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What I find surprising is that a Soviet style state run economy has not proven to be more successful. By exercising central control they should have been able t

What I find surprising is that a Soviet style state run economy has not proven to be more successful. By exercising central control they should have been able to drastically reduce the number of variables and with sufficiently sophisticated planning maybe eventually gained a competitive advantage. I guess unfortunately it collapsed before the advent of powerful enough computer systems.

trhway 12y ago
North Korea has access to modern computers, yet people there are starving. >By exercising central control they should have been able to drastically reduce people's entrepreneural activity as well as overall productivity. (note: i was born and grew up in USSR)
magoghm 12y ago
I don't think there ever will be a computer powerful enough to solve such a large scale planning problem. On top of that, I don't think it is even possible to get the data for it. Each person has his own personal "utility function" which he is trying to maximize and it is locked inside his brain.
- deleted 12y ago
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- ArkyBeagle 12y ago
  It may be dated, but some writers and economists hold that people aren't even consciously aware of their own preferences. So even if you could gather the data from what people way they want, there would still be error. One of the most colorful examples of this comes not from economics, but a strange book on advertising called "The Hidden Persuaders". It also talks about erotic images airbrushed into the ice cubes of whiskey ads :) When I'd first heard of "Mad Men", I'd hoped it would be about that, but it wasn't.
  - magoghm 12y ago
    Yes. That's exactly what I meant when I wrote "locked inside his brain".
random666 12y ago
The thing is centralized economy planning can never be the most efficient solution, no matter how powerful computer systems. The economy consists of individuals who drive supply and demand. They know best what they need and that's a simple and elegant solution. I don't understand why even try to centrally plan the economy. It's stupid and doesn't make sense. Even if it was possible it would require resources to centrally run it. There would be no competitive edge because the economy is based on the people who participate in it. The information is already out there. It's publicly accessible. Centrally planning it would create an unnecessary middleman and break the perfect solution. edit: clarification.
ArkyBeagle 12y ago
Look into the "Knowledge Problem". It's all very strange, and the naive first blush is that you'd be right. Turns out not to be true. One version of the theory states that price information is just that - information - and you can't replace that with even excellent planning. You could call China a hybrid of a planned/free economy, but as it's moved more to something akin to free markets, wealth has gone up, especially for the poorest there. This may be as close to an experiment as we can get in economics. Chinese Communism was never quite Soviet style Communism, but the results begin to look suspiciously like data.
squids 12y ago
You say it wasn't successful but they industrialised to an extent that they were one of the dominant superpowers within a generation. Aside from China, another planned economy I can't think of any other examples of that pace of economic development.

trhway 12y ago

North Korea has access to modern computers, yet people there are starving. >By exercising central control they should have been able to drastically reduce people's entrepreneural activity as well as overall productivity. (note: i was born and grew up in USSR)

magoghm 12y ago

I don't think there ever will be a computer powerful enough to solve such a large scale planning problem. On top of that, I don't think it is even possible to get the data for it. Each person has his own personal "utility function" which he is trying to maximize and it is locked inside his brain.

deleted 12y ago
[deleted]
ArkyBeagle 12y ago
It may be dated, but some writers and economists hold that people aren't even consciously aware of their own preferences. So even if you could gather the data from what people way they want, there would still be error. One of the most colorful examples of this comes not from economics, but a strange book on advertising called "The Hidden Persuaders". It also talks about erotic images airbrushed into the ice cubes of whiskey ads :) When I'd first heard of "Mad Men", I'd hoped it would be about that, but it wasn't.
- magoghm 12y ago
  Yes. That's exactly what I meant when I wrote "locked inside his brain".

random666 12y ago

The thing is centralized economy planning can never be the most efficient solution, no matter how powerful computer systems. The economy consists of individuals who drive supply and demand. They know best what they need and that's a simple and elegant solution. I don't understand why even try to centrally plan the economy. It's stupid and doesn't make sense. Even if it was possible it would require resources to centrally run it. There would be no competitive edge because the economy is based on the people who participate in it. The information is already out there. It's publicly accessible. Centrally planning it would create an unnecessary middleman and break the perfect solution. edit: clarification.

ArkyBeagle 12y ago

Look into the "Knowledge Problem". It's all very strange, and the naive first blush is that you'd be right. Turns out not to be true. One version of the theory states that price information is just that - information - and you can't replace that with even excellent planning. You could call China a hybrid of a planned/free economy, but as it's moved more to something akin to free markets, wealth has gone up, especially for the poorest there. This may be as close to an experiment as we can get in economics. Chinese Communism was never quite Soviet style Communism, but the results begin to look suspiciously like data.

squids 12y ago

You say it wasn't successful but they industrialised to an extent that they were one of the dominant superpowers within a generation. Aside from China, another planned economy I can't think of any other examples of that pace of economic development.