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The arguments for a centrally planned economy have been empirically disproved numerous times as to make the debate moot. But logically it is so clear: It is im

The arguments for a centrally planned economy have been empirically disproved numerous times as to make the debate moot. But logically it is so clear: It is impossible to assign value to something in any prescribed way, as the value of anything is determined by me. This is why my wedding ring has extremely high value to me, and I would need a lot of money to part with it, well beyond its value as a “generic” gold ring, which is more than its value in atomic gold. You can further extend this to literally anything, but even to commodities, which are theoretically the easiest to assign “value” to as they are fungible. It is a fool’s errand to try and plan an economy, and those who think they can, or believe they are currently doing so in any meaningful way, are mistaken.

frgtpsswrdlame 4y ago
Have they been disproved empirically? I'm well aware of many theoretical arguments against central planning but I'm not aware of empirical work.
- nyolfen 4y ago
  well, it was tried at scale one time, and the economy it produced lasted several decades, but was sclerotic, dependent on resources extracted by compulsion from its imperial periphery, and ended up literally unable to feed itself
  - deleted 4y ago
    [deleted]
  - malermeister 4y ago
    The same could be said, word for word, for capitalism as the United States are currently demonstrating.
    - nyolfen 4y ago
      this is so false i have a hard time believing you actually think this. that said, i strongly encourage you to put your money where your mouth is and invest accordingly!
    - aww_dang 4y ago
      The US isn't laissez-faire. Most proponents of free-markets would point to the current crises and relate them to the central bankers. Interest rates have been centrally planned rather than floating on the market. Banking regulations drive banks to hold treasuries. When new treasuries are issued at a higher rate of interest, the rate of discount for lower (near zero interest) t-bills increases, putting bank balance sheets out of whack.
      - malermeister 4y ago
        This is literally what a socialist would say about the Soviet Union. Not true socialism etc etc
        aww_dang 4y ago
        As flawed as the US economy is, at least there is still something resembling a market price for basics like a loaf of bread. Yes, you can claim that the USSR wasn't the socialist ideal, however moving further from that claimed ideal results in a more productive economy. To the extent that the west is increasingly centrally planned, it has become relatively less productive.
        godelski 4y ago
        Things aren't binary though. No one is saying the US isn't "real capitalism", they are just specifying what type of capitalism it is. But that's a very different than saying there's no true Scotsman. There's a reason one is a fallacy and the other isn't.
    - PrimeMcFly 4y ago
      That would be wrong though. The capitalist economy in the US has lasted literally centuries.
      - malermeister 4y ago
        Centuries are "several decades".
        PrimeMcFly 4y ago
        Sure, but when people say decades they generally mean an amount less than multiple centuries, or they would have said centuries...
        malermeister 4y ago
        True, but it's not wrong as claimed above.
        PrimeMcFly 4y ago
        It is if you consider the meaning that was being communicated and not the technical dictionary definition of words.
  - s3r3nity 4y ago
    > at scale one time Bait? Bait.
- aww_dang 4y ago
  In the Mises canon, the possibility of effective central planning is debunked from first principles. I wouldn't claim that a triangle having three sides is theoretical or empirical, but YMMV.
  - deleted 4y ago
    [deleted]
- asplake 4y ago
  As long ago as the 70s and perhaps earlier, the cybernetics community – people like Ashby, Conant, Beer – might have argued its non-viability (I choose that word deliberately) on information-theoretic grounds. The centre has neither the communication bandwidth nor the predictive power to control things for long.
  - mrkeen 4y ago
    "Google Finds: Centralized Control, Distributed Data Architectures Work Better than Fully Decentralized Architectures" http://highscalability.com/blog/2014/4/7/google-finds-centralized-control-distributed-data-architectu.html http://highscalability.com/blog/2014/4/7/google-finds-centra...
    - asplake 4y ago
      …in computer systems. And I wasn’t arguing for full decentralisation either
striking 4y ago
What about Walmart? Are corporations not their own little centrally planned economies? https://www.goodreads.com/book/show/38914131-the-people-s-republic-of-walmart https://www.goodreads.com/book/show/38914131-the-people-s-re...
- readthenotes1 4y ago
  What about Kmart? Are corporations not their own little centrally planned economies? Or take the something like 90% of restaurants that fail within the first year. Are they not..? You got to talk about the bath water if you want to talk about the baby
  - striking 4y ago
    Capitalist countries fail too. We just had a banking crisis resolved by centralized action. I'm not sure what this means aside from the fact that any poorly managed system fails.
