justintempler,
Don’t bother asking him practical scenrios, he will not answer them, other than raising more unrelated abstractions or the standard: "these things will not be be needed in my society.
What is considered a luxury has obviously varied throughout time, go back far enough then even having a fixed meal a day was a luxury. If one day most people have yachts then he would no doubt be screaming that these things are a human right, not for the infantile rich.
Robin,
"…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”.
Sure it does lest you forget Soviet Russia in the 1970s1980s when there was wheat to be harvested rotting in the fields with the rusting of it’s farm machinery and it’s empty grain silos because people’s abilities were being utilized in Russia’s factories.
Now I will do a complete rebuttal, right now, since someone asked for one.
“The economic calculation argument (ECA) has to do with the claim that, in the absence of market prices, a socialist economy would be unable to make rational choices concerning the allocation of resources and that this would make socialism an impracticable proposition. Tracing the historical development of this argument, this article goes on to consider some of its basic assumptions about how the price mechanism actually works in practice; in so doing, it attempts to demonstrate that the argument is based upon fundamentally shaky foundations. A rational approach to the allocation of resources in a socialist economy is then sketched out. Such an approach is predicated on a particular view of socialism as entailing a largely decentralised – or polycentric – structure of decision-making in contrast to the view typically held by proponents of the ECA that socialism would entail central – or society-wide – planning. Applying a decentralised model of socialist decision-making, this article identifies a number of key components of such a model and goes on to show how, through the interactions of these key components, the objections to socialism raised by the ECA are decisively overcome.”
I think rational choices would be a bit of a stretch. As the planners in charge of socialism can still make rational choices towards means and ends that they want to achieve, the problem is that they would be misallocating, as they don’t have enough information.
Now some questions:
In your introduction you haven’t defined socialism. How do you define it?
Ok, socialism is polycentric? How would that work? What would the government be like, if there was one?
Good luck.
Historical background:
"…
The aborted attempt to introduce so called “war communism” in 1918-1921 (in reality, a rigorous system of centralised rationing which, moreover, still retained elements of the market, rather than “free access” communism)"
I agree it retained elements of the market. And it was centralized. But how would retaining elements of the market cause it to fail? And which elements specifically?
“The aborted attempt to introduce so called “war communism” in 1918-1921 (in reality, a rigorous system of centralised rationing which, moreover, still retained elements of the market, rather than “free access” communism)”
It seems like you are forgetting other socialist movements. I look forward to seeing evidence that describes how your system will not fail.
An illustrative example:
"
So what exactly is the ECA about? To elucidate its core claims it would be helpful to use a hypothetical – and highly simplified – example.
Assume a factory in socialism manufactures a particular kind of consumer good, X. Assume that in order to manufacture X only two kinds of inputs are needed, A and B. Let us then suppose that there are three different methods for producing 1 unit of X which involve three different combinations of A and B, as follows:
Method 1 requires 9 units of A and 10 units of B Method 2 requires 10 units of A and 9 units of B Method 3 requires 10 units of A and 10 units of B
This prompts the question: which method should this factory chose in order to produce 1 unit of X? One might argue that it would make sense to use as few resources as possible to produce a given output since that would leave more resources over for doing other things. This alludes to what economists call “opportunity cost”. The opportunity cost of doing something is the best alternative you forego as a result. If you use a certain quantity of resources to produce one thing then you deny yourself the opportunity of using those same resources to produce something else. By minimising your opportunity costs you maximise the amount of resources that can be used for other purposes."
First, you are implicitly assuming that the goods are homogeneous. This is not necessarily true, even if they are indistinguishable, people may use how they are made in terms of their valuations. Using as few resources as possible isn’t always the best choice, and you don’t allude to the problem of picking between two different resources, even though you implied that it may be an issue! And you seem to be missing the point of opportunity cost, as it is really just the “next best option”. The point isn’t to minimize opportunity costs, the point is to pick the production process that can achieve the desired ends, using the goods (means).
"
“In terms of our example, this would require our factory at the outset to reject method 3. Why? Because while method 3 uses the same number of units of B as method 1, it uses more units of A.”
