Economic Calculation Problem Debunked!??

Economics Economics Questions
21

There is a little side point in the article that should cause some eye rolling. The OP wants bread and water to cost a miilion dollars an ounce, and a yacht to cost a penny.

When he wrings his hands about the unfairness of capitalism, he writes:

Salerno’s “integrated system of objective exchange ratios” (prices) reflects or is conditioned by, this unequal distribution of effective demand. Thus, frivolous luxury goods can be “valued” more highly – i.e., attract a higher price – than food for the hungry because a rich elite has vastly more purchasing power at its disposal to competitively bid for, and so push up the price of, the former compared to the latter.

In other words, if effective demand was redistributed the way the OP thinks it should be, life giving bread and water would have the value it deserves, a very high price, and yachts would be priced at a dime a dozen.

22

Oops, my bad. I failed to mention that the OP has found a way out. Sure work will be purely 100% voluntary, but on the other hand, and at the same time, it won’t be voluntary at all. We will have a new animal, never before seen in this world, called “democratic consensus”. Also, decisions will be made at a global level, meaning for the whole world, like it or not, but it will be no problem, because everyone will agree unanimously. All 6 billion of us.

First the voluntary quotes:

For free market critics of socialism like Mises and Hayek, it is taken for granted that a socialist economy would be a centrally planned economy in this sense of the term. It is argued that this central direction of economic activity would necessarily go hand in hand with a command structure (what Mises called the “Fuhrer principle”) to ensure production targets are met in accordance with the central plan and without any deviations that would threaten the coherency of the plan. The ineluctable consequences that flow from this are that a socialist economy could not be run democratically, that centralised rationing would have to replace free access and that voluntary labour would have to give way to coerced labour. In short, we would no longer be talking about “communism” or “socialism” as these terms were traditionally conceived by individuals like Marx, Engels, Morris and Kropotkin.

And:

By “socialism” or “communism”, as we saw earlier, was traditionally meant a society without markets, money, wage labour or a state. All wealth would be produced on a strictly voluntary basis. Goods and services would be provided directly for self determined need and not for sale on a market; they would be made freely available for individuals to take without requiring these individuals to offer something in direct exchange. The sense of mutual obligations and the realisation of universal interdependency arising from this would profoundly colour people’s perceptions and influence their behaviour in such a society. We may thus characterise such a society as being built around a moral economy and a system of generalised reciprocity.

Now for the forced labor quotes:

Free access to goods and services is a corollary of socialism’s common ownership of the means of production; where you have economic exchange you must logically have private or sectional ownership of those means of production. Free access to goods and services denies to any group or individuals the political leverage with which to dominate others (a feature intrinsic to all private-property or class based systems). This will work to ensure that a socialist society is run on the basis of democratic consensus. Decisions will be made at different levels of organisation: global, regional and local with the bulk of decision-making being made at the local level.26 In this sense, a socialist economy would be a polycentric, not a centrally planned, economy.

Huh? Democratic consensus? What does that even mean? Democracy means that almost half the people may not want to do something, but they will be outvoted and have to do it anyway. That is not consensus. And it is certainly not voluntary.

But maybe he means that once the vote is cast, the minority can say “I refuse to participate in the majority scheme. Work is voluntary, and I want all the benefits that will accrue from the majority working, without me having to do anything.” Not sure well that will go down with the majority.

I assume the majority will respond by voting that the minority either works or starves. No parasites in paradise, bro. That’s your voluntary choice, bro. Do what I want, what the global commisars have decided, what the regional commissars have decided, what the local commissars have decided, or starve.

“But my ‘self perceived need’ is not to starve.”

“Oh well.”

And again:

Because individuals would stand in equal relation to the means of production and have free access to the resultant goods and services, this would fundamentally alter the basis upon which society’s scale of preferences was established. It would make for a much more democratic and consensual approach altogether and enable a system of values reflecting this approach to emerge and shape this agenda. It is perhaps this that really lies behind the notion of society wide planning – some co-ordinated and commonly agreed approach in setting society’s priorities.

Yes, society wide, even global planning, and it will be commonly agreed upon.

How could anyone who qualifies as a percieved authority figure have possibly failed to realize this simple solution to all the world’s problems? We will have a democracy, but everyone will vote the same way. There will be global planning, but that’s because it was commonly [= universally down to the last man] agreed upon. Decisions will be made at at least three levels of beaurocracy about your life, but that’s only because you will have wanted whatever they decide anyway. You will do everything voluntarily, comrade.

Is it worth devoting a post to accepting this absoid little world, and showing how even in such a world there is a calculation problem?

23

Dave, you have the patience of a saint.

For my part I can hardly wait till the 26th rolls around.

