I still don’t quite understand how the calculation problem makes a socialist system absolutely unrealizable. Say 10 people start a society on an uninhabited tropical island. One of them is the despot. He declares that 7 people will run a beet farm to provide the food, 2 will be handymen making simple shelters out of sticks and leaves, and the despot will just eat the food and give orders. Does the calculation problem prevent that from working?
If not, why can’t that be scaled up? You have half a million people running farms, and some more building shelters, and of course a decent-sized bureaucracy overseeing it all.
The way I see it, the calculation problem really only becomes intractable if you insist on people actually having something resembling a standard of living. Once you start dealing with commodities, that’s when combinatorial explosion sets in and there’s simply no way to organize the whole affair centrally.
But what if the rulers don’t give a damn about standard of living? What if they just get off on power and that’s enough for them? In Orwell’s 1984, it was mentioned that the standard of living was crap compared to before the revolution, but the rulers just didn’t give a damn.
The measure of economic success is how well you’re meeting consumer demand. What you’re saying (just make broad assumptions and make them happen) is like telling a blindfolded man with a gun to shoot in a certain target and then applaud if any of his bullets hit. Yeah, some will hit. It won’t totally kill everybody. But why would you advocate this? Take off the blindfold.
“The measure of economic success is how well you’re meeting consumer demand. What you’re saying (just make broad assumptions and make them happen) is like telling a blindfolded man with a gun to shoot in a certain target and then applaud if any of his bullets hit. Yeah, some will hit. It won’t totally kill everybody. But why would you advocate this? Take off the blindfold.”
I don’t think he is advocating this. I think he is just asking a simple question.
I’m not advocating this, obviously. I just think it provides a possible counterexample to Mises’ assertion that there cannot possibly be any social order under a socialist economy, due to the calculation problem. Seems to me that in a sufficiently minimalist economy, the calculation problem ceases to be a problem, in much the same way an “intractable” algorithm becomes tractable with a small enough number of inputs.
Again, please don’t mistake this for advocacy; it’s merely a thought experiment.
The reason socialism works better with a few people who live near each other than in a country with millions of people is because information can be sent more easily and more pricisely. You can know what are each person’s needs because you can just ask them. Also, such a society would have a primitive industry because there’s not much of a division of labor and specialization. That would mean that there are fewer decisions to make and things to consider.
I don’t think anyone’s claiming that a socialist government can’t just order resources around the economy after making some arbitrary decision, but that’s the point, in any such example, the allocation of resources is arbitrary and without regard to the subjective preferences of individuals, hence the calculation problem.
That’s not the kind of economic society Mises was talking about. Primitive living of 10 people wasn’t within the scope of how Mises defines economics.
Yes of course Mises was talking about a standard of living that revolved around peace and not violence. He spends a considerable amount of time discussing that in “Socialism”.
That’s why on their way to the Socialist Holy Land millions of people are either gulaged, simply murderered, or starve to death. That is not economic action.
You know, some people believe the earth is going to be wiped out, everything on this earth should be hated, and suicide is the way to the next Level in order to board the spacecraft flying by near a comet. Oh Wait!! That’s already been done! I wonder if they made it.
Here’s a quote from Mises’ Socialism. The gist is that in very simple conditions, you are right. But “simple” means really simple:
"But computation demands units. And there can be no unit of the
subjective use-value of commodities. Marginal utility provides no
unit of value. The worth of two units of a given commodity is not
twice as great as one - although it is necessarily greater or smaller
than one. Judgments of value do not measure: they arrange, they
grade.Vf he relies only on subjective valuation, even isolated man
cannot arrive at a decision based on more or less exact computations
in cases where the solution is not immediately evident. To aid his
calculations he must assume substitution relations between com-
modities. As a rule he will not be able to reduce all to a common
unit. But he may succeed in reducing all elements in the computa-
tion to such commodities as he can evaluate immediately, that is KO
say, to goods ready for consumption and the disutility of labour and
then hc is able to base his decision upon this evidence. It is obvious
that even this is possible only in very simple cases. For complicated
and long processes of production it would be quite out of the
question. "
As for the other question, people who are pro socialism, while they may secretly want nothing more than to be the one in power and that’s enough for them, profess to want the good of the unfortunate masses. Which means a higher standard of living for most people than they have now.
I saw an interesting line from Mises about Socialism. That while its goal is PLANNING the economy, the calculation problem means it will be totally unplanned, the biggest crap shoot on Earth.