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I do think planned economies generally fail though - capitalism (meaning the process of letting individual agents decide on resource allocation) is a very power
by notfish 4y ago
I do think planned economies generally fail though - capitalism (meaning the process of letting individual agents decide on resource allocation) is a very powerful tool for optimizing something, and trying to centralize that decision making requires way more processing power. There’s just a huge amount of parallelizability here that you miss out on by having the government try to do allocation.
Don’t take this as me saying unregulated capitalism works even a little bit, you definitely need someone in charge of operating that tool or you end up in our current mess.
- pjscott 4y agoThe core problem here is not processing power but information: often a central planner just doesn't know what people want or need, and can't realistically get that knowledge out of their brains without using something like a price system. To make this intuitive, consider a farmer with unpleasantly acidic soil. In a centrally planned economy, that farmer had better hope that the central planners know about the local soil conditions and allocated some lime for adjusting the pH. In a less planned economy, it'll be in stock at a local store because farmers in the area buy it frequently.
- astrange 4y agoCentral planning attempts did lead to some useful research though; the decentralized planning that enables, say, grocery stores is based on this. (Some of this was invented by Soviet mathematicians like Leonod Khachiyan, whose children now do useful(?) things like run ironic post-Marxist NYC podcasts.)