24

TY Nir.

As for the 26th:

25

I guess the article can be thought of as two different pieces. The first why Mises is wrong. The other posters, and Mises in HA dealt with the articles criticisms. In a word, the nirvana fallacy.

The second piece is devoted to how Socialism will solve the calculation problem. A bit about the second piece follows.

Until now, I wrote about how the author didn’t really bother to smooth out the contradictions in his article.

The article tells us that work would be “strictly” voluntary, and yet decided on by “decision makers”. There is no “state”, but there are global, regional, and local “decision makers”.

Tell you what, since work being voluntary and “self defined needs” all being met is clearly ridiculous, let’s go with the coercive decision makers option and see if the calculation problem will be solved by them.

The article goes on to tell us that the very concept of scarcity is a “myth”. “Consumption goods, [and] production goods would be freely distributed.” And yet at the same time [in his section about the Law of the Minimum, and in his conclusion], he admits the existence of scarce resources.

But just because there is scarcity don’t make the mistake of thinking there is scarcity. '“To claim that all factors are scarce (because the use of any factor entails an opportunity cost) and, consequently, need to be economised is actually not a very sensible approach to adopt.” No, we just have a situation of non scarcity, where “the supply of…resources falls short of the demand for them”.

Again, since denying the myth of scarcity leads to absurdities, let’s go with the “supply of resources falling short” and see how the calculation problem is solved in a “society without markets, money, wage labour or a state”.

The ultimate answer, the solution to the calculation problem, is incredibly simple, yet incredibly profound. “But the precise mechanism(s) to be used is something that will have to be decided upon by a socialist society itself.” How could a supposedly sharp guy like Mises have missed that one?

Just to give poor old Mises a bit of a clue, the article explains that “Buick and Crump speculate, not unreasonably, that some kind of “points system” might be used with which to evaluate a range of different projects facing such a society.” Ah, OK. Some kind of points system. Of course, that points system is not a sure thing. It is mere specualtion. It might be used, and it might not. If it isn’t used, then, since socialism is too good an idea to be left to flop on its face, I assume the author posits that there are many other ways of solving the allocation problem, all as sound as the points system. He does not tell us what they might be, but assures us that whatever the socialist society decides will do just fine.

He does, however, offer us a big picture concept that will give us a hint. People will want food and water and a roof over their heads before anything else. His source for this is Abraham Maslow.

OK, lets cut to the chase. The article has no clue as to what the calculation problem is. He thinks that the problem is “Should I make my shirts with 75% cotton and 25% polyester, or vice versa?” Let us follow his answer, using dialectical materialism.

Hegel: Whatever gets you the most shirts.

Marx: But then we will make less tents.

Hegel: Ah, OK, lemme check my Maslow here. Shirts are number 3,762 on the list, tents are 10,435. Go for the shirts.

Marx: Who made that list, some central planner?

Hegel: Heavens no. Mises has proven, (that old duffer was good for something), that that is a bad thing. It was decided on locally, in literally millions of local units of society all around the world. There was a giant vote on the internet for every single product known to man, and we now have our list.

Sorry Charlie. That’s not the calculation problem. Brush up on Human Action. Here, let me quote it for you:

1. The Problem

The director wants to build a house. Now, there are many methods that can be resorted to.

Each of them offers, from the point of view of the
director, certain advantages and disadvantages with regard to the utilization
of the future building, and results in a different duration of the building’s
serviceableness; each of them requires other expenditures of building mate-
rials and labor and absorbs other periods of production. Which method
should the director choose? He cannot reduce to a common denominator the
items of various materials and various kinds of labor to be expended.
Therefore he cannot compare them. He cannot attach either to the waiting
time (period of production) or to the duration of serviceableness a definite
numerical expression. In short, he cannot, in comparing costs to be expended
and gains to be earned, resort to any arithmetical operation. The plans of his
architects enumerate a vast multiplicity of various items in kind; they refer
to the physical and chemical qualities of various materials and to the physical
productivity of various machines, tools, and procedures. But all their state-
ments remain unrelated to each other. There is no means of establishing any
connection between them.
Imagine the plight of the director when faced with a project. What he
heeds to know is whether or not the execution of the project will increase
well-being, that is, add something to the wealth available without impairing
the satisfaction of wants which he considers more urgent. But none of the
reports he receives give him any clue to the solution of this problem.
We may for the sake of argument at first disregard the dilemmas involved in
the choice of consumers’ goods to be produced. We may assume that this
problem is settled. But there is the embarrassing multitude of producers’ goods
and the infinite variety of procedures that can be resorted to for manufacturing
definite consumers’ goods. The most advantageous location of each industry
and the optimum size of each plant and of each piece of equipment must be

