I agree. The whole thing there was a bad choice of wording.
Indeed it’s not. But from this, we cannot deduce your conclusion.
So if the whole world suddenly became a socialist common wealth tomorrow, would it be able to produce a single warship? What about in 1 year, or in 10 years?
I’m distinguishing between tacit knowledge and scientific knowledge. The argument your making, namely that the Soviet system was able to produce because of international prices, is an argument which explains why it lasted for so long.
This is a gross misunderstanding, which really misses the crux and beauty of Mises’ argument.
If the goal of the totalitarian dictator isn’t to aid in rational economic calculation to benefit the consumers but instead to build a warship then there is no reason as to why he couldn’t.
What you need to remember is that the socialists that Mises were addressing believed that State Socialism would be more efficient than the market and that therefore the average man would be better off. Mises calculation argument utterly demolished this position.
Not at all. Mises grants this to his opponents.
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.(Mises,)
The director cannot even plan according to his own values and judgement regarding what is to be produced.
DD5, I would first like to say that I have been a lurker on this board for about a year now and that I hold you in the utmost respect. It is a great honor to finally be conversing with you.
Mises, in the quote, is referring to capital goods. Mises says that capital goods can be employed in a vast variety of different ways and that without prices it is impossible for the socialist planner to determine which use of the capital good is the most efficient.
But that is not what is being argued here. The question is whether a dictator with complete disregard for economic calculation and the rational satisfaction of wants can, in a society without prices, build a battle ship. The answer then is most certainly, “why not?”.
I agree with the conclusion. But it’s not my conclusion. It’s Mises.
Yes, Look at the exchanges of this debate more carefully.
Don’t ask me how many years until warships are out of the game. How should I know.
This is Mises’ argument. I agree with it. He talks about it in Socialism (later edition), as well as Human Action and other several places.
It is possible to resort to prices abroad. There were also black markets. They also conducted some trade with capitalistic neighbors. The point is that they were able to calculate so your tractor examples is really missing the crux of the argument. Without calculations of any kind, it is impossible to embark on any such project as a warship or even the mass production of pencils.
Because the director cannot resort to any method by which he can compare costs to be expended and gains to be earned. He has no way in which he can devise a plan for production of some commodity without compromising the more urgent needs of his workers and himself. Even according to his own value judgement, he must at bare minimum, provide them with food, clothes, shelter, etc… He can devise a plan to build a ship that may curtail the production of more urgent needs such as food. His workers will not be able to complete the project due to hunger.
I find that the calculation problem is an extremely difficult problem to grasp. I constantly struggle with it.
I have been reading on the sidelines with my iphone and have been unable to respond. The economic calculation position as described by Mises is very specifically the inability to formulate meaningful prices. Not the loss of purposeful action, an axiom that not even full socialism could prevent. I am not sure if there was a poor choice of words or a miscommunication somewhere or not. But if the argument is that people would be incapable making plans, even complex ones, in a socialist commonwealth then that is not specifically the argument of economic calculation. That is a separate argument, and it’s legitimacy should be explored elsewhere(IE On another thread). Mises makes it extremely clear in his texts that economic calculation specifically comes from lack of money, and/or the formulation of meaningful prices on the market.
You may be able to pull a few lines of text out of HA which would give merit to the argument that people become stupid in a socialist commonwealth but this is not the crux of his argument. Economic calculation revolves entirely around the concept of money, and money alone. If you are still confused about this I would recommend going back to Socialism and HA re-reading those specific parts of the text.
I don’t mean to be very forward, and certainly don’t mean to sound aggressive, but that is the tone I am reading from you. I want to state simply again that my tone is not meant to be forward or aggressive, but to sound stern in clear defense over the representation of the Misesian stance. Economic calculation is specifically about money, and the formulation of meaningful prices. It’s about economic rationality as Nir so gracefully stated.
This does not follow from your previous statement where you said that a single warship could not be created. There is no doubt that without economic rationality a socialist commonwealth would definitely extinguish it’s natural resources. Some things would be under-utilized, while others over utilized. This is why socialist commonwealths have absurd excess supplies of some goods, and extreme shortages of others.
DD5 I apologize if this seems forward but I think, based on your language, that you may have missed the fundamental points of the econ calc argument.
I wrote about why Fascism and Socialism fail for the same purposes in the below link. I explain why their functionality breaks down due to inability to formate meaningful prices. I hope
Please excuse my text if it seems antagonistic my friend, it’s not intended to. <3
Flic, I don’t even want to respond to what is a complete misrepresentation of my position from the start.
Please go over the entire thread and read all of my posts very carefully and don’t get fixated on just one or two particular phrases. Then comeback with some valid points if you have any. You are attacking a straw man right now and it will be very unproductive for me to reiterate the argument from the start.
I don’t think so. You may be fixated on one or two phrases that could have been better worded. Go over it again with the big screen and not the iPhone. Nir had a similar issue with some choice of words, but then we cleared it out.
This is going to be difficult to fight in the courts considering the precedent that has already been set under the perversion of the Commerce Clause during the FDR administration.
The only standing I see this has in court is the Individual Mandate which will be interesting on a few fronts. The Gov’t will be up against the wall because they are going to argue that the Individual Mandate is a TAX, because that will be the only way Congress can require us to pay for anything (This is not based on Original Intent, this is based on previous SCOTUS rulings). The Gov’t can prove their case under the guise of a Tax because of the enforcement under the IRS.
Obama has turned the insurance sector into a utility of the State, if this is Fascism, then I dont know what is.
I have read the thread on my PC, and re-read it. Perhaps you can better clarify your position because you spun a near 180.
I am not attacking anything, I am simply reminding you that the crux of the econ calc problem revolves around money, and meaningful prices, not about knowledge of production. I see that you ignored that.