- HDThoreaun 4y ago
  Walmart is literally a market. No one is forcing you to buy things at walmart or work at walmart. No one is telling you which goods you will get and in what quantity. Substituting in the face of scarcity is encouraged on the micro scale. The power of markets is allowing individual consumers to change their consumption habits in the face of scarcity/abundance.
  - cced 4y ago
    Absolute rubbish take. > No one is forcing you to buy things at Walmart When Walmart comes into a small town and uses it’s economies of scale to force smaller stores to shut down because they have the ability to operate at a loss, is this choice? Walmart has a board of executives that decide on the direction of the company, it’s a corporation the performs central planning in order to maximize profits.
    - HDThoreaun 4y ago
zzbzq 4y ago
Only by straw-manning the idea. What you've written there doesn't disprove anything. We've seen in real life that a large corporation can plan a proportion of an economy. What you have to prove, in order to repudiate central planning, is prove that there exists some maximum proportion of an economy that can be planned. And even then, a simple workaround would be to artificially recreate such maximums within the central structure. I think you're just not very imaginative.
- karaterobot 4y ago
  > We've seen in real life that a large corporation can plan a proportion of an economy. What you have to prove, in order to repudiate central planning, is prove that there exists some maximum proportion of an economy that can be planned. If the examples of large corporations planning a proportion of an economy count as an argument for why central planning could work, then surely the examples of actual, centrally-planned economies failing should count as arguments for why they don't. I mean, don't toss out the actual examples for the metaphorical ones.
  - stelonix 4y ago
    You mean examples why they didn't. Just because Starship exploded at launch it does not prove all Starships are going to explode. Likewise, if you have a handful of trials of planned economy it does not imply the whole concept is infeasible. Stating otherwise is fallacious.
    - etrautmann 4y ago
      Ah yes, on the 205th try we'll finally nail this impossibly complex and moving target.
  - assbuttbuttass 4y ago
    The problem with that argument is you have to argue that the USSR failed because of central planning, when the reality is their centrally planned economy succeeded in industrializing a majority-peasant agricultural country, defeating the nazis in world war 2, and launching a man into space. I'm not blind to the many flaws of the soviet union, but it's a bit absurd to point to it as a failure of central planning.
harimau777 4y ago
I'm not a fan of forms of socialism revolving around centrally planned economies; however, it seems to me that we also don't have any reason to believe that a market economy can accurately assign prices. The free market argument that the value of something is equal to it's price seems to me to be begging the question. It's essentially saying "the an object's market price equals it's value because I choose to say that an object's value is it's market price."
- kneebonian 4y ago
  That's pretty much the only real value though is what someone is willing to pay for it. To quote the Prince of Egypt "A lake of gold in the desert sand is less than a cool fresh spring, and to one lost sheep a shepherd boy is greater than the richest king." Ultimately the value of something is what someone is willing to assign to it, nothing has inherent value as far as humanity has been able to determine or agree on, so instead the market allows everyone the freedom to value whatever they would like at whatever they would like. But if you have an alternative way of reconciling the water diamond paradox I'd be interested in hearing it.
  - harimau777 4y ago
    The problem is that the market doesn't actually give people the freedom to price things in accordance with the value it represents to them because people do not start out with equal ability to pay. For example, a rich person may be willing to pay a higher price for a second home even though it is likely less valuable to them then it would be to someone without a home.
    - int_19h 4y ago
      But that is caused by existing economic inequality, not the free market itself. If the rest of your society is organized in ways that e.g. prevent massive unlimited accumulation of wealth, the disparity between what people can afford is much smaller - and then the market can easily be more optimal than any centralized scheme. Indeed, one could argue that capitalism (which explicitly allows for unlimited accumulation of capital) is detrimental to genuinely free markets for this exact reason: https://en.wikipedia.org/wiki/Free-market%20anti-capitalism https://en.wikipedia.org/wiki/Free-market%20anti-capitalism
cced 4y ago
If anyone is interested in learning more about how Walmart uses central planning today, here’s a Youtube video [1] of it (30 mins) I would love for OP to explain why central planning seems to work so well for private businesses but has no such hopes of achieving any success for the public. [1]: https://youtu.be/xuBrGaVhjcI https://youtu.be/xuBrGaVhjcI
- aww_dang 4y ago
  https://mises.org/library/planned-economy-and-economic-planning-what-peoples-republic-walmart-got-wrong-about-nature https://mises.org/library/planned-economy-and-economic-plann...
