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Greenfeld comes perilously close to independently discovering Hayek. Local, specialized knowledge is essential, and is one of the hardest features to scale, if

Greenfeld comes perilously close to independently discovering Hayek. Local, specialized knowledge is essential, and is one of the hardest features to scale, if it's possible at all. Also, this reminds me of stories about Soviet manufacturing quotas[1]: > The Soviet Union was the largest producer of shoes in the world. It was turning out 800 million pairs of shoes a year–twice as many as Italy, three times as many as the United States, four times as many as China. Production amounted to more than three pairs of shoes per year for every Soviet man, woman, and child. > The problem with shoes, it turned out, was not an absolute shortage. It was a far more subtle malfunction. The comfort, the fit, the design, and the size mix of Soviet shoes were so out of sync with what people needed and wanted that they were willing to stand in line for hours to buy the occasional pair, usually imported, that they liked. Or even more ridiculous[2]: > But probabably the most outrageous malfunction of the system was of a factory that fabricated metal products. It had a quota for scrap metal for recycling. The factory was operating more efficiently than expected so it was not generating as much scrap as expected. Since the factory was not meeting its scrap metal quota the higher authorities were going to fine it. So the factor personnel did what to them was rational. They took perfectly good zinc metal sheets and converted them into scrap to fulfill their scrap metal quota. When looking at large organizations through the lens of information problems, one realizes that Amazon, Google, Walmart et al. all exist on continuum along with the Soviet Union or even the US Government. [1]https://www.econlib.org/archives/2009/09/soviet_shoes.html https://www.econlib.org/archives/2009/09/soviet_shoes.html [2]https://www.sjsu.edu/faculty/watkins/stalinmodel.htm https://www.sjsu.edu/faculty/watkins/stalinmodel.htm