Whats alarming is you think this is an argument when it’s not.
Corporatism corporatism and more of it everyday.
I just need to my number
Is it cheaper to pay the fine or to (worthless) insurance.
And how is this not my argument? Have I not emphasized money prices and “method of calculation” over and over again? I can refer to “knowledge” when I think it’s appropriate. The two are not unrelated.
No I did not. I said from the start that the socialist director/planner cannot plan due to the absent of economic calculation.
I disagreed with you about interpreting the “calculation argument” as simply not being able to satisfy the most urgent wants of the consumers.
I said that the calculation problem is about not being able to plan at all. I don’t mean you stop being human and become an idiot. Of course you can devise plans that are not economically or physically possible. Like you can go ahead and plan to go fly off a cliff by flapping your hands like a bird.
But as far as economically feasible planning, it cannot be done, even if you assume that the problem of what consumers goods to produce is settled. That is the calculation problem.
This is my hang up.
This statement.
Is vastly different from
There is a reason that not just one, but 3 differnet individuals responded to you in correction. You have not made one or two statements but many, including the one above.
My attempt to clarify
You responded with
My second attempt to clarify
Than Esuric seeks clarification.
The point went un-answered.
Here is yuor response when I was pointing out Mises’s economic calculation problem.
You than contend that the economic calculation debate is not about money prices. Which is what I was trying to explain(patiently mind you)
And again
This continues for another page and then you finally alter your position by implying that a warship COULD be made.
It wasn’t just one or two statements, it was a continuous confusing conflation between the word planning, and economic planning that through us off, and based on your statement above you still continue to do it.
This statement
Does not logically follow from this statement
Planning and economic planning are two different things. That is my hang up.
I know it’s petty but it’s been evident already that loosely using the word planning will confuse people (myself included).
You asked in the beggining how this was not your argument. It may be but poor communication lead to confusion. This is why I cannot clearly ascertain what your position specifically is at all.
Now having said that, I do think that there may be a good argument about the dis-functionality of the division of labor in a socialist commonwealth, but that is an entirely OTHER discussion, one that stems FROM economic calculation, but is NOT economic calculation itself.
Please don’t make me go back and re-quote everything again. [:(]
You asked me to read your posts(rudly implying that I did not grant your posts sufficient attention), when in fact I have, respectfully considered your posts and found them lacking. I can read on the iphone the same as I can on a 24" screen. This discussion need not be a petty bickering contest.
Well, I think I’ve made it clear very quickly that the term planning refers to economic planning of more then just yourself and a few of your fellow neighbors, and not just any arbitrary planning in general. “The paradox of planning is that it cannot plan” refers to precisely that. Mises didn’t mean individuals can no longer plan, but simply that they cannot plan anything beyond the primitive tribal economy. That’s what I meant also.
And you are simply failing to grasp the problem. He cannot build the ship. If he cannot resort to any method of calculation to show him that it is economically feasible, then he cannot build it. You keep insisting that he can build a ship, although, not in the most efficient manner. This is certainly not the conclusion of the calculation problem.
One of them had a problem with some of my choice of words but ultimately agreed with my conclusion. Another one erred in his example by pointing to an alleged socialist commonwealth that was able to still resort to economic calculations to produce tractors and warships.
No it is very relevant to the calulation argument. That is what is meant by “no economy at all”. Sure you can have some division of labor on a very limited scale, such as in a small barter economy where everybody knows almost everybody. Nothing that can build a warship or a modern pencil.
Hayek disagrees, as do I.
“There is no reason to expect that production would stop [under Socialism], or that the authorities would find difficulty in using all the available resources somehow, or even that output would be permanently lower than it had been before planning started . . . . [We should expect] the excessive development of some lines of production at the expense of others and the use of methods which are inappropriate under the circumstances. We should expect to find overdevelopment of some industries at a cost which was not justified by the importance of their increased output and see unchecked the ambition of the engineer to apply the latest development elsewhere, without considering whether they were economically suited in the situation. In many cases the use of the latest methods of production, which could not have been applied without central planning, would then be a symptom of a misuse of resources rather than a proof of success.” - Friedrich Hayek
How does the following quote posted before not address the issue?
We may admit that in its initial period a socialist regime could to some extent rely upon of the preceding age of capitalism. But what is to be done later, as conditions change more and more? Of what use could the prices of 1900 be for the director in 1949? And what use can the director in 19890 derive from the knowledge of the prices of 1949? (Mises)
It is not as if I took the position that “planning” is not possible the day after the transformation. We are talking about the hypothetical socialist commonwealth in complete isolation where no economic calculation is possible. No structure of production created by the preceding age of Capitalism that can be “frozen” in time by the planners. Do you think Hayek is disagreeing with Mises also? I don’t think he is.
Ok that is the position I needed you to clarify. The position you stated is not the economic calculation argument.
It’s odd because I didn’t read that from Esuric’s posts.
You are still equivocating planning, expertise, and knowledge of production, to economic knowledge.
An economy always exists, but to further clarify the position at hand. A monetary market based economy is not necessary for production history is filled with examples to the contrary.
I understand that it is relevant to the calculation argument but it is NOT THE calculation argument. It is a second argument, and is a derivative of the calculation argument.
I’m sorry. You may not agree with the argument, but I assure you, It is the argument put forward by Mises.
What didn’t you read from his posts?
Nothing that can employ modern methods of production or anything remotely close. Nothing that requires many different people with different skills, who do not know each other, to cooperate in production. That is what is required to build a warship or even the bolts and nails that goes into it. You cannot do it without economic calculation. That is Mises’ argument, which is why it is so devastating. “No economy at all” is not some metaphorical expression. There is no reason to downplay it.
What examples? Give me one good example please.