mrkeen 4y ago
> It is impossible to assign value to something in any prescribed way, as the value of anything is determined by me. It's like Insulin. It may only be worth $5/vial to drug companies, but it's worth $100/vial to consumers who don't want to die.
- kelseyfrog 4y ago
  That's a really good point in the argument that markets for demand-inelastic goods are amoral at best and unethical at worst. We have choices to make when it comes to which economic systems best solve certain problems. Organ donation is a good example we're we've said, "we cannot let a market solve this problem." Are there issues, with it? Sure, but only the extreme among us argue that organ markets would be an improvement. Every market is open to this critique to various degrees.
piloto_ciego 4y ago
I mean, we have not tried it with modern computers… and he Soviets never even got close as the technology to see literally every non-black market transaction has only existed for a decade or so. Not saying I want to live in 1980s style Soviet bureaucracy (or weird modern Chinese mixed system) - but that doesn’t mean we can’t do immeasurably better than those systems. I am not sure “8 billion Turing machines” is intrinsically more efficient or accurate than “one really fast one.” Also, worth mentioning that you would sell your wedding ring in a heartbeat if you needed to pay for food/healthcare/etc. Sentimental value is important you’re right, but in my experience (maybe not yours which is fair) - when the chips are down you do what you have to do to survive. The problem is, in the current system we value human life less and than market equilibrium, and that’s silly. We could feed every starving person on the planet… several times over… but we don’t because it’s not profitable. That’s objectively stupid.
- godelski 4y ago
  > I mean, we have not tried it with modern computers Sure, but considering all the information you'd need to compute (I'd argue we're close but probably not there yet), is this okay? Are there disadvantages to this data collection? Do these downsides outweigh the upsides? I feel like these conversations are so difficult because everyone comes in with certain assumptions, assumes others have them (even if explicitly stated otherwise), or are dismissive of any other concerns. We need to be on the same page to have real conversations.
godelski 4y ago
The article even starts with a bad premise, claiming we have a laissez-faire system. Don't listen to people that binaryize opposing viewpoints: all forms of capitalism are the same. > arguments for a centrally planned economy I actually think we're getting close to a point where a planned economy could be feasible. The problem with planned economies is that the economy is naturally chaotic (small perturbations result in large changes in outcomes). So to do this you need a pretty close eye and measurements of the economy. But looking at this requirement, we have to ask what actually needs to be given up. I'd argue that this is the reason that we should never have a planned economy. The solution space is complex and there are no globally optimal systems, so we need to pick what we care about. If you are about reducing harm from potential tyrants from abusing the population (or some subset) and/or privacy and security from governments (not just your own) then this is absolutely not a path we want to go down. Because high levels of surveillance maximize tyrant's power and maximize potential exploitation by adversarial governments. And there lies the problem. Things that "look good on paper, but don't work in practice" are just things where on paper we haven't been nuanced. It is where on paper we've just had a myopic viewpoint, steamrolling your opinion, not seeking solutions. This is true outside economics and politics, but I think since it is a field that everyone feels qualified participate in and highly encourages blinders. We can't go about solving complex problems this way. We can't solve complex problems pretending all problems are easy and have precise solutions. Life is messy, and so are solutions. So let's talk about what we actually care about and what our actual objectives are before we even attempt to start optimizing. I rarely see any discussion of objectives. It is fine to assume that people just want a strong economy and well off people, but there are many other variables that we either need to concern ourselves with or not, and we can't have these conversations without establishing our premises. They aren't obvious.
antisthenes 4y ago
If you look closely, you'll see that at its core, this is just another Luddite argument. While it's true that a centrally planned economy may not ultimately have the same variety of goods, it's important to understand that a planned economy is not optimizing for that, and that parts of a regular economy (especially parts concerning national defense security and energy security) are already very highly planned) > It is a fool’s errand to try and plan an economy, and those who think they can, or believe they are currently doing so in any meaningful way, are mistaken. So were the people who thought cars couldn't be faster than horses or that computers couldn't beat humans at chess or generate deceptive but believable text output at a level of a 10-year old.
jk20 4y ago
[dead]

