Economic Calculation, What is at the center?

[wilderness]

DD5,

Am I anywhere near what you are saying?

[Esuric]

@DD5

In the imaginary socialist commonwealth, no economy can form (beyond the primitive barter economy). You obviously understand this point now, so like you said “can we try to remain focused?”

Okay, real simple:

Tomorrow the whole world becomes one unified socialist common wealth. Prices are gone, and all records to previous prices have been forgotten (not like this really matters). The socialist planner and his minions have no access to actual economic opportunity costs. Can he (and his minions) produce a warship?

[filc]

@DD5

If you mean that the information conveyed by prices becomes less and less informative regarding the valuation of the consumers, then yes, you are absolutely correct. More and more of the information conveyed by the price system becomes more reflective of government preferences and less reflective of the consumers. However, the calculation problem is very different from this.

@DD5

The calculation problem is not about disruption in prices. That’s interventionism.

@DD5

It is also not about meaningful/informative or not meaningful/informative prices in terms of satisfying the most urgent needs of the consumers.

@DD5

The calculation prices is about no prices at all. It is about no prices for any of the means of production. Under such a hypothetical scenario, there can be no rational economic planning at all. It is complete chaos.

To which a socialist will say, “Oh hey we can just make up prices!”. Even a socialist planner can make arbitrary prices, that doesn’t mean they create rational calculation.

DD5 do you have anyone else here that will back up your argument specifically? Who has actually read Socialism and HA?

@DD5

I have been very consistent.

Hmm?

@filc

He asserts that the focal point of Economic Calculation is that a true socialist common wealth could not plan and complete any project(literally), due to not having economic sanity.

@DD5

You continue to misrepresent my view over and over again, and frankly, I am quite sick of it. If you think that the focal point of my argument is not the absent of prices, then you’re mad!

@filc

At the point you arrive to total state you have no prices, or at least the prices derrived are meaningless.

@DD5

However, the calculation problem is very different from this.

@DD5

I stand by every word in that dialog.

So money and prices are a part of economic calculation or not? I am so confused about what you consider economic calculation it’s rediculous. It’s a simple yes or no question.

Either money is a part of economic calculation as you state, or it is not. Please clarify because you have been anything but consistent in your wording.

Did you notice how every other contributor to this forum used money as their focal point on economic calculation? Did you bother to read LadyAtti’s excellent critique of the problem?

[Stranger]

@Esuric

@DD5

In the imaginary socialist commonwealth, no economy can form (beyond the primitive barter economy). You obviously understand this point now, so like you said “can we try to remain focused?”

Okay, real simple:

Tomorrow the whole world becomes one unified socialist common wealth. Prices are gone, and all records to previous prices have been forgotten (not like this really matters). The socialist planner and his minions have no access to actual economic opportunity costs. Can he (and his minions) produce a warship?

Definitely not.

[Esuric]

@Stranger

Definitely not.

I’m not asking you.

[Stranger]

@filc

It is implied that coercion us used under a socialist regime, thats just a given. The point is, he is still capable of producing a warship, he just cracks the whips and sends his serfs to do the job. How long it takes him and what quality is a result is for another discussion.

How would he know which resource and task to allocate to which serf?

[DD5]

@Esuric

@DD5

In the imaginary socialist commonwealth, no economy can form (beyond the primitive barter economy). You obviously understand this point now, so like you said “can we try to remain focused?”

Okay, real simple:

Tomorrow the whole world becomes one unified socialist common wealth. Prices are gone, and all records to previous prices have been forgotten (not like this really matters). The socialist planner and his minions have no access to actual economic opportunity costs. Can he (and his minions) produce a warship?

Yes, I thought we both agreed on this point. But only because the planner can still resort to the prices from the night before. For some time, he will be able to produce a warship. But the planner would have to freeze the structure of production in order to continue to operate it indefinably. As conditions change, the system will disintegrate into chaos.

The point was that this is not a valid refutation for the literal meaning of “impossibility” in the calculation argument. The warship was only possible because it was still able to resort to prices left to it by the preceding era of Capitalism. It was still able to calculate. When calculation is no longer possible, as it is not under socialism, then they will no longer build their warships or anything else.

[Esuric]

@Stranger

How would he know which resource and task to allocate to which serf?

There’s a difference between scientific knowledge and tacit knowledge. The scientist/engineer can produce X with materials Y,Z,E. He just doesn’t see the economic opportunity costs, that is, he doesn’t know if he should produce it, or how to produce it economically. For example, Y,Z,E could be used to feed one million people, or it can build 10 schools, ect. The scientist doesn’t know this–he only knows how to build a warship. Furthermore, the scientist/engineer may not know that he can build a warship with just Y and Z.

