Socialist calculation problem

[fakename]

I wanted to post this to see if it will aid someone in their understandings of economics and society and esp. since I’ve never seen this topic mentioned here before:

The calculation problem emerges from socialism but it applies to any practice of central planning.

The problem is that when some objects become inalienable property, then the decisions on how to allocate this property becomes, in a way, operationally meaningless so that you don’t know that the property is allocated well. After all, how can one re-allocate something that is inalienable?

The problem can also be reformulated as the problem of the entrepreneur. A manager of a firm or a bureaucracy theoretically could accumulate enough data to efficiently run his enterprise. But to provide for a household and a state takes more than just good management but also an ability to take risks on future projects. This is something that is impossible to do by just gathering data, rather one must be entrepreneurial but one cannot be entrepreneurial unless he has the ability to risk and lose his property.

This problem essentially produces an economics where owners receive statistics and profits about and from their sales but these data are meaningless viz. financial success (since no real change in ownership ever occurred). The interconnections of buying and selling w/o alienable property may be summed up as a “play” economy.

I hope this proved interesting.

 

[St_Francis]

I wanted to post this to see if it will aid someone in their understandings of economics and society and esp. since I’ve never seen this topic mentioned here before:

The calculation problem emerges from socialism but it applies to any practice of central planning.

The problem is that when some objects become inalienable property, then the decisions on how to allocate this property becomes, in a way, operationally meaningless so that you don’t know that the property is allocated well. After all, how can one re-allocate something that is inalienable?

The problem can also be reformulated as the problem of the entrepreneur. A manager of a firm or a bureaucracy theoretically could accumulate enough data to efficiently run his enterprise. But to provide for a household and a state takes more than just good management but also an ability to take risks on future projects. This is something that is impossible to do by just gathering data, rather one must be entrepreneurial but one cannot be entrepreneurial unless he has the ability to risk and lose his property.

This problem essentially produces an economics where owners receive statistics and profits about and from their sales but these data are meaningless viz. financial success (since no real change in ownership ever occurred). The interconnections of buying and selling w/o alienable property may be summed up as a “play” economy.

I hope this proved interesting.

I think that this is a very interesting point; you seem to be saying that the evaluation of risk is different when one is risking one’s own money and resources than when someone is risking money and resources which are not their own in a consequence-free scenario. Then the “risks” will be taken according not to appropriate economic thinking, but according to the priorities of the source of the consequence-free funds.

In the Soviet Union, for example, it was very difficult to get anything, and yet the people there were all working. People would line up for a block or more when boots came into the store. In a free market, someone would have noticed that and gone into the boot-making business, but because the source of all funding was the centralized government, and the government did not have provision of boots as a priority, the people (in Russia! In the winter!) found it difficult to buy boots.

 

[fakename]

I think that this is a very interesting point; you seem to be saying that the evaluation of risk is different when one is risking one’s own money and resources than when someone is risking money and resources which are not their own in a consequence-free scenario. Then the “risks” will be taken according not to appropriate economic thinking, but according to the priorities of the source of the consequence-free funds.

In the Soviet Union, for example, it was very difficult to get anything, and yet the people there were all working. People would line up for a block or more when boots came into the store. In a free market, someone would have noticed that and gone into the boot-making business, but because the source of all funding was the centralized government, and the government did not have provision of boots as a priority, the people (in Russia! In the winter!) found it difficult to buy boots.

Essentially yes, I think that planning for the future is different from planning for the present.
Indeed, planning for the future can’t even be called “planning”; it’s more of a creative endeavor and as such this planning requires a creative and not a bureaucratic mindset. One can hire bureaucrats that have a businessman-like personality or you may est. incentive pay, and keep track of revenues through good accounting but again, these data and incentives are unchained from real property and so they are truly floating in a nihilistic sea of information.

 

[ACCT]

I think that this is a very interesting point; you seem to be saying that the evaluation of risk is different when one is risking one’s own money and resources than when someone is risking money and resources which are not their own in a consequence-free scenario. Then the “risks” will be taken according not to appropriate economic thinking, but according to the priorities of the source of the consequence-free funds.

In the Soviet Union, for example, it was very difficult to get anything, and yet the people there were all working. People would line up for a block or more when boots came into the store. In a free market, someone would have noticed that and gone into the boot-making business, but because the source of all funding was the centralized government, and the government did not have provision of boots as a priority, the people (in Russia! In the winter!) found it difficult to buy boots.

Yes, incentives matter. Prices, in a free market, transmit information that tells us what to produce and what not to produce. The failure of “public” education is an example of inefficiency and ineffectiveness.

Something as important as education should not be administered by the state. If you cannot see from one end of an organization to the other end, you are already in trouble. Politicians NEVER spend a minute actually experiencing public schools, nor do their children, grandchildren, and yet they are the ones writing flawed policies for public schools.

If we are going to improve the school system, we are going to have to have competition. School vouchers to parents with no strings attached are a step in the right direction.

My wife was a teacher in the public schools and now she is a college professor. We have seen first hand the inflexibility and the stupidity of a school system administered by the state.

“Public schools” are no longer public. These schools are government schools.

 

[fakename]

Yes, incentives matter. Prices, in a free market, transmit information that tells us what to produce and what not to produce. The failure of “public” education is an example of inefficiency and ineffectiveness.

Something as important as education should not be administered by the state. If you cannot see from one end of an organization to the other end, you are already in trouble. Politicians NEVER spend a minute actually experiencing public schools, nor do their children, grandchildren, and yet they are the ones writing flawed policies for public schools.

If we are going to improve the school system, we are going to have to have competition. School vouchers to parents with no strings attached are a step in the right direction.

My wife was a teacher in the public schools and now she is a college professor. We have seen first hand the inflexibility and the stupidity of a school system administered by the state.

“Public schools” are no longer public. These schools are government schools.

It’s not so much that the central planners could not get the requisite information, an economy does not aim to find information; it is not a discoverer of information per se but rather is it a way of finding wealth. To do this an economy needs entrepreneurship and this is not something that is learned or taught or absolutely dependent on data but it is only dependent on the possibility of earning other people’s property and losing your own and being able to anticipate that; it literally makes no sense to speak of earning and losing property when all property is always everyone’s property nor is it sensible to envision the economic problem as an information discovery problem when the very actions of economic agents routinely create new information constantly.

schools should be gov. run IMO (every state needs to impose education needed for that state). But the gov. should make its property alienable so that it can calculate. In a sense, this requires the most localization or privatization of schools.