Not always the right choice. Do consumers prefer goods that are made by method 3? Do workers prefer working in method 3? Is the good different when produced by method 3? A factory that only tries to minimize by amount of resources may be in error.
“In other words, there is no opportunity cost involved in rejecting 3 in favour of 1 or 2 assuming the output is identical in each case.”
Not necessarily true.
“However it is possible method 3 may result in a slightly higher quality version of X because of the additional unit of A or B used (compared to method 1 or 2) in which case a small opportunity cost might be incurred.”
At least you admit that the goods may be different. And wrong use of opportunity cost in this excerpt. It should be that the opportunity cost of producing X units of method 1 is Y units of method 2 that are higher quality.
“All this is fairly straightforward and there is no suggestion by proponents of the ECA that a socialist economy cannot ascertain whether one method of producing something is more – or less – technically efficient than another.”
You are vague with this statement. Is it only in cases where methods of production are worse in all possible aspects? It could be interpreted more broadly.
“Socialism is based on the common ownership of the means of production.”
How does common ownership exist?
Going to next section.
"
But what is actually happening in this “transformation process” whereby the “incommensurable subjective valuations” of individuals purportedly come to be expressed as objective exchange ratios or prices? Do the latter in fact actually capture the former? There is a kernel of truth in the claim that they do in that obviously if someone is willing to pay a price for a good he or she must ipso facto subjectively value that good. Otherwise the “willingness to pay” for it would not have arisen. But, of course, in a market economy mere “willingness to pay” is not enough; the means of payment – purchasing power- is what is crucially required and it is only willingness to pay that is backed up by purchasing power that actually affects prices. This is what economists call “effective demand” (presumably to be distinguished from “ineffective demand”). The subjective valuation that a pauper places on a square meal may be considerable but in the absence of the wherewithal to pay for such a meal, this counts for nothing. In short, the subjective valuations individuals place on goods cannot reasonably be said to be captured or embodied by the objective prices such goods attract in the market. Indeed, one might add that to suggest that they do, flatly contradicts a key myth of bourgeois economics – namely, that our wants are essentially “infinite” and the resources to meet them, limited.
"
Comments:
“It may be objected that while it does not aim to “quantify” our wants as such (along a cardinal scale), price does nevertheless reflect our subjective valuations insofar as it sheds light on our preferences (along an ordinal scale).”
No. Price is a reflection that people have different subjective valuations. You are attempting to confuse the issue by use of equivocating aggregate prices with individual valuations. And how does your argument address that there are no universal prices?
“However, this still does not get round the basic problem: in a market economy you cannot express a preference if you do not have the means to do so: purchasing power.”
Why not just clearly say that the problem is that people are poor, instead of cloaking it in eloquent language? And the point of a preference is showing willingness to exchange X for Y through action, it is meaningless if I don’t have X.
“While, according to conventional economics, effective demand determines price in conjunction with supply of the goods demanded, this effective demand is itself grossly unequally distributed by virtue of the unequal distribution of income.”
You just redefined demand, presuming it is quantifiable. How is this so? And please be more coherent with your ideas.
And this begs the question. How did these rich individuals get their wealth?
“Austrians respond to this by arguing that such differentials reflect the valuations individuals place on different occupations and the different contributions they make to society (which “society” duly “rewards” them for) but there is no way of testing this claim since such valuations are themselves subject to the limitations of “effective demand””
How did they get the wealth to begin with? This isn’t an effective argument, as I can just respond that in a free market economy, individuals originally got their wealth this way.
“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.”
Problem? Keep in mind prices determine costs, and if it wasn’t costly to produce these luxury goods, entreprenuers would bid the price down to remain competitive.
“We should bear these points in mind in considering the merits or otherwise of the ECA; it is based on so-called objective data”
Not based on objective data. Prices may appear objective, but are inherantly based on subjective valuations, and may change if the valuations change.
“To believe otherwise is to commit what is called the Fallacy of Composition – the illusion that what is true for each part of a whole must be true for the whole”
I think you are commiting a strawman. Austrians never claim that prices are subjective, rather they depend on subjective valuations.