determined. One must determine what kind of mechanical power should be
employed in each of them, and which of the various formulas for the
production of this energy should be applied. All these problems are raised
daily in thousands and thousands of cases. Each case offers special condi-
tions and requires an individual solution appropriate to these data. The
number of elements with which the director’s decision has to deal is much
greater than would be indicated by a merely technological description of the
available producers’ goods in terms of physics and chemistry. The location
of each of them must be taken into consideration as well as the serviceable-
ness of the capital investments made in the past for their utilization. The
director does not simply have to deal with coal as such, but with thousands
and thousands of pits already in operation in various places, and with the
possibilities for digging new pits, with the various methods of mining in
each of them, with the various methods for utilizing the coal for the
production of heat, power, and a great number of derivatives. It is permissi-
ble to say that the present state of technological knowledge makes it possible
to produce almost anything out of almost everything. Our ancestors, for
instance, knew only a limited number of employments for wood. Modern
technology has added a multitude of possible new employments. Wood can
be used for the production of paper, of various textile fibers, of foodstuffs,
drugs, and many other synthetic products.

Please tell me how you would solve that one.

26

Awesome work, Dave. Hopefully Robin will actually come back to respond, now that detailed refutations are being posted.

It seems socialists almost universally have this really bad habit of putting everything in the passive voice, or finding other creative ways to avoid referring to the people who will actually perform these actions. “Goods will be provided,” “To each according to his need.” I can see why Mises formulated his whole social theory around human action and methodological individualism, because that is precisely what socialists constantly try to obscure.

Anarcho-communists in particular would be averse to referring to the subject of the sentence performing the actions, because if they did it would soon become clear that the actors can only be - tadaaah! - the State.

Oh sorry, I meant “decision makers.”

27

As expected, I guess, one has to wade through the usual dross to get to the more meaty points. One guy assures me he does not want “embarrase” me but could I tell him whether I had finished college. I wouldnt want to embarrase him by remarking on his spelling ability. Another declares “my self determined needs tell me that I need a yacht 365 days a year, one unsullied by other people ever on it at all” and yet strangely enough wants volunteers to “hand polish my yacht every day from stem to stern” . Sigh. Ive encountered more than my fair share of these smart-arsed buffoons in my time who strive to affect an impression of engaging in clever repartee but only succeed in demonstrating their own ignorance.

Then there is the downright misinformation or, perhaps more kindly put ," misunderstanding" as again one might expect. I was not actually suggesting that yachts be rented out in an anarcho communist society. The idea is meaningless in a non-exchange non-monetary economy. The point I was simply trying to illustrate is that you dont need to personally own a yacht in order to enjoy the use of it - even under capitalism. Someone else then pipes in “The OP wants bread and water to cost a miilion dollars an ounce, and a yacht to cost a penny.” Er no..there is no monetary valuation in an anarcho communist society. No dollars, pennies, pounds or euros. Period.

There are a number of other points I could take up but frankly dont have the time to deal with all of them. So Ill be ruthlessly selective, if you dont mind

On scarcity - if people bothered to read with more care and attention they would perhaps appreciate the point that when I dismiss the “bourgeois myth of scarcity” I am not saying scarcity does not or could not exist. Im talking about a particular construction of the concept of scarcity. Relative scarcity is in fact central to the mechanism proposed called the “law of the minimum” which entails the identification (via the self regulating system of stock control ) of those factors - called limiting factors - that constrain the output of any given good

On planning - people seems to have some difficulty in differentiating this from the the proposed hierarchy of production goals. Some have the idea that the latter is some kind of intricately detailed structure put in place to guide production units in the allocation of factor inputs. Thats not my intention at all and I certainly dont envisage it as being anything more than the most broad brush schema perhaps resonating in some ways with Maslows hierarchy. Point is that, like it or not, you have to some way of prioritising production goals that is socially consistent in order to decide how to allocate a particular factor under conditions of competing end uses - scarcity. I am not particularly fussed about the order of these end uses or how these priorities are agreed upon - whether by communities democratically deciding on it or by simply leaving it up to the good judgement of production units supplying these input factors. And as I explained that does not mean low priority end uses will be ignored of which I suppose the production of yachts would be an example. It simply means these will be further back in the queue for particular resources and may require recourse to procedures such as technological substitution to met demand . That is eminently sensible as an arragement and I defy anyone to demonstrate how it could not be.

