Economic Calculation and "Real" Socialism

[ansiktsburk]

I came across this criticism of von Mises’ side of the economic calculation debate. The author claims that von Mises’ argument is built upon shaky foundations, and goes on to explain that in a “real” socialist society - decentralised socialism as opposed to central planning - the criticism is inapplicable. The article is a touch long, but I’d be very grateful if someone were willing to critique it. In short: theoretically, is the economic calculation argument applicable to decentralised socialism, or only the central planning variation?

[Laughing_Man]

Ah yes, decentralized socialism. The new fallback of socialist calculators.

[wilderness]

@ansiktsburk

decentralised socialism

isn’t that similar to saying white is black. if it’s not decentralized, then it’s not socialism. How do socialist coordinate their same agenda if not through some centralized mechanism?

[Laughing_Man]

@wilderness

isn’t that similar to saying white is black. if it’s not decentralized, then it’s not socialism. How do socialist coordinate their same agenda if not through some centralized mechanism?

Law of the jungle with the naive belief that every individual will be benevolent.

[wilderness]

@Laughing Man

Law of the jungle with the naive belief that every individual will be benevolent.

so everybody simply can take from everybody else but it’s really not taking it’s called sharing and being a family. so if I want it and take it and somebody refuses to let me have it, then they are simply not being a good family member and allowing me to take it from them cause i must of needed it more than they did cause i was the one trying to take it as it was only sitting there while in their possession. So eat up your food quickly or else somebody might take it![:P]

[Laughing_Man]

@wilderness

@Laughing Man

Law of the jungle with the naive belief that every individual will be benevolent.

so everybody simply can take from everybody else but it’s really not taking it’s called sharing and being a family. so if I want it and take it and somebody refuses to give it to me they are simply not being a good family member and allowing me to take it from them.

That’s my impression.

[fakename]

we already had a thread on this exact same thing.

Basically the article miscontrues how the calc. arg. works -going on about calculation occuring by pricing capital as consumer goods, or how calculation could only work if everyone had equal pay, or how opp. costs aren’t always realized on the market, etc.

[ThreeTrees]

Calculation in kind entails the counting or measurement of physical quantities of different kinds of factors of production. There is no general unit of accounting involved in this process such as money or labour hours or energy units. In fact, every conceivable kind of economic system has to rely on calculation in kind, including capitalism. Without it, the physical organisation of production (e.g. maintaining inventories) would be literally impossible. But where capitalism relies on monetary accounting as well as calculation in kind, socialism relies solely on the latter. This is one reason why socialism holds a decisive productive advantage over capitalism; by eliminating the need to tie up vast quantities of resources and labour implicated in a system of monetary accounting.

Do they seriously believe an economy is functionally equivalent to an auto factory?

Liebig’s Law can be applied equally to the problem of resource allocation in any economy. Indeed Liebig’s dismissal of the claim that it is the total resources available to a plant that controls its growth finds an echo in the socialist dismissal of the claim that we need to compare the “total costs” of alternative bundles of factors. For any given bundle of factors required to produce a given good, one of these will be the limiting factor. That is to say, the output of this good will be restricted by the availability of the factor in question constituting the limiting factor. All things being equal, it makes sense from an economic point of view to economise most on those things that are scarcest and to make greatest use of those things that are abundant. Factors lying in between these two poles can be treated accordingly in relative terms.

The end result of this is environmental degradation and exhaustion of natural resources, a la Stalin. “Overconsumption” under conditions like these would be worse than the “overconsumption” that gets blamed on capitalism today.

It is this grossly unequal distribution of income or purchasing power which has become even more glaringly unequal in recent decades at both the national and global levels, which exerts such a profound effect on the whole pattern and composition of production today – and the consequent allocation of resources that underpins this. It is reflected in the kind of production priorities that manifest themselves around us: conspicuous consumption in the midst of the most abject poverty. Such consumption is the cornerstone of a system of status differentiation which, in turn, provides the ideological underpinnings of an accumulative capitalist dynamic. It is from such a dynamic that the myth of insatiable demand springs. The logic of economic competition expresses itself as an economic imperative that enjoins competing enterprises to seek out and stimulate market demand without limit. Increased consumption translates into increased status while, at the same time, conveniently affording those enterprises increased opportunities to realise profit.