I want a break as this article is long. I will continue reviewing it.
Sure it does lest you forget Soviet Russia in the 1970s1980s when there was wheat to be harvested rotting in the fields with the rusting of it’s farm machinery and it’s empty grain silos because people’s abilities were being utilized in Russia’s factories
I think you have a long way yet to go in your researches if you seriously imagine for one moment that Soviet state capitalism was a society based on the principle “from each according to ability to each according to need”. Not even the most ardent Stalinist would make such a claim. Lenin freely admitted that what existed in Russia was state capitalism and admired the state capitalism of the German War economy as an exemplar to be followed.
But Robin I thought Marx and Engels held that socialism becomes the inevitable outgrowth of capitalism because the evolution of the latter type of society generates problems which can only be solved by a transition to socialism. not collapse.
I’ll contunue my calculation in kind criticism after you’ve had a chance to respond to eliotn. He brought a relevant point that pertains to my argument and your answer may negate my need to continue.
"I think you have a long way yet to go in your researches if you seriously imagine for one moment that Soviet state capitalism was a society based on the principle “from each according to ability to each according to need”. Not even the most ardent Stalinist would make such a claim. Lenin freely admitted that what existed in Russia was state capitalism and admired the state capitalism of the German War economy as an exemplar to be followed. "
Just devil’s advocate, but isn’t “from each according to ability to each according to need” emergent in the market process, as employers are looking for people who have the abilities they want, and people can buy goods they “need” through the market process?
Define capitalism. How can I distinguish capitalism from socialism?
Can I get a “hear hear” from anyone who 1) actually read the article 2) knows the basics of anarcho-communism 3) has anything but ad hominiem to offer?
I’d just like to know before I begin debating…
Socialists seem to forget that Lenin instituted real socialism between 1919 and 1921. The result? 4 million dead from starvation, millions imprisoned in gulags, and massive migrations out of cities due to food shortages. It got so bad that Lenin had to institute his “reforms,” i.e. partial market liberalization (he allowed farmers to own their own land, engage in some form of exchange, but continued to control capital intensive industries). Of course, he was heavily criticized, but Lenin was a relatively pragmatic socialist.
But Robin I thought Marx and Engels held that socialism becomes the inevitable outgrowth of capitalism because the evolution of the latter type of society generates problems which can only be solved by a transition to socialism. not collapse.
Yes and no. Marx and Engels certainly envisaged the movement towards socialism as being propelled forward by the inner contradictions of capitalism - above all , its increasing inability to rationally utilise the productive potential it had created in its midst . Interestingly, some of their writings read like a glowing panegyric to capitalist productivity which may come as surprise to some of anarchocaps who may never have read Marx before, preferring to rely instead on unreliable second hand accounts. I would not, however, go so far as to talk of capitalism collapsing in the sense of imploding of its own accord. M & E insisted instead on the need for the working class to bring capitalism to an end politically and consciously by democratically capturing the capitalist state into order to dismantle the system shored up by this state.
The idea that capitalism might “collapse” of its own accord is one that has been put forward by various leftists from time to time and is usually associated with the concept of the falling rate of profit advanced by Henryk Grossman in 1929 and developed by others since ( like John Strachey). This however overlooked Marx’s own argument about the counter tendencies to the tendency for the rate of profit to fall . The Marxian theory of crises which centres on the key concept of disproportional growth, holds that there are no permanant crises in capitalism (and therefore no reason to suppose that capitalism would collapse) but, rather, a continuous trade cycle of bust and boom . Every recession works to restore the conditions under which economic growth becomes possible only for that growth to lead back to recession. Engels however latter departed somewhat from this position when the prolonged depression of the late 19th century led him to believe - quite wrongly - that capitalism had entered a “trough of despond” from which it would not be able to extricate itself. But, essentially, the idea that capitalism would collapse is not part of the traditional Marxian perspective.
Welocme to the forum Apfel.
1] yes. have you actually read the previous posts?
2] no. do you know the basics of Austrian economics, in particular can you summarize what the calculation problem is [which the OP made a total hash of]?