[Esuric]

@DD5

Yes, I thought we both agreed on this point. But only because the planner can still resort to the prices from the night before.

Okay, re-read what I said and then answer. I want to get a clear answer from you.

[Stranger]

@Esuric

@Stranger

How would he know which resource and task to allocate to which serf?

There’s a difference between scientific knowledge and tacit knowledge. The scientist/engineer can produce X with materials Y,Z,E. He just doesn’t see the economic opportunity costs, that is, he doesn’t know if he should produce it, or how to produce it economically. For example, Y,Z,E could be used to feed one million people, or it can build 10 schools, ect. The scientist doesn’t know this–he only knows how to build a warship.

These ratios are economic ratios. That they aren’t expressed in money does not exclude them from the economic calculation problem.

The central planner does not know any of them. One scientist may be able to produce X with Y,Z,E, while the next scientist can produce 0.5X, while the vast majority of people can produce 0X. He does not know how to tell them apart.

[DD5]

@filc

Did you notice how every other contributor to this forum used money as their focal point on economic calculation?

Here you go again. You think I am mean to you but I am not. Why don’t you actually go over my posts, and not just to you but to others also, and see that money prices is the focal point of my argument.

You continue to misunderstand the problem at hand. The argument is not about economic calculation in general, but about the impossibility of economic calculation under Socialism (as put forward by Mises).

You refer to any any distortion in prices due to coercive intervention as part of the calculation argument/debate. At least, that’s what I understand from you.

And I am trying to explain to you that it is not. That’s not the calculation problem of Socialism. The calculation problem of Socialism describes a system where markets are completely abolished. Prices are not distorted. There are no prices. Under such a condition, the director cannot rationally plan anything economically for society or for his friends using society.

[Stranger]

@DD5

You refer to any any distortion in prices due to coercive intervention as part of the calculation argument/debate. At least, that’s what I understand from you.

Price controls are a form of economic calculation chaos, as they prevent the formation of prices. Subsidies and taxes, on the other hand, allow economic calculation.

[DD5]

@Esuric

Tomorrow the whole world becomes one unified socialist common wealth. Prices are gone, and all records to previous prices have been forgotten (not like this really matters).

I don’t understand the point you are trying to make with this question

He can try to use the structure of production as was left to him by the night before. I don’t know what he will be able to do and for how long. The question is pointless, It’s just a matter of time until it all breaks down, and what ever he can achieve (if at all) will be due to the structure left to it by the preceding age of Capitalism.

[Esuric]

@Stranger

These ratios are economic ratios.

What ratios? I didn’t mention any ratios.

@Stranger

One scientist may be able to produce X with Y,Z,E, while the next scientist can produce 0.5X, while the vast majority of people can produce 0X.

I’m not talking about economic efficiency. You’re right when you say that there are many different ways to produce X, and I said that myself in the comment you’re responding to. All I’m saying is that the scientist knows how to produce X; the economic and technical efficiency of the recipe is not the issue at hand. The prices conveyed are merely information signals, telling you what Y,Z,E are worth to society; they are the opportunity costs.

[DD5]

@Stranger

@DD5

You refer to any any distortion in prices due to coercive intervention as part of the calculation argument/debate. At least, that’s what I understand from you.

Price controls are a form of economic calculation chaos, as they prevent the formation of prices. Subsidies and taxes, on the other hand, allow economic calculation.

Sure, and Socialism is basically like arbitrary price settings over the entire economy by one central authority. So what’s your point?

[Esuric]

@DD5

I don’t understand the point you are trying to make with this question

You don’t want to get pinned down, I understand. This way you can continue making pretend like you actually understand economics.

[DD5]

@Esuric

@DD5

I don’t understand the point you are trying to make with this question

You don’t want to get pinned down, I understand.

Good. Are you looking real hard to find an argument here with me. I don’t get it.

[DD5]

@DD5

@Esuric

@DD5

I don’t understand the point you are trying to make with this question

You don’t want to get pinned down, I understand.

Good. Are you looking real hard to find an argument here with me. I don’t get it.

How should I know what Obama can do and for how long the minute he takes over the entire economy? What am I God?

[DD5]

Since when is the socialist utopia about being able to use what Capitalism has left it and being able to hang on for a while? Why are we even discussing this nonsense?

[filc]

@Stranger

Subsidies and taxes, on the other hand, allow economic calculation.

Subsidies and taxes alter the structure of prices as well and as such alter the playing field from which the market operates. It is still a disruption of economic calculation. Depending on the severity though it’s consequences may be minor and or unnoticed.