Anybody care to tackle this one? I can’t be bothered right now. I find the appeal to my bleeding heart combined with a complete lack of economic understanding too nauseating to and I’d rather like to continue digesting my stir fry.

[DD5]

To quote mises:

“A socialist system with a market and market prices is as self-contradictory as is the notion of a triangular square.”

–XXVI. THE IMPOSSIBILITY OF ECONOMIC CALCULATION UNDER SOCIALISM, 5. Quasi-market

[Leviathan]

There is no critique of decentrally planned socialism in the Austrian literature, mainly because of a lack of knowledge of the topic. For example, the post above mine inaccurately references market socialism, which is distinct from decentrally planned socialism, though both eviscerate the “economic calculation problem.”

[nirgrahamUK]

there is no such things as ‘market’ ‘socialism’. a market is private property owners who are free to make exchanges. You know production is important? you can only have a market over capital goods if you dont have socialism, since socialism is ‘collective’ ownership of such goods…if everyone owns the steel ‘together’ then there is no market for steel, or its inputs. there is no market. hence no ‘market’ socialism.

Don’t feel bad though, you aren’t alone. Kropotkin was not an economist either..

[fakename]

@Leviathan

There is no critique of decentrally planned socialism in the Austrian literature, mainly because of a lack of knowledge of the topic. For example, the post above mine inaccurately references market socialism, which is distinct from decentrally planned socialism, though both eviscerate the “economic calculation problem.”

How does decentralized planned socialism work then? I assume it congeals tacit knowledge (through some supercomputer) and uses it for the most optimal ends, has numerous firms which lowers prices and creates perfect competition and eliminates the incentive problems of hierarchal management?

Granted that it does all these things it still falls under capitalism since capitalism is not a knowledge making machine it is a property producing machine and it is created by a specific pattern of property relations.

[ziragt]

@Leviathan

There is no critique of decentrally planned socialism in the Austrian literature, mainly because of a lack of knowledge of the topic.

Actually, there is, just not directly. Since the more realistic of these ideas involve only allowing worker cooperatives, I would recommend some of the Austrian literature on the theory of organizations. For example, Peter Klein’s or Nicolai Foss’ work. I believe there is also a critique somewhere of John Roemer’s work.

[DD5]

@Leviathan

There is no critique of decentrally planned socialism in the Austrian literature, mainly because of a lack of knowledge of the topic. For example, the post above mine inaccurately references market socialism, which is distinct from decentrally planned socialism, though both eviscerate the “economic calculation problem.”

You can’t even understand the critique so how in the world would you know!?

[Leviathan]

@nirgrahamUK

Don’t feel bad though, you aren’t alone. Kropotkin was not an economist either..

Neither are you, apparently, as Kropotkin was a communist like myself rather than a market socialist. Of course, there are economists that advocate decentrally planned socialism (and many more that advocate market socialism), such as Robin Hahnel.

@fakename

How does decentralized planned socialism work then? I assume it congeals tacit knowledge (through some supercomputer) and uses it for the most optimal ends, has numerous firms which lowers prices and creates perfect competition and eliminates the incentive problems of hierarchal management?

The appealing nature of the horizontal firm and horizontal economic management more generally lies not only in its libertarian nature, as opposed to the straightforward authoritarian nature of the orthodox capitalist firm, but also in its ability to utilize tacit knowledge benefits lost by the orthodox capitalist firm, reliant on the same hierarchical central planning that would be the subject of consistent Austrian criticism. Decentrally planned socialism specifically is certainly strongly boosted through the incorporation of advanced technology (and I’d call that a bypass of the Austrian critique rather than a rebuttal, since Mises and Hayek could not have reasonably predicted the advent of supercomputers),but I’d not characterize their presence as integral to its success. Its specific nature involves planning conducted by geographically organized consumers’ and workers’ councils, which are subject to federative coordination that results in aggregation at local, municipal, regional, and eventually national levels. These are characterized by democratic input from affected workers and consumers as to production and consumption functions, respectively.