Of course under capitalism the process of prioritisation is skewed by the massively unequal distribution of income. So you have an appalling example in India, I believe, of the world’s most expensive private home being built to overlook the slums of New Delhi or whereever it is. Thats perfectly acceptable if you are the wealthy capitalist who happens to live in this edifice but certainly not if you are a slum dweller living in its shadow. Anarcho communism is not about pandering to the needs of a tiny parasite class and if some of you want to desparately hang on to your multi million dollar luxury yachts well - tough titties! - it aint going to happen, mate. You need to start coming out of your little bubble of infantile self centredness and trying being a decent human being for a change. You are not to flourish in a truly human society, if not. Trying cutting yourself off from the rest of the world in your little private yacht 24/7 and see how far you get. You will die of boredom , alone and unloved.

Thats the problem you see. Most of the objectors to anarcho communism presuppose the continuation of capitalism and the value system that animates and undergirds it. So they project into communism the outlook and behaviour of people in capitalism. This is sociologically inept.. Actually, even in capitalism by most estimates, approximating half of all the work that is done is unpaid and this is by no means just confined to the domestic household sector. Not only that, most of the paid work that is done in capitalism is actually totally socially useless from the standpoint of meeting human needs; indeed capitalism has become the most grotesquely inefficientt and wasteful form of economic organisation ever devised - by comparison with the productive potential it has, ironically, created. Think of the thousands of occupations that contribute absolutely nothing to human welfare but simply exist to oil the wheels of commerce and otherwise expedite the functioning of the system qua system - from tax collectors to bankers to insurance brokers and countless others involved in the money economy. All these will be scrapped in communism. We will produce much more with much less and more importantly we will produce the things that we really need first and foremost. Not friggin multi million doillar luxury yachts for heavens sake!

Anarcho capitalisrts are the rump of a dwindling band of ideological enthusiasts for capitalism who are desparately trying to defend the indefensible and salvage an utterly descredited social system - whether in the form of soviet state capitalism or American “free enterprise” - from the verdict of history that awaits it.

28

A million years from now some archeologist will unearth a library of just arguments trying to disprove the ECA.

29

For those that don’t know where Robin Cox’s 5 year old web article came from..

Someone in The Zeitgeist Movement got presented with the ECP. TZM is pushing a Resource Based Economy where robots, machines and a central computer will magically provide the world with all their goods for free. We’re all going to live in futuristic circular cities and no one is going to have to work unless they want to. No more money, or greed or profit, all crime will disappear. (fantasy land) This is supposed to be a global solution to the problem of scarcity and "technological unemployment " Someone in TZM decided Robin’s “solution” would be the perfect answer to the ECP and posted it to be parroted by their followers.

So even before we begin, as Robin admits, this would never work on a global scale.

This is my first post and I’m relatively new to studying the Austrian school of economics. I don’t have the expertise to pick Robin’s post apart bit bt bit but i do want to join in on the fun. I’ll pick out just one specific item, “calculation in kind”.

Calculation in kind may work to some extent where different ways of producing a specific final good are being compared or where a specific number of factors may be combined in alternate ways but becomes utterly useless when it comes to deciding which items to manufacture from which raw materials.

I’ll quote Max Weber who dealt with Robin’s assertion 90 years ago back in 1921 in Economy and Society:

But the more difficult problems of calculation begin when it becomes a question of comparing different kinds of means of production, their different possible modes of use, and qualitatively different final products … the comparison of different kinds of processes of production with the use of different kinds of raw materials and different ways of treating them, is carried out today by making a calculation of comparative profitability in terms of money costs. For accounting in kind, on the other hand, there are formidable problems involved here which are incapable of objective solution.

As a final note I was amused at Robin’s suggestion that “a “points system” may be used” .

One man’s point system is another man’s prices.

30

Exactly as I predicted, the reponse would end up, the yachts cater for a very small class so therefore it will not be catered for in your system, one can then inclue the entire luxury industry: perfumes, handbags, jewlery, shoes, clothing will all not be allowed other than those that everyone can be supplied with, which is basically none. I wonder if you would rant the same way in front of your own mother like you do here: “Well tough titties mom, that perfume you always wanted is totally socially useless, I know what you need, not you !”.

Obviously you do not care about these, because you believe the proletariat should not care about these things. So lets get to something that you can not ignore for your proletariat, lets take flour for example. The are different grades of flour in varying degrees of quality, the fact is that everyone would want to pick the best quality flour every day for their breads, pastas and cakes, the reality is that it is not possible for everyone to have the best flour every single day. People would pick the better quality goods for their birthdays or special holidays. Without a price system you cannot determine who will get what and when, unless your decision makers go to door to door to ask each individual person for their needs. I can give you a thousand other such examples of goods that will not function without a price system, the more you keep on saying well it will not function like that because in my society nobody will need it, the more the system will look like the Soviet system.

