The goods are controlled by whatever other state company produces it
How is it stupid? More state enterprises, stronger state, happier consumers. And managers certainly could have an incentive to invest profits into new enterprises(by perhaps running the enterprise they created for some extra time, or just plain its profits, whtever)
Lilburne, how would losses borne privately make it not state company? The state company’s equity would increase by the amount the manager pays from his own pocket if there is a loss, so it would in fact be more state owned
nandnor, if an individual controls the fate of a resource, enjoys the profits, and suffers the losses from its disposal, then that individual owns the resource. That’s what ownership, in the economic sense, is.
The goods are controlled by whatever other state company produces it
It seems the government makes the companies elect managers (or installs them) then leaves them alone. Are you just calling them state companies for the fun of it then?
You could say that the state “rents” out the enterprises for the manager to take care of, but only on a temporary and democratically(or whatever other statist ideological) basis. The manager even need not get the profits to himself, but some other state benefit(or fraction of profits) as incentiviser for good performance.
The calculation problem theory is not based on tweaking titbits in the system. So, you can’t tweak your way out of it Lange style. See any previous thread about it or the Lange debate.
“One cannot play speculation and investment. The specu-
lators and investors expose their own wealth, their own destiny. This fact
makes them responsible to the consumers, the ultimate bosses of the capi-
talist economy. If one relieves them of this responsibility, one deprives them
of their very character. They are no longer businessmen, but just a group of
men to whom the director has handed over his main task, the supreme
direction of the conduct of affairs. Then they—and not the nominal direc-
tor—become the true directors and have to face the same problem the
nominal director could not solve: the problem of calculation.”
But there can be incentive systems organised that would make profit valuable and losses uncomfortable, thereby still having the manager’s own destiny on the stake, while capital be owned by the state.
And think blue, the calculation problem applied to state ownership of means of production, whether market prices exist under state ownership is irrelevant(though in the managerial system they indeed do)
The problem with your theory is that people will be elected to placed in charge of businesses. However, the question is by whom. The problem of knowledge in society developed by Hayek already put a squash on governmental interference due to the fact that it is impossible for a centralized board to know what is required in the economy since only the individual has the data capable of acheiving his own happiness through his subjective preferences. These preference are reflected in prices which are signaled by profits and losses that allow producers to know which good society wants and in what amount.
The othe problem is if the state owns the property, the state becomes the primary allocator of scarce resources. Going back to Hayek’s theory, the state cannot possibly know what resources need to be produced and at one amount at any given time since this info can only be known by the individual actors within society who are on the ground . If the government allocates property rights in this ever changing environment filled with scarcity, how can it know the preferences of each and every individual better than the individual oriented market system. The government will not be able to give property rights (i use this term loosely in this connotation) to those who will best serve the needs of the people b/c it will be unable to tell what needs to be produced at one time and in what place as the individual oriented free market.
Here is an example that I hope clariffies this idea. If john and joe wish to start a business. John wishes to start a steel business on the same plot of land that Joe wishes to start a video game business. The government must decide then which business would be most valued by society between these two people (and more in a vastly more complex society). In the freemarket, John and Joe would compete for this plot of land by offering something to the oringinal owner of the land that he would want more ( i.e.money).
However, if the state were the primary allocator, it will not base its ideal upon the utility of the land used but by the political expediency of their decision. John may get the land because his business will create more jobs and maybe build things that the government values instead of what society values (which may be joe’s business). The government will also have the power to shape the market in their own image (shutting down companies they don’t like and starting up companies they do). This will cause problems within society as the government can not possibly know which businesses can start up without all the neccissary data (which is impossible to collect in the first place). Since the government has the ablility to affect supply, they have the power to affect the value of goods and services by either limiting it supply or making the supply overabundant in society. The free market on the other hand has profit and loss mechanisms through which it can ensure changes in prices and production to meet consumer demand through those profit and losses.
But there can be incentive systems organised that would make profit valuable and losses uncomfortable, thereby still having the manager’s own destiny on the stake, while capital be owned by the state.
It’s still not their money. They sound like managers more so than capitalists. In which case, they do not have true ultimate power over the disposal of capital, rather the state does, even in its choice of picking managers. If they are made responsible for all profits and losses and reap/suffer both, they’re just capitalists who were gifted capital by the state (depending to what degree they’d trust it not to just change its policies and expropriate so even this is a distortion.) In the former case, the calculation problem persists because the state remains the sole proprietor over capital goods, in the latter it’s just a matter of the initial distribution being warped.
Let me repeat. That is not the socialist calculation problem. The problem is simply this: How is it possible to do economic calculation in the absence of market prices? Mises said it himself in Human Action, p. 705:
The problem of socialist economic calculation is precisely this: that in the absence of market prices for the factors of production, a computation of profit or loss is not feasible (emphasis mine).
Mises clearly admitted that a socialist country can still do economic calculation, provided there is still a pricing system in place somewhere. For example, the Soviet Union attempted to abolish the market and the pricing system, however, they could still calculate, because it could reference prices from abroad.
Mises wrote in Human Action, p. 702:
An apparent verification of these errors was seen in the experience of the socialist governments of Soviet Russia and Nazi Germany. People do not realize that these were not isolated socialist systems. They were operation in an environment in which the price system still worked. They could resort to economic calculation on the ground of the prices established abroad. Without the aid of these prices their actions would have been aimless and planless. Only because they were able to refer to these foreign prices were they able to calculate, to keep books, and to prepare their much talked about plans (emphasis mine).
But until you can explain how this can be done without market prices, you have not really solved the problem at all.
In reality, your argument is this: my system is feasible, because it allows for some economic calculation in some markets, because I still allow for profits and losses. If you permit profits and losses, then, of necessity, you must have some market prices intact, or else according to Mises, it would be unfeasible.