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The interview is interesting from the perspective of economic history because it reveals the prevailing thinking of the era; namely that capitalism leads to "a

The interview is interesting from the perspective of economic history because it reveals the prevailing thinking of the era; namely that capitalism leads to "anarchy" in production. What Stalin and others did not appreciate is that the free market produces a "hidden order", which was understood by many 18th and 19th century economists. Another major error of the era was the belief that central planning of an economy - socialism - could replace capitalism. There was a major debate at the time, now known as the economic calculation debate[1], between socialist economists Harold Laski and Oscar Lange on the one hand and liberal economists Ludwig von Mises and Friedrich von Hayek on the other. In the 20's Mises had made the stunning argument that allocation of capital was impossible without the price function that is inherent to the capitalist system[2]. Laski and Lange obviously disagreed and provided the socialist counter argument. It was many years later, after the fall of the Soviet Union, that socialist philosopher and historian Robert Heilbroner admitted in the New Yorker "It turns out, of course, that Mises was right. The Soviet system has long been dogged by a method of pricing that produced grotesque misallocations of effort".[3] Still, many do not understand or appreciate the importance of economic calculation and the price function in the rational allocation of capital, which has implications not only for states, but for corporations[4]. [1] http://en.wikipedia.org/wiki/Economic_calculation_problem http://en.wikipedia.org/wiki/Economic_calculation_problem [2] https://mises.org/econcalc.asp https://mises.org/econcalc.asp [3] Reflections after communism, Robert Heilbroner (apologies to those without a subscription) http://www.newyorker.com/archive/1990/09/10/1990_09_10_091_TNY_CARDS_000357236 http://www.newyorker.com/archive/1990/09/10/1990_09_10_091_T... [4] http://mises.org/journals/rae/pdf/rae9_2_1.pdf http://mises.org/journals/rae/pdf/rae9_2_1.pdf

