14 ms·

That''s a very classic view, from an era when market-based systems vs. central planning were a big issue. They missed so much. - Just because there are restori

That''s a very classic view, from an era when market-based systems vs. central planning were a big issue. They missed so much. - Just because there are restoring forces doesn't mean stability is reached. This is basic control theory, but it escaped economists for a long time. There's always nonzero lag. Often there's a lot of lag. This can move things out of the stable region. - There's an assumption here that a market economy is a competitive market economy. This breaks down when the number of major players in a market is small. Or somebody has a "moat". Read Thiel's "Zero to One". - Hayek was writing in an era when manufacturing dominated, production cost exceeded marketing cost, and the size of companies was limited by inefficiencies in coordinating a really large organization. Those constraints favor a market economy. Today, services dominate, marketing often costs more than production (which means most of the cost is advertising), and computing has made it possible to scale companies to planetary scale without organizational collapse. Those factors favor sheer scale.

Terr_ 2y ago
> There's an assumption here that a market economy is a competitive market economy. Aside, there's also a fundamental trade-off been a competitive market and a market where individual actors have freedom. For example, one model may assume that everyone has perfect price information and therefore the market is very efficient, while another assumes that everyone can make secret deals and keep prices hidden and therefore cartels are unstable.
dh77l 2y ago
Well Collapse almost happened in 2008. Useful exercise is to play out what would have happened if the banks werent bailed out. And again just last year everyone got fully bailed out when SVB collapsed. This type of stuff encourages all kinds of halucinations.
DiscourseFan 2y ago
>computing has made it possible to scale companies to planetary scale without organizational collapse I wonder. Say we had various factories for producing goods around the world, and different factories requested the same inputs in different amounts. An algorithm could probably calculate how much of each input it should distribute to those factories. However, the structure of this economy still relies on the commodity form, since those inputs would almost certainly be worked in a certain, standardized way to be properly organized by the algorithm properly. Therefore, the computerization of the economy only leads to an image of the kind of unrestrained productivity you might imagine technology would bring, but lacks the kind of creativity necessary for it. This is all to say that if not the market, then whatever else could've managed an incomprehensibly complex economy certainly existed before contemporary computers (and certainly, the structure of the economy in even the 19th century in early high capitalism itself was the "computer," the quantitative management of social forces). Its not as if our era, today, is particularly unique, or that Hayek was right then or wrong now, but rather that he was fundamentally wrong to believe that the market itself was the path to freedom, even then.
- Animats 2y ago
  > Say we had various factories for producing goods around the world, and different factories requested the same inputs in different amounts. An algorithm could probably calculate how much of each input it should distribute to those factories. That's a manufacturing planning system. Each product has a bill of materials, and all those parts have to be present before the product is assembled. Factories which make many similar products either have to have very good systems to get all the parts in the right place at the right time, or carry excessive inventories. It's not a market-based system. The main goal is minimizing stalls, where production stops due to lack of a part. The cost of stalls usually dominates the cost of the parts, because revenue is zero until the product is complete.
  - DiscourseFan 2y ago
    Yes but the standardization of inputs and the optimization of revenue present us with a market rather than a more free form of creative development. The kind of production that such standardization allows is extremely limited formally.

Terr_ 2y ago

> There's an assumption here that a market economy is a competitive market economy. Aside, there's also a fundamental trade-off been a competitive market and a market where individual actors have freedom. For example, one model may assume that everyone has perfect price information and therefore the market is very efficient, while another assumes that everyone can make secret deals and keep prices hidden and therefore cartels are unstable.

dh77l 2y ago

Well Collapse almost happened in 2008. Useful exercise is to play out what would have happened if the banks werent bailed out. And again just last year everyone got fully bailed out when SVB collapsed. This type of stuff encourages all kinds of halucinations.

DiscourseFan 2y ago

>computing has made it possible to scale companies to planetary scale without organizational collapse I wonder. Say we had various factories for producing goods around the world, and different factories requested the same inputs in different amounts. An algorithm could probably calculate how much of each input it should distribute to those factories. However, the structure of this economy still relies on the commodity form, since those inputs would almost certainly be worked in a certain, standardized way to be properly organized by the algorithm properly. Therefore, the computerization of the economy only leads to an image of the kind of unrestrained productivity you might imagine technology would bring, but lacks the kind of creativity necessary for it. This is all to say that if not the market, then whatever else could've managed an incomprehensibly complex economy certainly existed before contemporary computers (and certainly, the structure of the economy in even the 19th century in early high capitalism itself was the "computer," the quantitative management of social forces). Its not as if our era, today, is particularly unique, or that Hayek was right then or wrong now, but rather that he was fundamentally wrong to believe that the market itself was the path to freedom, even then.

Animats 2y ago
> Say we had various factories for producing goods around the world, and different factories requested the same inputs in different amounts. An algorithm could probably calculate how much of each input it should distribute to those factories. That's a manufacturing planning system. Each product has a bill of materials, and all those parts have to be present before the product is assembled. Factories which make many similar products either have to have very good systems to get all the parts in the right place at the right time, or carry excessive inventories. It's not a market-based system. The main goal is minimizing stalls, where production stops due to lack of a part. The cost of stalls usually dominates the cost of the parts, because revenue is zero until the product is complete.
- DiscourseFan 2y ago
  Yes but the standardization of inputs and the optimization of revenue present us with a market rather than a more free form of creative development. The kind of production that such standardization allows is extremely limited formally.