3] that was itself an hominem attack. Plenty of stuff besides ad hominem up there. It will be a good entrance into the debate if you will let us see your level of honesty and intellect by showing how accurately you can summarize the points raised, then refute them if you can.
4] A thought occured to me. If we are talking about for each according to his need, how can there ever be a revolution, meaning how can private ownership of property end? After all, the current owners of any property will all say they need [remember, need is “self determined”] everything they have already, plus more.
The financial burden of the civil war and industrialization, moreover, called
for the nationalization of the banks, and the subsequent devaluing of the
currency. “The printing of notes,” Carr argues, “remained the sole serious
available source of funds to meet current public expenditure and to make
advances to industry.” So although the financial policies of War Communism
produced the “virtual elimination of money from the economy,” it would be
quite mistaken to view this result as the product of any anti-market intention.
The destruction of the rouble, according to Carr, was “in no sense the produce
either of doctrine or of deliberate design.”
The collapse of the currency had originally “been treated by every responsible
Soviet leader as an unmixed evil against which all possible remedies should be invoked.”
It was only after no remedy could be found that Soviet leaders began to make a virtue out of the
elimination of money, and “the view became popular that the destruction of
the currency had been a deliberate act of policy.”
The Soviet experiment with Pure Communism
Boettke, P. J.
tl;dr - that money was abolished purposefully because of ideology is Soviet propaganda; they where fighting a costly war and the economy suffered because of it, money became virtually useless
money wasn’t abolished purposefully but they printed the heck out of those paper notes…by accident?.
I didn’t purposefully clean out my fridge but I did keep eating everything and never went to the store to stock up.
ymmv
“Can I get a “hear hear” from anyone who … 2) knows the basics of anarcho-communism…”
The basics of anarcho-communism…
Judging from the infoshop Anarchist FAQ link that you posted on thezeitgeistmovement forum? nope.
“Some may decide on equal pay, others on payment in terms of labour time, yet others on communistic associations (we have indicated elsewhere why most anarchists consider that communism would be in people’s self-interest, so we will not repeat ourselves here).”
one part makes the claim that you can determine prices, one part claims that you do not use prices and instead uses calculation in kind, and yet another part claims to be using the labor theory of value.
You are going to have to define YOUR version of anarcho-communism instead of throwing out multiple versions that contradict each other. Pick one flavor of anarcho-communism and follow it all the way through.
I began; interupped the attemped when faced with ignorace and ad hominems in order to ask that question. Thanx for making it easier; now I know who’s posts I can focus on.
Yes, I know a bit about the Austrians but I’m learning more. Yes, I can summarize the ECP, or rather the ECPs plural -
for I agree with the article that one could argue that von Mises and Hayek bring up two distinct arguments against the possibility of socialist planning, von Mises focusing on the nature of practical rationality and Hayek on epistemological arguments against primarily centralised planning.
Focusing on the first, I’d say that the issue is one of how to efficiently allocate resources: for instance in the choice
"whether we shall use a waterfall to produce electricity or extend coal and better utilize the energy contained in
coal” to quote von Mises, how is the decision to be made? We need some way of calculating benefits of alternatives, and this in turn requires a common unit of measurement.
I know, sorry 
But that would be a lie. They’d want it, but they would not need it, truly. By need being self-determined one means that there will not be a central planning agency deciding how much of something I get. But, again, a capialist way of thinking is interposed on a communist society; that Marx’s words can’t apply if everyone is greedy and wants everything is self-evident. Therefore, an anarcho-communist society assumes that a cultural shift away from this thinking as a necessity before the revolution can occur.
Or to quote Captain Jean Luc Picard, in an episode dealing with a moneyless world, “I think we can all excercise some self-control”. 
nirgrahamUK,
I’d say stupidity, not accident. This is why anarchists are not fans of the USSR.
The point being that the incident in question is in no way similar to the suggestion made by anarcho-communists, and thus can’t be used to “debunk” it.
justintempler,
Anarcho-communism = no money, no labour-units or energy units, etc, no markets.