31

  1. Thank you, robbo, for your reasoned, civil reply.

  2. You write: Another declares “my self determined needs tell me that I need a yacht 365 days a year, one unsullied by other people ever on it at all” and yet strangely enough wants volunteers to “hand polish my yacht every day from stem to stern” .

I’m not sure how that refutes the essential point being raised. The socialist utopia will have everyone get whatever they feel they need. As the article put it so eloquently, “self determined needs”. The question is, what if my self determined needs tell me I want the most luxurious of luxury yachts, unshared by anyone. Sure, slaves can go on it and hand polish it, because I feel a need for that, and of course my guests, but my self determined needs tell me I just cannot endure anyone else on it.

The socialist utopia promises free access to all goods, according to the article, based on self determined needs. And yet this last reply suddenly says I won’t get them.

  1. You raise the point that “you dont need to personally own a yacht in order to enjoy the use of it - even under capitalism”.

That is debatable, to say the least. Many people have a self determined need to feel no one else can touch their yacht without permission, and that they can have the yacht at their disposal at a moment’s notice, should they, on a sudden whim or a surprise guest visit, decide to use it. You may not feel these self determined needs, and more power to you. But why should everyone under the sun, for all time, be required to submit to your estimation of other people’s needs?

In other words, you are contradicting yourself. The self determined needs thingy has flown out the window.

  1. You write: The OP wants bread and water to cost a miilion dollars an ounce, and a yacht to cost a penny." Er no..there is no monetary valuation in an anarcho communist society. No dollars, pennies, pounds or euros. Period.

The article discusses three states of affairs: capitalism as it is, capitalism as it should be if it was more just, and socialism. An example of the middle state is your suggestion of yachts for rent, not for ownership.

In the piece quoted in the previous post, you explained that because the rich have unfair purchasing power in your opinion, that yachts are given a high price and living essentials a low one. The implication is that you consider the reverse a superior state of affairs under capitalism.

  1. About scarcity: Thank you for clarifying. There is “relative scarcity”, and there is “bourgeois scarcity”. One exists, the other is a myth. Relative scarcity means there is, for example, less gold in the world than silver. What is “bourgeois scarcity”? I have never come across the phrase before.

Maybe you allude to something you mentioned in the article. You write that capitalist economists think that all items are equally scarce, because they all have an opportunity cost. Yes, that is a myth all right, but not a bourgeois myth. It is a mythical understanding of the phrase “opportunity costs”. Because not all opportunity costs are equal. But this is not the place to explain basic economic concepts.

  1. In one long paragraph in this last post, you openly admit that you have not solved what Mises called the calculation problem, and don’t really care about it in the first place. Serious socialist economists have been struggling with it for 80 years, and you are declaring that it’s not even worth thinking about. Instead, you solve a different problem of you own creation.

I refer you to an earlier post where Mises was quoted describing the calculation problem in brief. Let’s see what you have to say about it in this latest post, with my comments in bold and in brackets:

On planning - people seems to have some difficulty in differentiating this from the the proposed hierarchy of production goals. Some have the idea that the latter is some kind of intricately detailed structure put in place to guide production units in the allocation of factor inputs.

[That is exactly what Mises was saying socialism will never be able to come up with. Under capitalism, there is a price mechanism which forces decisions right down to the most intricate details. And those “details” are given plenty of thought, because they can make or break a company. Which means, they decide if scarce, or as you call them, “relatively scarce” resources are wasted or put to best use.]

Thats not my intention at all

[Here is your admission that you have no intention of solving the calculation problem].

and I certainly dont envisage it as being anything more than the most broad brush schema

[So not only are we not getting a plan for the intricate details, we are not getting any details whatsoever. If you read the quote from Mises, he is discussing someone who has decided he needs to build a house. Perhaps he reached this decision by resonating with Maslow. It is certainly one of the most basic human needs in any scale. To build or not to build is not the question. That is not the calculation problem. The calculation problem is HOW to build the house.

And the solution proposed in the article you wrote, using the law of the minimum to figure out whether to make the house out of wood or brick, does not solve the problem either. You can do a great service to humanity and to socialism and to me by explaining how you would solve the problem Mises describes using the law of the minimum, not the trivial problem you described.]

perhaps resonating in some ways with Maslows hierarchy. Point is that, like it or not, you have to some way of prioritising production goals that is socially consistent in order to decide how to allocate a particular factor under conditions of competing end uses - scarcity. I am not particularly fussed about the order of these end uses or how these priorities are agreed upon - whether by communities democratically deciding on it or by simply leaving it up to the good judgement of production units supplying these input factors.

[Oh, OK. That is the answer. The calculation problem is nothing to fuss about. It can be solved by vote. Or by good judgement. Rereading Mises description of the problem, I see now that a simple vote will take care of everything. And the director Mises described obviously did not have good judgement, either. How could I have missed these simple elegant solutions. What was all the fuss about?]