frgtpsswrdlame 4y ago

Have they been disproved empirically? I'm well aware of many theoretical arguments against central planning but I'm not aware of empirical work.

nyolfen 4y ago
well, it was tried at scale one time, and the economy it produced lasted several decades, but was sclerotic, dependent on resources extracted by compulsion from its imperial periphery, and ended up literally unable to feed itself
- deleted 4y ago
  [deleted]
- malermeister 4y ago
  The same could be said, word for word, for capitalism as the United States are currently demonstrating.
  - nyolfen 4y ago
    this is so false i have a hard time believing you actually think this. that said, i strongly encourage you to put your money where your mouth is and invest accordingly!
  - aww_dang 4y ago
    The US isn't laissez-faire. Most proponents of free-markets would point to the current crises and relate them to the central bankers. Interest rates have been centrally planned rather than floating on the market. Banking regulations drive banks to hold treasuries. When new treasuries are issued at a higher rate of interest, the rate of discount for lower (near zero interest) t-bills increases, putting bank balance sheets out of whack.
    - malermeister 4y ago
      This is literally what a socialist would say about the Soviet Union. Not true socialism etc etc
      - aww_dang 4y ago
        As flawed as the US economy is, at least there is still something resembling a market price for basics like a loaf of bread. Yes, you can claim that the USSR wasn't the socialist ideal, however moving further from that claimed ideal results in a more productive economy. To the extent that the west is increasingly centrally planned, it has become relatively less productive.
      - godelski 4y ago
        Things aren't binary though. No one is saying the US isn't "real capitalism", they are just specifying what type of capitalism it is. But that's a very different than saying there's no true Scotsman. There's a reason one is a fallacy and the other isn't.
  - PrimeMcFly 4y ago
    That would be wrong though. The capitalist economy in the US has lasted literally centuries.
    - malermeister 4y ago
      Centuries are "several decades".
      - PrimeMcFly 4y ago
        Sure, but when people say decades they generally mean an amount less than multiple centuries, or they would have said centuries...
        malermeister 4y ago
        True, but it's not wrong as claimed above.
        PrimeMcFly 4y ago
        It is if you consider the meaning that was being communicated and not the technical dictionary definition of words.
- s3r3nity 4y ago
  > at scale one time Bait? Bait.
aww_dang 4y ago
In the Mises canon, the possibility of effective central planning is debunked from first principles. I wouldn't claim that a triangle having three sides is theoretical or empirical, but YMMV.
- deleted 4y ago
  [deleted]
asplake 4y ago
As long ago as the 70s and perhaps earlier, the cybernetics community – people like Ashby, Conant, Beer – might have argued its non-viability (I choose that word deliberately) on information-theoretic grounds. The centre has neither the communication bandwidth nor the predictive power to control things for long.
- mrkeen 4y ago
  "Google Finds: Centralized Control, Distributed Data Architectures Work Better than Fully Decentralized Architectures" http://highscalability.com/blog/2014/4/7/google-finds-centralized-control-distributed-data-architectu.html http://highscalability.com/blog/2014/4/7/google-finds-centra...
  - asplake 4y ago
    …in computer systems. And I wasn’t arguing for full decentralisation either

striking 4y ago

What about Walmart? Are corporations not their own little centrally planned economies? https://www.goodreads.com/book/show/38914131-the-people-s-republic-of-walmart https://www.goodreads.com/book/show/38914131-the-people-s-re...