pessimizer 13y ago
Your claims are a lot more controversial than you're making them appear. It's intellectually dishonest to present them as settled fact.
- forrealx 13y ago
  Hardly. If you suppress overt pricing system, hidden ones always emerges. Usually, they're based on "favors" and "threats." Of course, they're a lot less effective and far more dangerous since they're dictated by, and subject to, the whims of the socialists. "Women also submitted to Beria's sexual advances in exchange for the promise of freeing their relatives from the Gulag. In one case, Beria picked up Tatiana Okunevskaya - a well-known Soviet actress - under the pretence of bringing her to perform for the Politburo. Instead he took her to his dacha where he offered to free her father and grandmother from NKVD prison if she submitted. He then raped her telling her 'scream or not, doesn't matter.' Yet Beria already knew her relatives had been executed months earlier. Okunevskaya was arrested shortly afterwards and sentenced to solitary confinement in the Gulag, from which she survived." http://en.wikipedia.org/wiki/Lavrentiy_Beria http://en.wikipedia.org/wiki/Lavrentiy_Beria
rplacd 13y ago
If you don't mind a parenthetical point, I'd argue that Marx's specific analyses and the precise names stuck to them are too limiting at this point - or at least I'm convinced you've conflated two properties that someone pointed out a while ago would make debate considerably more productive (by virtue, I suppose, of making the "heterodox" double-qualifier idelogies suddenly more motivated) when separated - the degree to which ownership and control of the means of production are centralized; and the precise ownership described in the terms of some separate dichotomy. Your point would prescribe for the first - but "socialism" as a name I'd claim has accreted and been recast to the extent that some synthetic history in which the limited-liability company is replaced with the cooperative would be called "market socialist" by last-generation Soviet nomenklatura, and yet "social-democratic and cooperativist" by the Co-operative Party that by agreement constitutes a curiously significant amount of British Labour (and hence the use of a name.) That's neither to argue, though, that the two are a mile and a half away: you're right to say that it did once imply both, and that in past contexts (or that's my impression of Western European economic reform post-World War II) it was overbearing as a trend no matter how the actual distribution of control could be construed. (Edited for spelling correction, the contextualization at the end, and the note about how overt signs of association affect self-appropriation of names...)
dang 13y ago
This counts as an ideological tangent, and therefore off-topic. There is no meaningful path from this article to Austrian economics. Edit: Perhaps this needs more explanation. "Stalin -> communism -> capitalism -> Austrians" is not a meaningful path, because there's nothing specific about it, nothing to tie it to this particular story. It merely uses the story as a launching pad to jump straight into a perennial ideological debate, which—if it continues—is likely to drown out any nuanced conversation that really is relevant to the article.
- philwelch 13y ago
  If you're serious about not letting every story dissolve into the same tedious arguments we've seen for the past few years, I would be so happy.
  - dang 13y ago
    Definitely serious, and interested in your suggestions re how.
    - philwelch 12y ago
      I got your email. It'll be awhile before I have the time to compose my thoughts on the issue.
- arve456 13y ago
  Yes, there is a specific path. One of the major themes of the interview is how socialism is efficient (and the future)", "capitalism leads to chaos" that may seem foreign to a lot of people now because pretty much no one believes in it anymore. At the time of the interview, a lot of people did[1]. Every econ 101 book (from high school/university) I've had refers to the debate about the economic calculation problem, and they're pretty clear about which side was right. This is not some "perennial ideological debate" anymore, but an interesting and very important historical development. You messed up here. The relevance of the economic calculation problem should be obvious, and is not more ideological than the top comment of this post. [1] Wells: "Recently I was dining with the Royal Society, our great English scientific society. The President’s speech was a speech for social planning and scientific control. Thirty years ago, they would not have listened to what I say to them now. Today, the man at the head of the Royal Society holds revolutionary views, and insists on the scientific reorganisation of human society. Your class-war propaganda has not kept pace with these facts. Mentality changes."
firstOrder 13y ago
This interview took part when the economy in the UK and USA had hit the skids, while the USSR's economy was chugging along like gangbusters. In fact, a significant number of English and west European workers moved to the USSR to work since there was a labor shortage. American firms went there as well. Whatever the economists were talking about, the US had just started to change to an incredibly centralized, semi-planned economy based on military spending as well as things like the NSF. The US is still like this, the military budget is over half a trillion a year, and the brass has been publicly begging Congress for decades now to not make so useless tanks and such. It is a job and research program, it in/directly financed the transistor and IC and microprocessor, it created the Internet and so forth. Under Stalin the USSR's economy was doing great. Khrushchev made a lot of changes, and problems began cropping up (bread shortages, less capital spending etc.) You can't make a comparison with the US as an unplanned economy, since this was the beginning to changing it to a semi-planned economy with a (conservatively) $600 billion a year "military" budget. You can't say Stalin's economic policies failed, as they were successful under himself, and Khrushchev majorly changed them in the same way FDR changed the US policies. Also the price argument is tautological and not falsifiable. Something is valuable because something is valuable. Let us say that Bitcoin is a giant Ponzi scheme (which it is), a $6 billion bogus market cap of worthless hashes. In fact it was a $14 billion market cap four months ago, now $6 billion. Is all the equipment buys, and wasted electricity and so forth a rational allocation of capital? Couldn't it be better used to make something useful? Well it's a rational allocation because of the price which makes it rational which points to the price. It's a circular, tautological, unfalsifiable argument. When Bitcoin's market cap crashes below $1 billion, and then lower, the price argument you mention won't have its defenders admit they're wrong because it is tautological.
- BugBrother 13y ago
  I got a bit of cognitive dissonance here. But I guess it connects, in a way. >> Under Stalin the USSR's economy was doing great. Khrushchev made a lot of changes, and problems began cropping up OK, this was in the middle of the great depression in USA/Europe -- while Soviet had tens of millions of dead/prisoners (hunger, political executions, camps, etc) in the 1930s. So I can believe there was a lack of workers and lots of jobs in Soviet... :-) And since many of the new immigrants (some from Sweden) were executed and put in camps, the lack of workers would continue... From a strict economic perspective, if not humanitarian, I guess that could be called "great"? In a similar way that the Nazi Germany had "great" revenues from stealing murdered/fleeing jews' belongings. (The discussion of markets and valuation I leave for economists, they've been discussing that a long time. I tend to think the capitalist method is less bad than the alternatives I've ever heard of, even despite the bubbles ever two decades.)

pessimizer 13y ago

Your claims are a lot more controversial than you're making them appear. It's intellectually dishonest to present them as settled fact.

forrealx 13y ago
Hardly. If you suppress overt pricing system, hidden ones always emerges. Usually, they're based on "favors" and "threats." Of course, they're a lot less effective and far more dangerous since they're dictated by, and subject to, the whims of the socialists. "Women also submitted to Beria's sexual advances in exchange for the promise of freeing their relatives from the Gulag. In one case, Beria picked up Tatiana Okunevskaya - a well-known Soviet actress - under the pretence of bringing her to perform for the Politburo. Instead he took her to his dacha where he offered to free her father and grandmother from NKVD prison if she submitted. He then raped her telling her 'scream or not, doesn't matter.' Yet Beria already knew her relatives had been executed months earlier. Okunevskaya was arrested shortly afterwards and sentenced to solitary confinement in the Gulag, from which she survived." http://en.wikipedia.org/wiki/Lavrentiy_Beria http://en.wikipedia.org/wiki/Lavrentiy_Beria

rplacd 13y ago

If you don't mind a parenthetical point, I'd argue that Marx's specific analyses and the precise names stuck to them are too limiting at this point - or at least I'm convinced you've conflated two properties that someone pointed out a while ago would make debate considerably more productive (by virtue, I suppose, of making the "heterodox" double-qualifier idelogies suddenly more motivated) when separated - the degree to which ownership and control of the means of production are centralized; and the precise ownership described in the terms of some separate dichotomy. Your point would prescribe for the first - but "socialism" as a name I'd claim has accreted and been recast to the extent that some synthetic history in which the limited-liability company is replaced with the cooperative would be called "market socialist" by last-generation Soviet nomenklatura, and yet "social-democratic and cooperativist" by the Co-operative Party that by agreement constitutes a curiously significant amount of British Labour (and hence the use of a name.) That's neither to argue, though, that the two are a mile and a half away: you're right to say that it did once imply both, and that in past contexts (or that's my impression of Western European economic reform post-World War II) it was overbearing as a trend no matter how the actual distribution of control could be construed. (Edited for spelling correction, the contextualization at the end, and the note about how overt signs of association affect self-appropriation of names...)

