"EIRMOS
http://www.cato.org/pubs/journal/cj16n2-7.html
You give the impression of being unessecarily eltisit. You need money to plan?? Are you certain? Maybe Communism failed in the USSR b/c they probably weren’t using the scientific method to arrive at decisions. Perhaps, it was b/c it was an elitist, totalitarian, and militant regime where an elite created a false representation of reality? That’s why, seemingly, information from the outside world collapsed the regime. Unlikely it was b/c of using a scientific economics which didn’t use monetary prices. I have never seen ANY EVIDENCE directly showing the monetary market systems are actually necessary. I need some causative evidence, not just anecdotal evidence."
EIRMOS,
What was the point of posting me that link from Cato?
Maybe, probably, perhaps you should read it.
Let me quote it for you.:
"Chapter 3, “What Price Socialism? An Economy without Information,” could have been written by Ludwig von Mises or F. A. Hayek. Although Shane nowhere mentions the pioneering work of the two Austrian economists, who long ago predicted the impossibility of efficiently allocating resources without competitively determined market prices and private property rights, his findings show that they were right and Marx was wrong. This chapter can be profitably read by both economists and noneconomists–it gets to the heart of the information failure in the Soviet system of central planning without getting mired in technical jargon.
Shane shows the difficulty of trying to ration scarce goods without the price mechanism and the loss of freedom that occurs when economic life is strictly controlled by the state. By keeping the prices of consumer goods artificially low, the Soviet planners created the ubiquitous “waiting line.” Around that institution grew “an elaborate subculture…with its own habits and rules.” The odd thing is that shortages appeared in product lines of which the Soviet Union was the largest producer in the world. In the late 1980s, the USSR produced more than three pairs of shoes for each citizen, but people had to wait to buy shoes. The problem was that the available shoes did not reflect consumers’ tastes: the shoes were made to fulfil a government plan, not to satisfy market demand. Thus, consumers had to wait in line for hours to find shoes that fit and were stylish–and most of those shoes were imported.
That “malfunction,” argues Shane, was due to information control:
Prices are information–the information producers need in order to know what and how much to produce. In a market for a product as varied in material and design as footwear, shifting prices are like sensors taped to the skin of a patient in a medical experiment; they provide a constant flow of information about consumer needs and preferences. When the state controlled prices, it deprived producers of information about demand [p. 77].
The politicization of economic life in the Soviet Union meant that “prices functioned as propaganda and therefore malfunctioned as economic indicators.” Keeping the prices of food and housing artificially low helped support the myth of a Soviet socialist utopia or, as Shane puts it, “Controlled prices were an indispensable prop for the Soviet illusion” (p. 79).
Without the feedback of prices based on demand and supply, planners had to make production decisions on the basis of past data rather than on current consumer preferences. As a result, production targets could change dramatically, as could prices. In the case of laundry soap, for instance, an acute shortage turned into a giant surplus in less than two years. Without the guidance of prices, “the soap industry was like a hugh truck with no steering wheel, careening from one curb to the other” (p. 84).
Because the state empowered bureaucrats to set prices and made illegal what was natural–the inclination to make one’s self and one’s family better off by private production and market exchange–people had a strong incentive to break the law. The “shadow economy” became a way of life and helped people survive. Those who operated in the parallel market economy were “economic dissidents,” argues Shane. “By exercising economic freedom, they were challenging the state’s monopoly on the economy, just as a political dissident who asserted freedom of speech or of the press challenged the state’s monopoly on ideology” (p. 92).
The Soviet system was totally corrupt. Those in power readily accepted bribes from those who found market activity more lucrative than following orders from party bureaucrats. Shane provides numerous examples of such corruption: from the illegal use of Xerox machines by workers at the Communist party’s headquarters to “the Uzbec affair,” in which party members enriched themselves by underreporting cotton production, selling the residual on the black market and accepting large bribes. “What became increasingly clear after 1988,” writes Shane, “was that the Stalinist economy, still essentially intact, could not be reformed. It could only be dismantled, and a market economy grown in the ruins” (p. 98)."