- The price mechanism shows (indirectly) how abundant a resource is.
(The price mechanism shows nothing of the sort. This is the first mistake in your reasoning. What the price mechanism shows is how much the seller perceives he can acquire for his good. There could be one cell phone in the entire world, but if no one wants it the price will not be very high. Ergo, the abundance of cell phones is indeterminate from the price. Prices will, it is true, end up lower when things are mass produced, but that isn’t the only reason for low prices.)
- The price mechanism is necessary because it allows individual people to decide how much of a good will be produced and where it will be distributed
(This examination of the pricing mechanism is a little backward, a little to the left of X and a little south of Y. So I’ll try to get you back to 0,0. The price mechanism does not say either of those things. The price of something is set according to those factors. When a price is set and X sells well, the manufacturer may raise the price if he perceives he is selling too low. “Where” something is to be distributed is not automatically known. If a producer of a good happens to sell something somewhere, he may decide to continue sales in that area, but that does not exclude that there are other areas where he may have sold better. Nor does it tell him where such an area is, or where it would be a bad idea to sell. And the price that the producer fixes can indicate to consumers what might be going on in terms of worldwide production and distribution, but it is by no means clear cut.)
Please let me know if I have missed something fundamental about the problem so I can continue my research!
(Your analysis of the price mechanism was faulty. Wikipedia is bad research material. Read just about any section in Human Action dealing with government intervention in…anything. Read the whole book. Apart from having a lot of examples of precisely what you are researching, Mises has an undeniable wit about him throughout the whole book. If you aren’t big into reading lengthy works, Economics in One Lesson offers some lesser examples, without so much wit, but still a fun read, and he gets the point across rather clearly. But it might also do you good to read works by supporters of central planning, and try to think through logically how their ideas would work. You will hit walls over and over and over when it comes to scarcity.)
Here are the solutions that I have come up with:
- Don’t we already know how abundant our current resources are? For example, a mining company knows how much ore it’s taking out of the ground every day and has likely had geological surveys done regarding the total capacity of the mine. If every company uploaded this information to a database, we could know how abundant our global resources are.
(We do not know everything, but that is irrelevant. We can work within the confines of what we do know to answer your questions. The mining company may know how much ore is in a mine, and we may be able to keep that information on a database. This tells us nothing about what should with that ore. Specifically, it does not tell us why it is worth our time to mine these things, nor does it tell us if our mining is costing more than we can get a return on from the ore. Only the fact that we can sell the ore determines that we should be mining it. If we are simply mining it because some central computer says to, there will be no way of determining if the act of mining was not itself a waste of resources.)
- For basic goods and services (basic food, water, energy, shelter, clothing, communication) we know how much the average human uses of each - based on statistics and scientific studies on how much human beings need for a healthy lifestyle. So, the goal would be to provide this average amount for every single person. So really no need for consumer input for this. If there wasn’t currently enough production to provide this, resources would first be allocated to develop it until there were enough basic goods for every person.
(Do we really know how much clothing the average person needs? Or water? How can you determine how much communication a person needs? Let me offer some examples. You are giving all the food, water, clothing, and energy that a computer determines the average person needs. A freak storm tears apart your clothes. You’ve been outside in the cold, naked, for an hour. You rush home, heat the bath, and run some water. Now, in a market system with a functioning supply-demand mechanism, the market will adjust. You will simply pay more to get more energy, water, and clothes. However, with this database entry idea, you are using up a limited amount allotted to you. You’ve used more heat, water, and clothing than has been calculated for your use. How does the system respond? How can it just give you more without having to recalculate what everyone gets? And then have this happen in aggregate. Thousands of people on occasion using more than they are allotted. You either have to let those people go without water, energy and clothing until they get their next rations, or you have to recalculate everything so that everyone, across the board, gets less. And what happens when you do that? The people that are using more continuously use more, and end up getting more than everyone else, and each time this recalculation is done, the people who worked within their means get less, the heavy users continue to over-use, and soon everyone has to over-use just to survive. People starve, freeze, and die.)
Next, we have luxury goods. We know how abundant each resource is, and we can determine how much of each resource a good requires (and uses in production). Individual manufacturers already have all this data. So for each luxury good we determine how much of each resource it uses. Then we can use the relative abundance of each resource to determine an overall value of the good. Here we would initially have to have some kind of credit system as demand would far outweigh supply.
(This comes from your faulty analysis of the price mechanism. Price does not come only from the abundance of a material. People have to want it, and with luxury goods, some people will want it more than others. You are also making the error of saying that the value of a good comes from something inherent in the good and the labor that goes into producing that good. Goods are not worth whatever work was put into making them. Goods are only worth what someone is willing to pay. But getting back to this idea of luxury goods, what will be the basis of your credit system? What will people have to do to earn luxury goods credits? And what happens when people decide to start trading their luxury goods for food, energy and clothing? How do you adjust the credit-to-goods ratio to keep people from getting luxury goods they don’t want and trading them for things they do want? Those who want more of a luxury good than they can afford will get them from people who don’t want those goods but want more clothing. The market will tear apart this whole system from within as people amass clothing or food and use them to trade for other things, all outside the calculation of some database. The redistribution of materials will throw everything out of whack. You’ll have to start putting bullets in people’s heads, essentially. And what do you mean by “initially”? At what point will you not have any credit system?)
Such a system could be implemented in real time as a networked software application. We could input all information on resource availability into a database and as people would input their orders, the value of the good would be subtracted from their credit supply and decrease the amount of resources in the database - in turn increasing the value of the goods.
(So there would be a panic to buy the new goods? See, because that’s not how price in terms of abundance really works. Every time someone buys an iPhone, the price of all other iPhones does not go up. This is an inherent difference in a functioning market and what you are supposing. In the market, a sale is made, and when enough sales are made the factory uses the funds to produce more, to meet demand, or less if there isn’t much demand. But here you’re just saying that you’ve produced X as much as X can be produced, so as it becomes rarer, the price must go up. But what if like…five people buy X? Doesn’t that mean that all the materials used to make X have been wasted, when they could have been used to make Z instead? You again run into the problem of misusing all your resources. This is why Samsung doesn’t use all the copper in the world to produce as many televisions as possible before selling them.)
This comprises the basics of how I believe the economic calculation problem would be resolved within TVP. Let the criticisms begin! However, if possible, please limit your criticisms as to how what I’ve proposed will not solve the economic calculation problem as opposed to any other arguments against socialism, TVP, etc. (i.e. I know most here would be opposed to this based on arguments of basic freedom/liberty but that doesn’t really relate to the problem) Thanks!
(Done and done.)