readthenotes1 4y ago
What about Kmart? Are corporations not their own little centrally planned economies? Or take the something like 90% of restaurants that fail within the first year. Are they not..? You got to talk about the bath water if you want to talk about the baby
- striking 4y ago
  Capitalist countries fail too. We just had a banking crisis resolved by centralized action. I'm not sure what this means aside from the fact that any poorly managed system fails.
HDThoreaun 4y ago
Walmart is literally a market. No one is forcing you to buy things at walmart or work at walmart. No one is telling you which goods you will get and in what quantity. Substituting in the face of scarcity is encouraged on the micro scale. The power of markets is allowing individual consumers to change their consumption habits in the face of scarcity/abundance.
- cced 4y ago
  Absolute rubbish take. > No one is forcing you to buy things at Walmart When Walmart comes into a small town and uses it’s economies of scale to force smaller stores to shut down because they have the ability to operate at a loss, is this choice? Walmart has a board of executives that decide on the direction of the company, it’s a corporation the performs central planning in order to maximize profits.
  - HDThoreaun 4y ago

zzbzq 4y ago

Only by straw-manning the idea. What you've written there doesn't disprove anything. We've seen in real life that a large corporation can plan a proportion of an economy. What you have to prove, in order to repudiate central planning, is prove that there exists some maximum proportion of an economy that can be planned. And even then, a simple workaround would be to artificially recreate such maximums within the central structure. I think you're just not very imaginative.

karaterobot 4y ago
> We've seen in real life that a large corporation can plan a proportion of an economy. What you have to prove, in order to repudiate central planning, is prove that there exists some maximum proportion of an economy that can be planned. If the examples of large corporations planning a proportion of an economy count as an argument for why central planning could work, then surely the examples of actual, centrally-planned economies failing should count as arguments for why they don't. I mean, don't toss out the actual examples for the metaphorical ones.
- stelonix 4y ago
  You mean examples why they didn't. Just because Starship exploded at launch it does not prove all Starships are going to explode. Likewise, if you have a handful of trials of planned economy it does not imply the whole concept is infeasible. Stating otherwise is fallacious.
  - etrautmann 4y ago
    Ah yes, on the 205th try we'll finally nail this impossibly complex and moving target.
- assbuttbuttass 4y ago
  The problem with that argument is you have to argue that the USSR failed because of central planning, when the reality is their centrally planned economy succeeded in industrializing a majority-peasant agricultural country, defeating the nazis in world war 2, and launching a man into space. I'm not blind to the many flaws of the soviet union, but it's a bit absurd to point to it as a failure of central planning.

harimau777 4y ago

I'm not a fan of forms of socialism revolving around centrally planned economies; however, it seems to me that we also don't have any reason to believe that a market economy can accurately assign prices. The free market argument that the value of something is equal to it's price seems to me to be begging the question. It's essentially saying "the an object's market price equals it's value because I choose to say that an object's value is it's market price."

kneebonian 4y ago
That's pretty much the only real value though is what someone is willing to pay for it. To quote the Prince of Egypt "A lake of gold in the desert sand is less than a cool fresh spring, and to one lost sheep a shepherd boy is greater than the richest king." Ultimately the value of something is what someone is willing to assign to it, nothing has inherent value as far as humanity has been able to determine or agree on, so instead the market allows everyone the freedom to value whatever they would like at whatever they would like. But if you have an alternative way of reconciling the water diamond paradox I'd be interested in hearing it.
- harimau777 4y ago
  The problem is that the market doesn't actually give people the freedom to price things in accordance with the value it represents to them because people do not start out with equal ability to pay. For example, a rich person may be willing to pay a higher price for a second home even though it is likely less valuable to them then it would be to someone without a home.
  - int_19h 4y ago
    But that is caused by existing economic inequality, not the free market itself. If the rest of your society is organized in ways that e.g. prevent massive unlimited accumulation of wealth, the disparity between what people can afford is much smaller - and then the market can easily be more optimal than any centralized scheme. Indeed, one could argue that capitalism (which explicitly allows for unlimited accumulation of capital) is detrimental to genuinely free markets for this exact reason: https://en.wikipedia.org/wiki/Free-market%20anti-capitalism https://en.wikipedia.org/wiki/Free-market%20anti-capitalism

cced 4y ago

If anyone is interested in learning more about how Walmart uses central planning today, here’s a Youtube video [1] of it (30 mins) I would love for OP to explain why central planning seems to work so well for private businesses but has no such hopes of achieving any success for the public. [1]: https://youtu.be/xuBrGaVhjcI https://youtu.be/xuBrGaVhjcI

aww_dang 4y ago
https://mises.org/library/planned-economy-and-economic-planning-what-peoples-republic-walmart-got-wrong-about-nature https://mises.org/library/planned-economy-and-economic-plann...