jimduk 6y ago
Hi, apart from Hayek (and maybe Ursula Le Guin, and A Hamilton), has anyone got any good pointers on theories for when you favour local over global knowledge or vice versa. Either political theories, or game-theoretic. Transaction cost economics is the closest thing I've seen, and maybe some of Stuart Kauffman's stuff on the adjacent possible and the CEO's job being to 'recut' the company into different divisions. But I've never seen anything along the lines of - if I have a changing fitness landscape L and a set of communicating agents A with different sets of knowledge, and they can use their knowledge to extract value from the local landscape, or they can make tools to increase the value of that knowledge or they can communicate or they can listen, then in what situations should you take different actions. The extremes are easy ( local changing landscape, high comms costs, then don't listen to anyone else; static similar landscape, cheap comms, listen to the cleverest agent); Maybe there is some biology stuff with ants or some agent-based modelling work ?
- davio 6y ago
  Lean manufacturing or Toyota production system is pretty relevant. The concept of sub-optimizing metrics seemed especially topical to the article.
  - camjohnson26 6y ago
    Demming’s Out of the Crisis talks about reducing variation to improve efficiency and how difficult that is.
- JamesLeonis 6y ago
  I can recommend two authors: Nassim Taleb and James C Scott. In particular their books "Antifragile" and "Seeing Like A State" respectively.
  - zaphod4prez 6y ago
    Both great books!
  - klmadfejno 6y ago
    Controversy over Taleb is no secret, but I'll say it every time. Everything I've seen by Taleb seems to be him posing an idea that is obviously flawed, claiming that it is mainstream among widespread experts (when its not), and then taking credit for saying its incorrect, whilst making the reader feel smart because they too see why its obviously wrong.
    - baryphonic 6y ago
      I'm not sure this is true. Sometimes he says things that are, well, nonsense (e.g. a lot of his anti-GMO posturing), and other times he's right on the money (e.g. criticizing Black-Scholes long before the '08 crisis). In all cases, he insults his detractors as "bullshitters" when it is only warranted for some.
- tomgp 6y ago
  Francis Spufford’s Red Plenty is a great “nonfiction novel” about the problems of (and conceptual/mathematical limits to) central planning in the Soviet Union.
notfromhere 6y ago
The USSR had the same issues that large companies do because central planning was modeled on a corporate model. Internally, corporations function like centrally planned economies.
- pm90 6y ago
  > Internally, corporations function like centrally planned economies. Well, they try to. But unlike Governments, they don't have access to Departments of economists or planners that can spend all their time looking at the data and deciding the optimal plan. The decisions corporations take is most often based on the whims of its decision makers (senior managers/HOD/VP of X) who will cherry-pick metrics that suits their perspective.
  - babesh 6y ago
    The hope is that Darwin will select for the corporations that do this better.
    - notfromhere 6y ago
      Given how few corporations last any significant length of time, it works until it doesn’t.
  - olefoo 6y ago
    You seem to think that teams of economists don't cherry pick metrics that suit their perspective.
    - pm90 6y ago
      This is a strange argument. Government departments dedicated to planning are often required to publish their guidance/research publicly making it difficult to get away with cherry-picking metrics. Having a team of professionals who understand the basics of our economic system tackle the problem seems to have a higher probability of success as compared with business leaders who often lack formal training in statistical methods. There are more arguments but this should be enough to prove this false equivalency.
snake_plissken 6y ago
Kind of unrelated but when you mentioned Soviet shoe factories, this scene from HBO's Chernobyl takes on a whole new dimension: https://www.youtube.com/watch?v=idb_qsAAe1c https://www.youtube.com/watch?v=idb_qsAAe1c "I'm a nuclear physicist. Before you were deputy secretary, you worked in a shoe factory." "Yes, I worked in a shoe factory. And now I'm in charge. To the workers of the world."
- baryphonic 6y ago
  When writing my post, I remembered the miner's joke from the series: > What's as big as a house, burns 20 liters of fuel an hour, puts out a huge amount of smoke and noise, and cuts an apple into three pieces? > A Soviet machine for cutting apples into four pieces.
inglor_cz 6y ago
As someone who grew up in late Communist Czechoslovakia, the regime was absolutely obsessed with production of impressive statistics, especially those of heavy industry. How much steel was produced yearly, how much coal was produced yearly, and how the old bourgeois Czechoslovakia (1918-1939) was so much worse off in comparison. What was NOT trumpeted out loud: * we were seriously behind in production of many consumer goods and in their quality, * some parts of our industry could not compete with Western products on the account of being obsolete - especially electronics.
- baryphonic 6y ago
  Having never lived in a socialist country, but having seen the effects up close and having read about them extensively, my model of Marxist-Leninist states is that they are basically giant corporations that produce everything and employ everyone within the boundaries of a state. Imagine Walmart, but they produce everything, employ everyone, "Loss Prevention" runs a corporation-wide spying ring (with incentives for turning in your fellow employees), HR has show trials and prisons/camps for anyone who might be causing low worker morale. Management releases quarterly numbers that are extremely rosy, mainly for the benefit of the board (the Politburo or maybe Central Committee) and the shareholders (the Party), though this is mainly to enforce which talking points to discuss; none of them can say anything but disparaging things about the competition (bourgeois capitalist-imperialist states), nor acknowledge any progress they may have achieved. Above all, management wants everyone to know that they are actually a giant family. I'm not sure how far off this is, but socialist propaganda always reminds me of corporate BS I've seen over the course of my career. At least with a corporation, I can leave.
  - Viliam1234 6y ago
    Your model is nice, but it is missing one important step: At the beginning of the experiment, all people who were not at the bottom of the company pyramid are shot, and their roles are filled by randomly selected remaining employees. So the company starts with nobody in the management having any idea about anything, and it takes a few decades of trial and error to regain some knowledge about how to run things. In the meanwhile, many employees starve to death. At the end, Wallmart finally regains its former functionality. The management proudly opens the windows that have been locked for decades. On the outside, they see drones flying everywhere, a personal teleport at every street corner, and rockets regularly flying to Mars. In despair, the entire project is abandoned.

jimduk 6y ago

Hi, apart from Hayek (and maybe Ursula Le Guin, and A Hamilton), has anyone got any good pointers on theories for when you favour local over global knowledge or vice versa. Either political theories, or game-theoretic. Transaction cost economics is the closest thing I've seen, and maybe some of Stuart Kauffman's stuff on the adjacent possible and the CEO's job being to 'recut' the company into different divisions. But I've never seen anything along the lines of - if I have a changing fitness landscape L and a set of communicating agents A with different sets of knowledge, and they can use their knowledge to extract value from the local landscape, or they can make tools to increase the value of that knowledge or they can communicate or they can listen, then in what situations should you take different actions. The extremes are easy ( local changing landscape, high comms costs, then don't listen to anyone else; static similar landscape, cheap comms, listen to the cleverest agent); Maybe there is some biology stuff with ants or some agent-based modelling work ?

