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> Trying to replace that with a "central brain" inevitably leads to severe misallocation of resources. Now the question is: If a conglomerate has a dominate po

> Trying to replace that with a "central brain" inevitably leads to severe misallocation of resources. Now the question is: If a conglomerate has a dominate position in a marketplace, doesn't its administration face many of the same problems and challenges just like a central planner? In this situation, from a technical perspective, which are the similarities and differences here? Of course, one can answer, "this is why we have anti-trust laws", or "the free market still largely works, nobody can fully control an economic sector, even a conglomerate is bounded by the market". But it doesn't respond to the real question. For example, if Amazon or Google is trying to use an algorithm to optimize something globally, intuitively, it seems that they are effectively solving the same type of economic calculation problem, albeit at a much smaller scale. I made this comment because I recently saw an essay that also uses the book Red Plenty as an example to argue that many attempts on "AI", "machine learning" or "big data" by large corporations can potentially fall into the old central planning pitfalls. What is your opinion?

chordalkeyboard 6y ago
> If a conglomerate has a dominate position in a marketplace, doesn't its administration face many of the same problems and challenges just like a central planner? In this situation, from a technical perspective, which are the similarities and differences here? Yes they do. the differences are that they are still dependent on goods that their own firm doesn't produce, so the prices of those goods discipline their budget/plans to some degree, the firm is unable to use violence to compel the behavior they need to survive, and that as they call victim to the same central planning problems as governments, their marginal profit decreases so that the owner sees less profit and the price of a share of ownership decreases because of that.
- cmrdporcupine 6y ago
  But they can use violence. By capturing control of the state and shifting state policy to coerce in its favour. Or failing that, employing violence directly themselves as many large monopolies did in the 20s and 30s. As an aside, I see this as the fundamental point of departure in language between a Marxian socialist and a libertarian-capitalist, they mean two different things by the "state": libertarians believe the state is a parasite on the market and a corrupter and destroyer of the free market. Marxists believe that the state is created _by_ the market for itself ("The executive of the modern state is nothing but a committee for managing the common affairs of the whole bourgeoisie.") Both see the other as hopelessly naive.
  - dragonwriter 6y ago
    > Marxists believe that the state is created _by_ the market for itself I don't think that is accurate. Marxists believe that in practice bourgeois control of the State (in the developmental phase of capitalism, bourgeois influence on the aristocracy which controls the State) is the vehicle by which the bourgeois create and maintain the system of private property of which the market is an epiphenomenon. (And, therefore, that control of the State is necessary to abolish that system of property rights and the capitalist system that depends on it.) On the descriptive points of this libertarian capitalists generally agree (disagreeing on the normative assessment); seeing that the purpose of the state is to enforce the system of property rights that the market relies on, and that the State is defective to the extent that it extends beyond or departs from that function.
    - chordalkeyboard 6y ago
      > On the descriptive points of this libertarian capitalists generally agree (disagreeing on the normative assessment); seeing that the purpose of the state is to enforce the system of property rights that the market relies on, and that the State is defective to the extent that it extends beyond or departs from that function. Some see the state as a capture of the dispute resolution process and feel that the market emerges as a consequence of certain norms.
  - chordalkeyboard 6y ago
    > But they can use violence. By capturing control of the state and shifting state policy to coerce in its favour. Or failing that, employing violence directly themselves as many large monopolies did in the 20s and 30s. This is true but in functional terms the corporation is then acting with the powers of a government or organized crime, and then is subject to the same arguments that are used to explain the failures/successes of those systems. > Marxists believe that the state is created _by_ the market for itself This is somewhat true. Its important to note that it is created or captured by certain market participants, not the market as a whole.
Spooky23 6y ago
Big companies are little command economies with many of the problems at a smaller scale. Having run a $100M vertical in a very large organization, it’s pretty easy to see how problems develop. There’s always a trade off between “efficiency”, standards and local/global control. With central control, a guy in California buys the vehicle fleet, and doesn’t understand why people in Boston need a car that doesn’t get stuck in snow, etc. Another model might be a scenario where semi-autonomous divisions consume shared services as captive market participants. AI, etc will probably exacerbate these things, as they’ll allow more growth with less people managing things.
pfdietz 6y ago
There's a reason corporate raiders could make quick money by breaking up conglomerates.

chordalkeyboard 6y ago

> If a conglomerate has a dominate position in a marketplace, doesn't its administration face many of the same problems and challenges just like a central planner? In this situation, from a technical perspective, which are the similarities and differences here? Yes they do. the differences are that they are still dependent on goods that their own firm doesn't produce, so the prices of those goods discipline their budget/plans to some degree, the firm is unable to use violence to compel the behavior they need to survive, and that as they call victim to the same central planning problems as governments, their marginal profit decreases so that the owner sees less profit and the price of a share of ownership decreases because of that.

cmrdporcupine 6y ago
But they can use violence. By capturing control of the state and shifting state policy to coerce in its favour. Or failing that, employing violence directly themselves as many large monopolies did in the 20s and 30s. As an aside, I see this as the fundamental point of departure in language between a Marxian socialist and a libertarian-capitalist, they mean two different things by the "state": libertarians believe the state is a parasite on the market and a corrupter and destroyer of the free market. Marxists believe that the state is created _by_ the market for itself ("The executive of the modern state is nothing but a committee for managing the common affairs of the whole bourgeoisie.") Both see the other as hopelessly naive.
- dragonwriter 6y ago
  > Marxists believe that the state is created _by_ the market for itself I don't think that is accurate. Marxists believe that in practice bourgeois control of the State (in the developmental phase of capitalism, bourgeois influence on the aristocracy which controls the State) is the vehicle by which the bourgeois create and maintain the system of private property of which the market is an epiphenomenon. (And, therefore, that control of the State is necessary to abolish that system of property rights and the capitalist system that depends on it.) On the descriptive points of this libertarian capitalists generally agree (disagreeing on the normative assessment); seeing that the purpose of the state is to enforce the system of property rights that the market relies on, and that the State is defective to the extent that it extends beyond or departs from that function.
  - chordalkeyboard 6y ago
    > On the descriptive points of this libertarian capitalists generally agree (disagreeing on the normative assessment); seeing that the purpose of the state is to enforce the system of property rights that the market relies on, and that the State is defective to the extent that it extends beyond or departs from that function. Some see the state as a capture of the dispute resolution process and feel that the market emerges as a consequence of certain norms.
- chordalkeyboard 6y ago
  > But they can use violence. By capturing control of the state and shifting state policy to coerce in its favour. Or failing that, employing violence directly themselves as many large monopolies did in the 20s and 30s. This is true but in functional terms the corporation is then acting with the powers of a government or organized crime, and then is subject to the same arguments that are used to explain the failures/successes of those systems. > Marxists believe that the state is created _by_ the market for itself This is somewhat true. Its important to note that it is created or captured by certain market participants, not the market as a whole.

Spooky23 6y ago

Big companies are little command economies with many of the problems at a smaller scale. Having run a $100M vertical in a very large organization, it’s pretty easy to see how problems develop. There’s always a trade off between “efficiency”, standards and local/global control. With central control, a guy in California buys the vehicle fleet, and doesn’t understand why people in Boston need a car that doesn’t get stuck in snow, etc. Another model might be a scenario where semi-autonomous divisions consume shared services as captive market participants. AI, etc will probably exacerbate these things, as they’ll allow more growth with less people managing things.

pfdietz 6y ago

There's a reason corporate raiders could make quick money by breaking up conglomerates.