This is key, a socialist society has to answer these questions.
All of these are resolved by way of markets and prices.
Its not that they can’t build it’s who do they build it for, why do they build it, and for who? It’s also a question of how can we most efficiently build it while not disrupting over the resource stock.
Show me where I have claimed this. The argument is about a socialist commonwealth. Not the socialist commonwealth the day after.
If economic calculation of any sort really becomes absent, as in the case of the hypothetical and imaginary autocratic socialist commonwealth, then they won’t be able to produce tanks. You need economic calculations to show what methods are economically feasible. In terms of the economic knowledge -costs to be expenditures and gains to be earned, they have no method to resort to.
There is no longer any knowledge regarding costs for anything. It is impossible to devise a plan and actually finish it (let alone coordinate it) when you are talking about anything beyond the simple things that a small barter economy can perhaps produce.
Don’t tell me they can still do it because they can resort to prices of the preceding age of Capitalism. That’s not showing socialism can build tractors. It’s showing that socialism can build tractors if there is some Capitalism in its vicinity or recent history.
Reread the argument again from Human Action. Not because it’s the best, but because it’s the shortest. That is not the argument. Mises assumes the problem of what to produce and how much is settled. He is granting his opponents with this assumption for the sake of argument. He is taking this to a higher level. he is showing that they cannot build it. This is why it’s so devastating and so controversial. hardly anybody would object to what you claim about the market being more efficient.
That’s not what I’m saying (pure obfuscation on your part). I’m saying that you’re taking Mises’ usage of the term “impossible” too literally, and that you have overlooked the important implications/insights of his argument. Impossible = can’t have rational allocation. The socialist doesn’t know that he doesn’t want the tractor, precisely because he can’t see the opportunity cost (not rational).
It’s non-sequitur to state that not being aware of a cost means inability to construct. It just means that natural resources will be wasted. As long as the resource pool exists though they can still build.
Also it is equally fallacious to assume that a country can calculate by adopting the pricing structure of a foreign nature. The structure of production is different in each country, a neighboring country still canot correctly calculate even if adopting another countries pricing. Mises also explains this in HA.
Prices are unique to time and place, you cannot borrow the pricing structure of another and expect it’s value to be anything other then arbitrary. Communist countries lasted not because it was borrowing prices from neighboring countries, but because it had not yet extinguished it’s resource pool.
Borrowing money prices from a neighboring bourgeois country, and not having money at all still both suffer from the same problem. The inability to formulate meaningful prices. The only difference between the amount of distortion in the two is a matter of degree.
This is silly because it’s what I would ask from you. Come Sunday I’ll provide a plethora of quotes for you to chew on.
Thats not what he is showing. He is saying that yes, you can build it, but capitalism can perform the same task with a better management of resources. He is saying, why would you build a warship with 300 tons of steel when you can do the same job with 150. He is asking you, HOW do you know your method is the most economic one? The point is, without prices, you cannot know which method is the most economically efficient route to take.
That was a response to Flic!!
I know what you’re saying, and I think you are wrongly downplaying it. I think I adequately addressed your points about the tractors, and about what Mises said. I suggest you reread the section. “impossible” means just that. Unless you consider a primitive barter economy as part of the argument. You are clearly talking about modern methods of production, i.e., tractors and all of its millions of parts. Mises’ argument is that it cannot be done. I agree.
How much more could Mises have explicitly stated it, I have no idea.
Show me. Provide the evidence that he is saying that without economic calculation, you can still build it. Show me the evidence or stop wasting both of our time.
without prices, you don’t even know if it is economically feasible! You die before you complete the project!
I can’t afford to spend the time now to show you. I will on Sunday. Quite frankly I’m surprised no one else is here explaining it. That said I have already provided you with one article, and you persist in ignoring it.
But there is a chance that you wouldn’t die, in fact being the maestro of such a coercive plan it’s likely you, the planner, will not die. Your slaves might, but I’m sure you will be drinking wine and fine bread as much as you can clobber.
Economic feasibility is not necessary for production. Your ignoring the fundamental purpose of the econ calc argument, that is, management of the resource pool.
So yes, you may have be able to build it, and yes your slaves may starve as you didn’t anticipate the amount of food necessary to sustain them. That doesn’t mean you cannot accomplish it.
It is if you want to complete it.
I don’t think you realize the complexity of the modern methods of production and the ability to attach any meaningful costs to the infinite array of possibilities. They cannot be guessed. They transcend the knowledge of any one man, if I may use Hayek here to make the point.
I don’t know what you are trying to say here. If you cannot plan, it is nonsensical to even talk about modern methods of production. You forget that there is no private sector to loot in order to make up for the planner’s losses. There are no signals to guide the planner for anything. There is nothing. Yet, you insist that this is about more efficient or less efficient. It’s not. If you don’t have any signals, you are like a blind man. There is no alternative method to economic calculation using money prices. That is the argument put forward by Mises.
That is what we are disputing DD5. I’m not sure what your hung up on. You assert that no planning can take place, and I assert otherwise.