Anarchist FAQ = general anarchist theories, including for example mutualism, which does include money and markets. Anarchist FAQ isn’t all communist, though communist ideas are included among other “flavours” of anarchism.
but when anarcho-communists ‘give up’ having a money, and then face extreme poverty and societal collapse from the lack of economic calculation, this won’t be stupid, and so can’t be compared to the State-communist experience?
Socialists seem to forget that Lenin instituted real socialism between 1919 and 1921. The result? 4 million dead from starvation, millions imprisoned in gulags, and massive migrations out of cities due to food shortages. It got so bad that Lenin had to institute his “reforms,” i.e. partial market liberalization (he allowed farmers to own their own land, engage in some form of exchange, but continued to control capital intensive industries). Of course, he was heavily criticized, but Lenin was a relatively pragmatic socialist**.**
Sorry but this is complete and utter nonsense. It is the same nonsense penned by the likes of the discredited conservative historian, Richard Pipes, who argued that what came to be called “War Communism” was not simply a ‘temporary measure’ but an ambitious attempt to introduce “full-blown communism.” (The Russian Revolution, Fontana, 1992) as well as by the anarcho-capitalist, Murray Rothbard, in his dismally ill informed essay “The Death Wish of the Anarcho-Communists” .
It would be far more accurate to say that the (partial) collapse of discernably capitalist structures and forms of accounting was much more a consequence, than a cause, of the extraordinarily calamitous events that overtook Russia in the aftermath of the Bolshevik Revolution, culminating a bloody civil war and invasion by a number of western imperialist powers. What was established in the period of so called “war communism” (1918-21) - a term that was not used at the time but retrospectively introduced by Lenin - was a system based on state ownership, not common ownership, of the means of production and, by a decree passed on November 29th, 1920, any industrial concern employing over 10 workers was to be promptly nationalised. Control of the economy became increasingly centralised in the hands of the state and labour, far from being the free labour of a communist society, was increasingly regulated by the state and later subjected to Trotsky’s infamous “labour militarisation” programme. Wage labour was not exactly abolished but up to 90% of wages were paid in kind. The collapse of the rouble in hyperinflation meant that money was largely, but not entirely, replaced by barter. Huge numbers of workers deserted the towns for the countryside prompted by massive food shortages and the prospect of benefitting from land redistribution but conditions in the rural areas themselves were likewise grim. The state pursued a policy of forcible confiscation of food while severe drought aggravated the situation enormously resulting in large scale famine.
In short, nothing about this brief period in Russian history resembled anything like a genuine communist society and the conditions - in particular, the absence of a sufficiently developed infrastucture and the general lack of communist consciousness among what was an overwhelmingly peasant population - that might have allowed such a society to come into being were notably ABSENT. You cannot introduce a communist society without mass understanding and support. This is basic Marxism. Anyone who claims that what happened in Russia in the period 1918-21 was “communism” does not understand the first thing about Marxism or communism.
nirgrahamUK,
Except off-course, it’s been explained in detail why economic calculation would not be a problem.
Also, money is not “given up”. We don’t just decide one day that “nope, no money anymore!”. Rather, the need for money and markets is transcended, by designing a society where they are not needed. The abolishment of money is a consequence of the way society is built, not what society is built on.
I would not, however, go so far as to talk of capitalism collapsing in the sense of imploding of its own accord.
So Marx never said capitalism would collapse, but Mises said communism [to use Marx’s word] would.
How prophetic of both of them.
Too bad robbo forgot a few quotes of Uncle Karl:
The development of Modern Industry, therefore, cuts from under its feet the very foundation on which the bourgeoisie produces and appropriates products. What the bourgeoisie, therefore, produces, above all, are its own grave-diggers. Its fall and the victory of the proletariat are equally inevitable."
—Karl Marx and Frederic Engels, The Communist Manifesto[133]
Just a reminder, the Manifesto was published in 1848, a bit before 1929.
Communism is for us not a state of affairs which is to be established, an ideal to which reality will have to adjust itself. We call communism the real movement which abolishes the present state of things. The conditions of this movement result from the premises now in existence."
—Karl Marx, The German Ideology[134]
Those two are from Wikipedia on Marx. Oddly enough, the article did not bother to find a single quote supporting robbo’s position. Instead it mentions explicitly over and over just the opposite of what robbo claims.