@fakename

Granted that it does all these things it still falls under capitalism since capitalism is not a knowledge making machine it is a property producing machine and it is created by a specific pattern of property relations.

If an economic system should incorporate the public ownership of the means of production, it is socialist and not capitalist in nature. I’m not certain why some economic rightists seem intent on excluding market socialism and decentrally planned socialism from the vibrant and dynamic socialist tradition, but suspect it’s related to the ability of those systems to bypass what they arrogantly perceived as a watertight critique.

@ziragt

Actually, there is, just not directly. Since the more realistic of these ideas involve only allowing worker cooperatives, I would recommend some of the Austrian literature on the theory of organizations. For example, Peter Klein’s or Nicolai Foss’ work.

Worker cooperatives are characterized by the most consistent adherence to Hayekian principles. I’d recommend some David Prychitko, especially some of his work conducted in conjunction with Jaroslav Vanek. Try some Burczak as well.

@ziragt

I believe there is also a critique somewhere of John Roemer’s work.

Which is an advocacy of market socialism, and a model more centralized than that which most market socialists (such as Theodore Burczak and David Schweickart) advocate, at that. There are no actual Austrian criticisms of decentrally planned socialism other than shallow ideological rants such as Rothbard’s sourceless screed against the Spanish anarchists.

@DD5

You can’t even understand the critique so how in the world would you know!?

There’s nothing more to understand than its nonexistence…though that alone might qualify it for induction into the Austrian school’s literature.

[chloe732]

@ansiktsburk

I came across this criticism of von Mises’ side of the economic calculation debate.

Is it naive of me to ask, “Why not abandon ‘market socialism’, ‘centralized socialism’,‘decentralized socialism’, and instead just allow the free market to work without intervention?” Calculation problem solved, yes? Or, are socilalists simply determined to “take control”, and therefore must seek ways to fix the inevitable problems they face?

[Leviathan]

@chloe732

Is it naive of me to ask, "Why not abandon ‘market socialism’, ‘centralized socialism’,‘decentralized socialism’, and instead just allow the free market to work wihout intervention?

Considering the authoritarian and decidedly unfree nature of the capitalist labor market, the free market can only legitimately exist in the socialist economy. The capitalist “free market” that you refer to is a perpetually nonexistent textbook theory, as capitalism has always been based in significant state intervention. That was the most ironic aspect of the socialist calculation debate; the opening premises were false, as capitalism is itself dependent on central planning. Currently, the market concentration endemic in the system renders the orthodox capitalist firm exactly the sort of rigidly hierarchical inefficiency spawner that the early Austrians feared the central planning board would be.

[nirgrahamUK]

@Leviathan

Neither are you, apparently, as Kropotkin was a communist like myself rather than a market socialist.

non sequitor

@Leviathan

Of course, there are economists that advocate decentrally planned socialism (and many more that advocate market socialism), such as Robin Hahnel.

where can i read something he wrote that would give some credence to the idea that he understands economics?

@Leviathan

If an economic system should incorporate the public ownership of the means of production, it is socialist and not capitalist in nature

if there is public ownership there is no market. how could there be?

@Leviathan

There are no actual Austrian criticisms of decentrally planned socialism other than shallow ideological rants such as Rothbard’s sourceless screed against the Spanish anarchists.

it is not shallow to say that a triangular-square is an impossibility, it is too absurd to warrant analysis…

[ziragt]

@Leviathan

Worker cooperatives are characterized by the most consistent adherence to Hayekian principles. I’d recommend some David Prychitko, especially some of his work conducted in conjunction with Jaroslav Vanek. Try some Burczak as well.

I was indirectly referring to Burczak, actually. I’d read Prychitko as well, but I cannot afford his volumes on cooperatives. What do you recommend by Schweickart?

[chloe732]

@Leviathan

Its specific nature involves planning conducted by geographically organized consumers’ and workers’ councils, which are subject to federative coordination that results in aggregation at local, municipal, regional, and eventually national levels.

You’re not serious, are you?