And as I explained that does not mean low priority end uses will be ignored of which I suppose the production of yachts would be an example. It simply means these will be further back in the queue for particular resources and may require recourse to procedures such as technological substitution to met demand . That is eminently sensible as an arragement and I defy anyone to demonstrate how it could not be.

[Votes and good judgement are very sensible. And having less yachts produced than houses is also sensible. How did capitalism become so topsy turvy? We make piles and piles of yachts under capitalism, but so few homes. We even had a yachts bubble in 2008 that collapsed the whole economy.

But that is besides the point. Many things are sensible, but are irrelevant to solving the calculation problem. It is sensible to use an umbrella in a heavy rain. But an umbrella is not the solution to the calculation problem. So too, broad brush stuff like having yachts at the end of the queue does not begin to address the calculation problem].

  1. There follows some tough love on the part of the poster, explaining to us that we all have to grow up, that we are NOT going to have our self determined needs satisfied. He explains to us that the yacht we have self determined is a very deep need is not going to make us happy anyway.

It seems we have misunderstood the whole concept of having our self determined needs met. Of course they will be met, down to the last micron of detail, but only if these self determined needs are not “childish” and “self centered”. And only if they will make us happy. Only mature, adult, other-person-oriented, true-happiness-producing, self determined needs will be met.

And the poster explains how we have reached this misunderstanding. It’s because we are sociologically inept. Our self determined needs today are not a product of human nature. Rather, they are a product of the capitalist system. Under socialism, what we think is human nature will be revealed to be mere childish self centeredness that is a byproduct of capitalism. Under socialism, no one will be childish or self centered. No one will want the same things they want now. Nobody will want a multimillion dollar yacht anymore, only things they “really need”.

Workers of the world, unite. You have nothing to lose but your childish self centered sociologically inept, skewed, self determined values that will not make you happy anyway.

Has a certain ring to it, no?

  1. We can discuss why there luxury palaces besides slum dwellings somewhere you are not sure of, and whether rich people are all parasites, and whether people are paid good money to do things that are totally socially useless, and whetehr capitalism is inefficient and wasteful, or whether “state capitalism” is an oxymoron, but that is beyond the scope of this thread. Let us limit ourselves in this thread to the calculation problem and your proposed solution. You can start another thread if you wish to discuss those other topics.

  2. I’m glad we agree that capitalism has created the vast productive potential we see before us.

  3. I was surprised and pleased to finally understand why the Soviet Union, that paragon of socialist perfection so praised by millions for 70 years, just collapsed in a crumpled heap. Turns out it wasn’t a socialist country at all. No, Soviet Russia was a CAPITALIST country. George Orwell is smiling.

32

TY, AJ.

33

For those that don’t know where Robin Cox’s 5 year old web article came from..

Someone in The Zeitgeist Movement got presented with the ECP. TZM is pushing a Resource Based Economy where robots, machines and a central computer will magically provide the world with all their goods for free. We’re all going to live in futuristic circular cities and no one is going to have to work unless they want to. No more money, or greed or profit, all crime will disappear. (fantasy land) This is supposed to be a global solution to the problem of scarcity and "technological unemployment " Someone in TZM decided Robin’s “solution” would be the perfect answer to the ECP and posted it to be parroted by their followers

I am not aware that TZM has discussed my article. Do you have further information?

So even before we begin, as Robin admits, this would never work on a global scale.

I admit nothing of the sort. I think you are a little confused to say the least. What you are presumably alluding to is the notion of central planning which I have explicitly rejected. It is a red herring. That does not mean a relatively decentralised anarcho communist society cannot be worldwide

This is my first post and I’m relatively new to studying the Austrian school of economics. I don’t have the expertise to pick Robin’s post apart bit bt bit but i do want to join in on the fun. I’ll pick out just one specific item, “calculation in kind”.

>>

Calculation in kind may work to some extent where different ways of producing a specific final good are being compared or where a specific number of factors may be combined in alternate ways but becomes utterly useless when it comes to deciding which items to manufacture from which raw materials.

Any complex system of production - whether capitalist or socialist - MUST entail calculation in kind. That is unavoidable. What is eminently avoidable however is monetary caiculation.