davio 6y ago
Lean manufacturing or Toyota production system is pretty relevant. The concept of sub-optimizing metrics seemed especially topical to the article.
- camjohnson26 6y ago
  Demming’s Out of the Crisis talks about reducing variation to improve efficiency and how difficult that is.
JamesLeonis 6y ago
I can recommend two authors: Nassim Taleb and James C Scott. In particular their books "Antifragile" and "Seeing Like A State" respectively.
- zaphod4prez 6y ago
  Both great books!
- klmadfejno 6y ago
  Controversy over Taleb is no secret, but I'll say it every time. Everything I've seen by Taleb seems to be him posing an idea that is obviously flawed, claiming that it is mainstream among widespread experts (when its not), and then taking credit for saying its incorrect, whilst making the reader feel smart because they too see why its obviously wrong.
  - baryphonic 6y ago
    I'm not sure this is true. Sometimes he says things that are, well, nonsense (e.g. a lot of his anti-GMO posturing), and other times he's right on the money (e.g. criticizing Black-Scholes long before the '08 crisis). In all cases, he insults his detractors as "bullshitters" when it is only warranted for some.
tomgp 6y ago
Francis Spufford’s Red Plenty is a great “nonfiction novel” about the problems of (and conceptual/mathematical limits to) central planning in the Soviet Union.

notfromhere 6y ago

The USSR had the same issues that large companies do because central planning was modeled on a corporate model. Internally, corporations function like centrally planned economies.

pm90 6y ago
> Internally, corporations function like centrally planned economies. Well, they try to. But unlike Governments, they don't have access to Departments of economists or planners that can spend all their time looking at the data and deciding the optimal plan. The decisions corporations take is most often based on the whims of its decision makers (senior managers/HOD/VP of X) who will cherry-pick metrics that suits their perspective.
- babesh 6y ago
  The hope is that Darwin will select for the corporations that do this better.
  - notfromhere 6y ago
    Given how few corporations last any significant length of time, it works until it doesn’t.
- olefoo 6y ago
  You seem to think that teams of economists don't cherry pick metrics that suit their perspective.
  - pm90 6y ago
    This is a strange argument. Government departments dedicated to planning are often required to publish their guidance/research publicly making it difficult to get away with cherry-picking metrics. Having a team of professionals who understand the basics of our economic system tackle the problem seems to have a higher probability of success as compared with business leaders who often lack formal training in statistical methods. There are more arguments but this should be enough to prove this false equivalency.

snake_plissken 6y ago

Kind of unrelated but when you mentioned Soviet shoe factories, this scene from HBO's Chernobyl takes on a whole new dimension: https://www.youtube.com/watch?v=idb_qsAAe1c https://www.youtube.com/watch?v=idb_qsAAe1c "I'm a nuclear physicist. Before you were deputy secretary, you worked in a shoe factory." "Yes, I worked in a shoe factory. And now I'm in charge. To the workers of the world."

baryphonic 6y ago
When writing my post, I remembered the miner's joke from the series: > What's as big as a house, burns 20 liters of fuel an hour, puts out a huge amount of smoke and noise, and cuts an apple into three pieces? > A Soviet machine for cutting apples into four pieces.

inglor_cz 6y ago

As someone who grew up in late Communist Czechoslovakia, the regime was absolutely obsessed with production of impressive statistics, especially those of heavy industry. How much steel was produced yearly, how much coal was produced yearly, and how the old bourgeois Czechoslovakia (1918-1939) was so much worse off in comparison. What was NOT trumpeted out loud: * we were seriously behind in production of many consumer goods and in their quality, * some parts of our industry could not compete with Western products on the account of being obsolete - especially electronics.

baryphonic 6y ago
Having never lived in a socialist country, but having seen the effects up close and having read about them extensively, my model of Marxist-Leninist states is that they are basically giant corporations that produce everything and employ everyone within the boundaries of a state. Imagine Walmart, but they produce everything, employ everyone, "Loss Prevention" runs a corporation-wide spying ring (with incentives for turning in your fellow employees), HR has show trials and prisons/camps for anyone who might be causing low worker morale. Management releases quarterly numbers that are extremely rosy, mainly for the benefit of the board (the Politburo or maybe Central Committee) and the shareholders (the Party), though this is mainly to enforce which talking points to discuss; none of them can say anything but disparaging things about the competition (bourgeois capitalist-imperialist states), nor acknowledge any progress they may have achieved. Above all, management wants everyone to know that they are actually a giant family. I'm not sure how far off this is, but socialist propaganda always reminds me of corporate BS I've seen over the course of my career. At least with a corporation, I can leave.
- Viliam1234 6y ago
  Your model is nice, but it is missing one important step: At the beginning of the experiment, all people who were not at the bottom of the company pyramid are shot, and their roles are filled by randomly selected remaining employees. So the company starts with nobody in the management having any idea about anything, and it takes a few decades of trial and error to regain some knowledge about how to run things. In the meanwhile, many employees starve to death. At the end, Wallmart finally regains its former functionality. The management proudly opens the windows that have been locked for decades. On the outside, they see drones flying everywhere, a personal teleport at every street corner, and rockets regularly flying to Mars. In despair, the entire project is abandoned.