyboard 6y ago
  Thats an interesting perspective. Why don’t you agree that the privatization was a reaction to a failing system? Surely if command economics had been successful they wouldn’t have felt the need to privatize?
  - rtsil 6y ago
    I'm far from an expert on this, but the reason could be that back then, "democracy" and free market without State intervention were presented as inseparable parts of the same package.
    - 6y ago

lumost 6y ago

The eventual collapse of the soviet union is attributable to dozens of causes, including an oppressive government which lost the support and confidence of it's people, a military budget in excess of 30% of GDP, an expensive and pointless foreign war, widespread censorship, and a crippling bureaucracy. I'd be skeptical that price controls had a larger affect on the distribution of information than censorship and the threat of imprisonment in the gulag.

mulmen 6y ago
How are you able to draw this distinction? If price controls are ineffective allocation of capital then surely GDP was depressed? How can you isolate and ignore price controls in such a complex system as the Soviet economy?
- lumost 6y ago
  I wouldn't ignore them, but I'd suggest that there were other more potent mechanisms for information control which resulted in ineffective capital allocation. Consider that talking about a superior suspension system present in Western cars would have been problematic to the censors. Engineers who pushed such systems could find themselves in trouble, and ultimately cozy insiders could get competitors blackballed for pushing competing programs e.g. Censorship and Corruption did the most damage to the efficient allocation of capital.
  - chordalkeyboard 6y ago
    Certainly the USSR made other mistakes besides price controls, the point is that without market-generated prices, they had no way of knowing which goods were in higher demand relative to their supply in order to invest capital resources in producing those. Many Soviet goods were of high quality but the planners still sought pricing information from their western rivals in order to allocate capital.
  - barrkel 6y ago
    The corruption of nominating a supplier or a design as the only approved design is equivalent to not using price as information - or rather, not being allowed to use price as information. For example, if a supplier is inefficient in a free market, then the prices they charge are significantly higher than the inputs - i.e. profit is high. High profits attract competition; competitors look at the price of the output and the prices of the input and see that they can do better by building something cheaper. This competition drives efficiency and reduces prices. Whether competition is banned, or improvements are banned, or prices are exogenously set, it's all approximately equivalent to mucking with price as information.
chordalkeyboard 6y ago
> oppressive government which lost the support and confidence of it's people The oppression was in order to control the economy and the support and confidence was lost because in part because of their inability to provide basic goods and services in a command economy. > I'd be skeptical that price controls had a larger affect on the distribution of information than censorship and the threat of imprisonment in the gulag. Its not about the size of the effect but about the effect on specific information that is needed for capital allocation. USSR was outcompeted by market-driven economies and collapsed due to the unsustainability of the system.
- hackbinary 6y ago
  Uhm, no. No single factor, but the USA going into an arms race with the USSR combined with the USA in association with Saudia Arabia tanking world oil prices played significant roles in the demise of the USSR and the Eastern Bloc.
  - chordalkeyboard 6y ago
    Ok, why was the mixed economy of the US able to produce all those weapons and all those consumer goods and feed and clothe their people while the command economy of the USSR couldn't compete on any one of those fronts? Oil prices is a distraction from the issue because if the USSR had been able to sell petroleum at a premium then they would have been able to purchase raw materials and finished products from market economies elsewhere and perhaps sustained the system for longer but it doesn't explain why they were reliant on an extraction industry and market-produced goods.
    - deleted 6y ago
      [deleted]
    - hackbinary 6y ago
      I think you're looking at this from a consumerism point of view. The US started a huge build up of arms. eg missiles and destroyers specifically, but also the US had significant advances with tank and aircraft weaponry. The US consumerist system had a positive feedback into the US industrial military complex where advances in manufacturing and information technology lead to huge efficiency gains for arms production even though Western arms production supply chains almost completely isolated. So, the US had a massive technology and manufacturing advantage, then the US tanked world oil prices and other commodities that the USSR required from world markets. Significantly the USSR was buying more grain and food from the world market, so while the USSR was able to keep up with technology, it was not able to keep up with efficiency gains that the US was realising. Corruption was also a huge problem for the USSR, and it still is to this day in Russia. The Americans bankrupted the USSR on multiple fronts. Capital allocation is a capitalist system notion, but, more generally, the US was able to allocate deploy its available resources in a way that out-competed the USSR. The USA was able to organise its society and economy in a more efficient and productive way than the USSR, and that is a Macro Economic argument. Until the 80's the USA had second most equitable distribution of wealth next to the USSR. The USA imposed significant taxes on everybody up to a marginal rate of 80%. If you want to "Make America Great Again", you need to restore taxation to the levels seen between 1945 and 1981; maybe even to the end of the 80's. American government funding through the DARPA project lead to numerous technological advances that most people, worldwide, now depend upon.
kortilla 6y ago
> I'd be skeptical that price controls had a larger affect on the distribution of information I don’t think you’re understanding what information is being talked about here. If you don’t let a market of buyers and sellers determine the price of something you can’t discover the supply and demand curves nor the price floor, etc. If the government comes out and just dictates that the price for gas is capped at $2/gal, you just end up with a bunch of shortages, rations, and lost potential oil industries because a ton of market information has bene destroyed. That is entirely independent of censorship.
nyolfen 6y ago
the most important immediate causes were a) that it could not feed itself and had to buy food imports with hard currency, and b) that it acquired its hard currency by selling oil, which became unsustainable during the 1980s
- p_l 6y ago
  Often omitted part of the reason for that was that it had to build itself up, in rather hostile conditions, from much worse state than "the west". Even former Russian partition of Poland, to this day considered (for a reason) a backwards place, was one of the most modern areas of the Russian Empire. Then when post-WW2 the expected disarmament didn't come... well
petre 6y ago
You forgot Chernobyl. Gorbachev also lists it as a possible cause in his memoirs. Possibly one of the last straws.
sofixa 6y ago
Don't forget stuff like Chernobyl that drained the budget.

socialdemocrat 6y ago

There were many problems with the Soviet system but the collapse was not really related to it not being a market economy. In fact the enormous economic collapse that happened was due to privatization shock doctrine promoted by free market fundamentalists. Ironically free market reforms killed Russia not their command economy.

mensetmanusman 6y ago
The system collapsed because their people hated it. It was so inefficient.
- RealityVoid 6y ago
  Hah, I beg to differ here. I mean, a lot of people hated it, but, a lot of people did not. It is scary how well people bought the propaganda. Even now, in ex communist countries, we have people pining for the "good old days".
  - Spooky23 6y ago
    People always remember the good and compartmentalize the bad.
chordalkeyboard 6y ago
Thats an interesting perspective. Why don’t you agree that the privatization was a reaction to a failing system? Surely if command economics had been successful they wouldn’t have felt the need to privatize?
- rtsil 6y ago
  I'm far from an expert on this, but the reason could be that back then, "democracy" and free market without State intervention were presented as inseparable parts of the same package.
  - 6y ago