Your problem like that of many other anarcho caps is that you dont really understand what is being proposed. Calculation in kind is only one feature of interlocking system of coordinated features each serving a different function. I dont recall suggesting that calculation in kind is what is required to decide which items to produce -although it is inescapably involved in the process of producing them. I suggest you re read the article with more of an open mind and try to grasp how an anarcho-communist society might function holistically

I’ll quote Max Weber who dealt with Robin’s assertion 90 years ago back in 1921 in Economy and Society:

But the more difficult problems of calculation begin when it becomes a question of comparing different kinds of means of production, their different possible modes of use, and qualitatively different final products … the comparison of different kinds of processes of production with the use of different kinds of raw materials and different ways of treating them, is carried out today by making a calculation of comparative profitability in terms of money costs. For accounting in kind, on the other hand, there are formidable problems involved here which are incapable of objective solution.

Yes Im familiar with Weber and particularlly in the context of the substantivist/formalist debate. I dont find his argument persuasive at all though he has offered some useful sociological insights elsewhere

The problem with the ECA proponents like Mises & Co is that they are simple unable to get to groips with what is a fuindamentally different lway of looking at economic cascilaculation which dispenses with the need to make cost compasrisons in this way. There are in other words two fundamentally different perspectives involved - what I call a vertical perspective and a horizontal of lateral perspective pof cost account. The key to the latter is the self regulating system of stoick control which lies at the heart of my anarcho communist proposal. Mises arguments were simply not geared to tackle this kind of approach becuase he automatically assumed a communist or socialist economy must be a centrally planned one involving society wide plan. Once you reject that this opens up the possibility of looking at the problem in a an entirely new lighght and therin to to discover the decisive refutation of the ECA itself

As a final note I was amused at Robin’s suggestion that “a “points system” may be used” .

One man’s point system is another man’s prices.

Once again yourwe confusing different things The points system relates to a system of non monetary rationing of some goods in the early stages of communism. Its about entitlement to scarce goods not prices per se. It is different for example from the system of labour vouchers which requires goods to be priced in labour time and which individuals can appropriate according to the amount of labour they contributed and for which they would be issued a voucher or certifcate. Labour vouchers are not money in that they do not circulate. Marx following Robert Own suggested them in a half hearted fashion as a way of dealing with shortages in the aftermath of capitalism’s abolition (see Critique of the Gotha Programme). I dont support the idea of labour vouchers myself and though I see some merit in the points scheme it is quite different from the labour voucher scheme involving labour time “pricing”

34

**

Come now, come now, this is avoidance at its best. The claim that monetary calculation is avoidable–while still keeping an economy properly intact–is exactly what Mises argues against. Nobody denies that calculation exists. You’re just dancing around the issue with vague notions of holistic production, which doesn’t make a lick of sense. It doesn’t matter if the Führer principle involves a few bureaucrats, or the active polling of the vast majority. It doesn’t matter if you include everyone in deciding what to produce. The fact of the matter is that it is still centralization, and so it doesn’t matter if it’s a bloody democracy or an autocracy.

The rest of the article is so sad, that I really don’t know what to say. Uh, that’s a helluva lot of subjunctive statements. “Goods would be provided”. Nice dodge.

Are you seriously serious? We can change human nature! All that is required is for the proletariat to own the means of production! Brilliant!

The only tyranny you can possible conceive of is the tyranny of oligarchy or autocracy. Have you ever heard of the tyranny of the majority? That is still a centrally planned economy, regardless of whether you have it in one spot or globally or regionally or locally.

This sums up your article: You don’t even understand the concept of centralization. It doesn’t matter if it’s democratically controlled or multiple, different spatial locations. It is still bloody centralization.

35

“As expected, I guess, one has to wade through the usual dross to get to the more meaty points.”

I can’t be the only one whose head went numb reading his original ‘article’ that finds large amounts of irony in this statement.

In short, lies are long and the truth is short, and if you can’t say it clearly and in a few words it’s because you either don’t have the time or the ability. Time can be a factor on message boards and sometimes a long post is necessary because you don’t have time to edit down to a shorter one. But you wrote this a while ago by your estimation. Others have trimmed your claims down and they come down to a load of BS that has been effectively disposed of a few decades ago. Anything new?

36

Time for a reply to the criticisms that capitalism is deeply flawed.

This post will deal with Robin’s first point, that a free market only considers the needs of those with money, not the deeply felt needs of those without money.

This is a moral and an economic question.

The Moral Question.

The Prohpet Micah says “He has shown you, O man, what is good; And what does the Lord require of you but to do justly, to love mercy, and to walk humbly with your God?” A socialist or atheist can replace " the Lord" and “God” with “Marx” or “Rothbard”, but the question remains the same. Is selling only to those who can afford it good and just and walking humbly with our idea of what is right? Is it not morally superior to have everyone give it all away to whoever wants it?

Robin finds a neat solution that will please everyone. All work will be voluntary. You don’t have to work at all if you don’t want to. All your needs will be met anyway. But if you do work, you must give away your labor for free.