Here is an excerpt from a very pro Marx article, one that considers him a great genius:
This was what made Marx and Engels’s analysis of the coming communist society so powerful: their brand of socialism would succeed not because of mere striving and wishful thinking but because it was based in scientific study and represented the culmination of an inevitable trend in the modern world. Accordingly the Manifesto contained little discussion of political organization or revolutionary activity. Instead it presented communism as the direct product of a process of historical change involving a class struggle that was rooted in the effects of industrialization. The working class was destined to become a majority in society, and it would be bound, in the face of obvious economic oppression, to demand change, which could only be achieved by seizing economic and political power. In this view societies passed through great epochs: as feudalism had given way to capitalism, so capitalism would give way to communism. It was this faith in the inevitability of communism, as predicted by scientific socialism, that was Marx’s great contribution.
But apparently the Marxists had themselves a problem recruiting troops with this. If it is all inevitable anyway, why should I get myself killed fighting for communism? I’d rather leave things as they are for now, thank you very much. Trotsky, who headed the army, had to do something.
We have no record of his fiery speeches that I know of, but we can see how he wheedled out of it, rather unconvincingly, if you ask me. What Marx really meant, though not what he said, was [according to Trotsky]:
The bourgeoisie and the working class are thus located on a soil which renders our victory inescapable – not in the astronomical sense, of course, not inescapable like the setting and rising of the sun, but inescapable in the historic sense, in the sense that unless we gam victory all society and all human culture is doomed.
So troops, stop being so lazy. All society and human culture is at stake here.
Those Marxists who still knew how to read were outraged at this travesty. As one Trotskyite put it:
…apparently arouses in the aforementioned comrades a violent reaction. This takes the form of heatedly denouncing as un-Marxist any suggestion that capitalism can be possibly followed by a society other than socialism; crystallizes in a mechanical formulation of inevitability; and accuses us of “abandoning Marxism” in posing the existence of historical alternatives.
Well! We have to calm these guys down. How about boring them to death with sophistry? If you have the extra room in your brains, here’s what they came up with:
http://www.marxists.org/archive/draper/1947/12/inevitsoc.htm
But never fear. The true blue anti-robbo cops gave as good as they got:
To remove the principles of inevitability and spontaneity from Marxism, says Mattick, is to emasculate the teachings of Marx. It is to deny the concept of the universal operation of dialectic materialism and to ascribe to human consciousness a vastly over-rated role.
So robbo, you wouldn’t want to emasculate the teachings of Marx, now would you?
Apfelstrudel
“Anarcho-communism = no money, no labour-units or energy units, etc, no markets.”
Great now that you have told me what it is not, you can start to explain what your version of it is. I’m assuming your version relies heavily on calculation in kind to an attempt to substitute for money.
Apfel.
Robbo’s solution of the calc problem has been ripped to shreds earliera few times over by the posters here. He made up his own version of the problem, and evaded the real problem by saying “Who cares? Anything will work. Votes, point systems, common sense, you name it.”
You wrote:
They’d want it, but they would not need it, truly. By need being self-determined one means that there will not be a central planning agency deciding how much of something I get. But, again, a capialist way of thinking is interposed on a communist society; that Marx’s words can’t apply if everyone is greedy and wants everything is self-evident. Therefore, an anarcho-communist society assumes that a cultural shift away from this thinking as a necessity before the revolution can occur. Or to quote Captain Jean Luc Picard, in an episode dealing with a moneyless world, “I think we can all excercise some self-control”.
So there is no central planning agency deciding what I need. On the other hand it’s not me deciding for myself either. Then who will decide? And will this decision be enforced by violence, or be merely an opinion with no teeth?
Also, Marx really messed it up, you are saying. As did Lenin and Stalin and Trotsky and Castro and Che and every last Marxist and Communist on the face of the Earth until now. They tried to set up Communism BEFORE anyone had this cultural shift. A real Marxist would be writing psychology books about self control. Robbo himself is wasting his time on the calculation problem, because what we need first thing is to have a huge cultural shift.