mrkeen 4y ago

> It is impossible to assign value to something in any prescribed way, as the value of anything is determined by me. It's like Insulin. It may only be worth $5/vial to drug companies, but it's worth $100/vial to consumers who don't want to die.

kelseyfrog 4y ago
That's a really good point in the argument that markets for demand-inelastic goods are amoral at best and unethical at worst. We have choices to make when it comes to which economic systems best solve certain problems. Organ donation is a good example we're we've said, "we cannot let a market solve this problem." Are there issues, with it? Sure, but only the extreme among us argue that organ markets would be an improvement. Every market is open to this critique to various degrees.

piloto_ciego 4y ago

I mean, we have not tried it with modern computers… and he Soviets never even got close as the technology to see literally every non-black market transaction has only existed for a decade or so. Not saying I want to live in 1980s style Soviet bureaucracy (or weird modern Chinese mixed system) - but that doesn’t mean we can’t do immeasurably better than those systems. I am not sure “8 billion Turing machines” is intrinsically more efficient or accurate than “one really fast one.” Also, worth mentioning that you would sell your wedding ring in a heartbeat if you needed to pay for food/healthcare/etc. Sentimental value is important you’re right, but in my experience (maybe not yours which is fair) - when the chips are down you do what you have to do to survive. The problem is, in the current system we value human life less and than market equilibrium, and that’s silly. We could feed every starving person on the planet… several times over… but we don’t because it’s not profitable. That’s objectively stupid.

godelski 4y ago
> I mean, we have not tried it with modern computers Sure, but considering all the information you'd need to compute (I'd argue we're close but probably not there yet), is this okay? Are there disadvantages to this data collection? Do these downsides outweigh the upsides? I feel like these conversations are so difficult because everyone comes in with certain assumptions, assumes others have them (even if explicitly stated otherwise), or are dismissive of any other concerns. We need to be on the same page to have real conversations.

godelski 4y ago

The article even starts with a bad premise, claiming we have a laissez-faire system. Don't listen to people that binaryize opposing viewpoints: all forms of capitalism are the same. > arguments for a centrally planned economy I actually think we're getting close to a point where a planned economy could be feasible. The problem with planned economies is that the economy is naturally chaotic (small perturbations result in large changes in outcomes). So to do this you need a pretty close eye and measurements of the economy. But looking at this requirement, we have to ask what actually needs to be given up. I'd argue that this is the reason that we should never have a planned economy. The solution space is complex and there are no globally optimal systems, so we need to pick what we care about. If you are about reducing harm from potential tyrants from abusing the population (or some subset) and/or privacy and security from governments (not just your own) then this is absolutely not a path we want to go down. Because high levels of surveillance maximize tyrant's power and maximize potential exploitation by adversarial governments. And there lies the problem. Things that "look good on paper, but don't work in practice" are just things where on paper we haven't been nuanced. It is where on paper we've just had a myopic viewpoint, steamrolling your opinion, not seeking solutions. This is true outside economics and politics, but I think since it is a field that everyone feels qualified participate in and highly encourages blinders. We can't go about solving complex problems this way. We can't solve complex problems pretending all problems are easy and have precise solutions. Life is messy, and so are solutions. So let's talk about what we actually care about and what our actual objectives are before we even attempt to start optimizing. I rarely see any discussion of objectives. It is fine to assume that people just want a strong economy and well off people, but there are many other variables that we either need to concern ourselves with or not, and we can't have these conversations without establishing our premises. They aren't obvious.

antisthenes 4y ago

If you look closely, you'll see that at its core, this is just another Luddite argument. While it's true that a centrally planned economy may not ultimately have the same variety of goods, it's important to understand that a planned economy is not optimizing for that, and that parts of a regular economy (especially parts concerning national defense security and energy security) are already very highly planned) > It is a fool’s errand to try and plan an economy, and those who think they can, or believe they are currently doing so in any meaningful way, are mistaken. So were the people who thought cars couldn't be faster than horses or that computers couldn't beat humans at chess or generate deceptive but believable text output at a level of a 10-year old.

jk20 4y ago

[dead]