Admirable though it is, I am personally very sceptical that such a scheme is feasible. In fact, I think it is a fairy tale. I also think there is a sound moral basis for saying that a person who woks has every right to keep the fruit of his labors and do with them as he pleases. Which usually means he will only exchange them for something he wants more.

I have a vague impression that Uncle Marx agreed with me. His whole thesis was that workers are not getting to keep the fruits of their labors, that they are being exploited. I wonder if he ever made it clear that under socialism the worker will keep even less of the fruits of his labor than if he worked for a capitalist in a factory. He would have it all taken away, to be given to whoever needs it most.

The Economic Question.

We put aside the moral questions for now. Let us assume for the moment a world where people are neither inclined nor forced to meet all my demands. This seems to me to be a very realistic situation for most of us.

I look hungrily into the shop windows and see all kinds of stuff that I want. How will I get them? I have to work for it. And if I cannot make everything myself, which no one can, I will have to convince someone, call him Jones, to give it to me. Selfish person that Jones is, he won’t give me what I want unless I give him something in exchange.

So I go home and start planning. I wish to use up as little of my resources as possible, and produce something I can exchange for as much as possible. I start thinking about what people want so I can make it and get something in return. My plans ignore completely what people with no money want, because they have nothing to give me in return. I cannot exchange with them. There is no point in working for them if my goal right now is to meet my needs.

The economic definiton of demand, meaning how many people want and can afford Product X, is exactly what I have in mind and what is useful to me when I make my plans about whether to make Product X.

So summing up, what is Robin saying exactly? Is she questioning the morality, or the economic usefulness, of the accepted definition of demand?

If she is questioning the morality, then what does the fallacy of composition and the myth of scarcity, in fact what does her long long spiel, have anything to do with it? Just come right out and say, “It is morally wrong to work unless you work for free.” Simple enough, no? Then prove that if you can. I cannot imagine what the proof of such a statement will contain, but I don’t think it involves any of what she wrote.

So I guess she is claiming that the accepted definition of demand fails at measuring what it is intended to measure. Or maybe that a person wishing to be economically successful will be better served looking at the demands of all mankind, as opposed to only those with something he needs. I think I have shown she is wrong, that all her arguments fall away.

37

Smiling Dave,

Robin is a he. He’s 58 years old He lives in Spain.He comes by way of South Africa and Great Britian where he was a supporter for the Socialist Party of Great Britain. From what I can tell he is concerned about the enviornment. His profession seems to be landscaper slash gardener. I would imagine many of his clientele are bourgeois as the average proletariat does his own gardening and landscaping. I would even hazzard to guess that in a socialist society the services of his profession may even be considered a luxury.

Robin,

In a socialist society, without the use of money prices, how could your services be utilized using calculation in kind?

Do you consider 4 hours of strimming(weed wacking) equal to 4 hours chainsaw work to remove a fallen tree?

Is your 4 hours of your labor equal to 4 hours of a doctor’s time?

Is four hours of your time equal to the four hours of labor by the worker on North Sea drilling platform that helps to supply the oil to make the gasoline for your string trimmer?

Just how do you trade your time for a new chainsaw when the old one wears out?

How do you do a calculation in kind when your job consists of labor hours and you want to trade it for a consumer good?

If we are trading hours of labor for consumer goods, why would I work in a factory producing Volkswagens when I could trade those same hours working in a Ferrari factory?

38

He is 58 years old and wrote that article in 2005, when he was in high school? So he was in high school when he was 53 years old.

Maybe he wrote it before 2005. He quotes a book written in 1992. So he was in high school when he was 40 years old.

39

As expected, I guess, one has to wade through the usual dross to get to the more meaty points. One guy assures me he does not want “embarrase” me but could I tell him whether I had finished college. I wouldnt want to embarrase him by remarking on his spelling ability. Another declares “my self determined needs tell me that I need a yacht 365 days a year, one unsullied by other people ever on it at all” and yet strangely enough wants volunteers to “hand polish my yacht every day from stem to stern” . Sigh. Ive encountered more than my fair share of these smart-arsed buffoons in my time who strive to affect an impression of engaging in clever repartee but only succeed in demonstrating their own ignorance.

Mmmm… interesting, you act like a clown and you didnt actually answer my question, that alone tells me all I need to know about you.

40

Justintempler

As I said before I am not an advocate of labour vouchers and hence labour time pricing and the question of how you might trade your time for a new chainsaw when the old one wears out simply does not arise in a society in which one “gives according to one’s abilitiies and takes according to one needs”. Try if possible to be a bit more attentive and focussed. The scope and purpose of calculation in kind was explained in the article in question and has to be considered in conjunction with those other interlocking components of an anarcho communist system and not in isolation