dang 13y ago

This counts as an ideological tangent, and therefore off-topic. There is no meaningful path from this article to Austrian economics. Edit: Perhaps this needs more explanation. "Stalin -> communism -> capitalism -> Austrians" is not a meaningful path, because there's nothing specific about it, nothing to tie it to this particular story. It merely uses the story as a launching pad to jump straight into a perennial ideological debate, which—if it continues—is likely to drown out any nuanced conversation that really is relevant to the article.

philwelch 13y ago
If you're serious about not letting every story dissolve into the same tedious arguments we've seen for the past few years, I would be so happy.
- dang 13y ago
  Definitely serious, and interested in your suggestions re how.
  - philwelch 12y ago
    I got your email. It'll be awhile before I have the time to compose my thoughts on the issue.
arve456 13y ago
Yes, there is a specific path. One of the major themes of the interview is how socialism is efficient (and the future)", "capitalism leads to chaos" that may seem foreign to a lot of people now because pretty much no one believes in it anymore. At the time of the interview, a lot of people did[1]. Every econ 101 book (from high school/university) I've had refers to the debate about the economic calculation problem, and they're pretty clear about which side was right. This is not some "perennial ideological debate" anymore, but an interesting and very important historical development. You messed up here. The relevance of the economic calculation problem should be obvious, and is not more ideological than the top comment of this post. [1] Wells: "Recently I was dining with the Royal Society, our great English scientific society. The President’s speech was a speech for social planning and scientific control. Thirty years ago, they would not have listened to what I say to them now. Today, the man at the head of the Royal Society holds revolutionary views, and insists on the scientific reorganisation of human society. Your class-war propaganda has not kept pace with these facts. Mentality changes."

firstOrder 13y ago

This interview took part when the economy in the UK and USA had hit the skids, while the USSR's economy was chugging along like gangbusters. In fact, a significant number of English and west European workers moved to the USSR to work since there was a labor shortage. American firms went there as well. Whatever the economists were talking about, the US had just started to change to an incredibly centralized, semi-planned economy based on military spending as well as things like the NSF. The US is still like this, the military budget is over half a trillion a year, and the brass has been publicly begging Congress for decades now to not make so useless tanks and such. It is a job and research program, it in/directly financed the transistor and IC and microprocessor, it created the Internet and so forth. Under Stalin the USSR's economy was doing great. Khrushchev made a lot of changes, and problems began cropping up (bread shortages, less capital spending etc.) You can't make a comparison with the US as an unplanned economy, since this was the beginning to changing it to a semi-planned economy with a (conservatively) $600 billion a year "military" budget. You can't say Stalin's economic policies failed, as they were successful under himself, and Khrushchev majorly changed them in the same way FDR changed the US policies. Also the price argument is tautological and not falsifiable. Something is valuable because something is valuable. Let us say that Bitcoin is a giant Ponzi scheme (which it is), a $6 billion bogus market cap of worthless hashes. In fact it was a $14 billion market cap four months ago, now $6 billion. Is all the equipment buys, and wasted electricity and so forth a rational allocation of capital? Couldn't it be better used to make something useful? Well it's a rational allocation because of the price which makes it rational which points to the price. It's a circular, tautological, unfalsifiable argument. When Bitcoin's market cap crashes below $1 billion, and then lower, the price argument you mention won't have its defenders admit they're wrong because it is tautological.

BugBrother 13y ago
I got a bit of cognitive dissonance here. But I guess it connects, in a way. >> Under Stalin the USSR's economy was doing great. Khrushchev made a lot of changes, and problems began cropping up OK, this was in the middle of the great depression in USA/Europe -- while Soviet had tens of millions of dead/prisoners (hunger, political executions, camps, etc) in the 1930s. So I can believe there was a lack of workers and lots of jobs in Soviet... :-) And since many of the new immigrants (some from Sweden) were executed and put in camps, the lack of workers would continue... From a strict economic perspective, if not humanitarian, I guess that could be called "great"? In a similar way that the Nazi Germany had "great" revenues from stealing murdered/fleeing jews' belongings. (The discussion of markets and valuation I leave for economists, they've been discussing that a long time. I tend to think the capitalist method is less bad than the alternatives I've ever heard of, even despite the bubbles ever two decades.)