You would never be able to prove logically, or empirically that a socialist commonwealth would be incapable of planning a process of production and completing it. What you could prove however is that the to complete the produced item the costs involved would have been devastating. That doesn’t mean they can’t do it, it just means the costs are irrational. Your argument has no framework, logic, or any type of coherent base. It’s just thrown out there that once socialism is reached everyone instantaneously runs out of resources and cannot produce.
It’s a fallacious argument though. A socialist country could easily coerce it’s citizen’s into mining and cultivating various raw resources. The question isn’t that it can’t be done, the question is why should it be done, how much of it should be done, and for whom.
So as where you cannot prove that they are incapable of producing, we can however prove that they are not aware of their economic environment, and incapable of ascertaining what individuals as a whole want/need to sustain themselves. It’s not that they can’t make available thousands of pounds of steak to please their citizen’s. It’s that they don’t know if they should allocate resources to create thousands of pounds of meat, or should they instead focus on making available more clean water. They don’t know what are the highest order of needs are, they don’t know if steel is more valuable in creating more cars, or if they should instead build more homes.
Economic calculation has to do with the meaningful formation of prices. Prices carry the information which link producers and consumers together. It shows us what is currently in demand, and what the resource pool will currently allow. It also tells us when raw materials need to be cultivated. It has nothing to do with not having the schematics for building a train, but everything to do with, should we even BUILD the train, or an airplane instead?
The only thing we can prove as an absolute, via apriori reasoning and empirically is that a socialist commonwealth cannot economically calculate, via prices. Calculation implies a knowledge thats aware of what consumers want, and aware of the resource pool’s availability. All of these revolve around meaningful prices. It implies marginal utility, subjective theory of value, the the formation of prices, which I describe in the article I linked, praxeology, among many many other Austrian axioms and theories. So as I said earlier, your argument of being incapable of completing a process is only a derivative of the Econ Calc argument, that is, the ability to formulate meaningful prices.
Prices carry information, the information they carry is a reflection of demand of consumers and availability in the supply of resources. It’s not that a social commonwealth cannot build something, it’s that they would build it while being ignorant of what consumers needs are, and while being ignorant of their available resource pool.
Honestly in how many different ways do I need to explain it?
have you bothered to read this yet?
don’t know. Maybe I can stir something, or maybe not.
It depends on the definition of “plan”.
unless plan means otherwise. The production may take place, but it might be the individual actors valuing what needs to take place in the market, rather than, the socialist who is blind. This is my delineation (maybe other hold it too) that there is only one market and that is the free market. Socialist attempts are not of the market and only hamper and are detrimental to the market. Any actual production is the individual actors within the market making positive economic relations happen whereas the socialist is only degenerating and never generating anything.
The only reading of costs would be individuals in the actual market trying to send out signals anyway they can. The socialist either is heeding these signals or not. It will vary how much allocated throughout the market. But it’s still the individuals entrenched in the market actually sending out the signals. Not the socialist. Even if the socialist sends rubber tires to Place-A without Place-A asking for tires, the socialist still sees the signal that Place-A uses rubber tires, unless, which undoubtedly happens at times, the socialist sends rubber chickens where rubber tires were needed. Then the socialist isn’t seeing the signal at all. But any signal that does come through has nothing to do with the socialist. It only has to do with the signals on the ground given even if that means Place-A uses tires. It’s Place-A signaling to the socialist that it uses rubber tires. Even if the socialist says to Place-A it no longer uses rubber tires now it works with rubber chickens, then it is those individual actors at Place-A that still are involved with the rubber chickens. The socialist only deemed the place to be for rubber chickens.
that’s my two-cents.
I think you hit it on the head Wilderness, it’s the signaling process as you stated that they are missing. That signaling process comes about via money and meaningful prices(market formed).
In this case the socialist institute has no way of ascertaining what it’s citizen’s need or don’t need and can only provide/build ad-hoc. It’s moves will be arbitrary or reactionary.
true. Though the socialist can receive a signal even as simple as one as Place-A has tires. That sensory phenomena of Place-A using tires is a fact or at least the last time the data sheets were updated and confirmed. The socialist may follow that simplistic signal and send tires to that location. But the socialist is only redistributing capital, meaning, the capital isn’t being distributed, ie. invested, in accord with market demand. It is being redistributed because of the material that is sold at the place at the expense of capital sold to another place. And since market prices are not used to devise the redistribution, then it’s not consumer driven and given that information is asymetrical to begin with this only further hampers what is already known at the most simplistic level, ie. I don’t know what somebody else is thinking.
It’s all production factors with no consumer factors, ie. consumer/market demand. But since the consumer demand isn’t being read by the socialist, the socialist is only shuffling around parts in the society. Not with any feedback from the consumers but only by the historical use of institutions. It’s probably why with increased socialist activities the status quo is maintained because it is the equilibrium process taken further which already shuns dynamic knowledge so the increased static knowledge, ie. historical institutions, remain in place to maintain the already instituted practice of redistribution from point A to point B. It’s not the flux driven consumer market where dynamic shifts are occurring but rather the static old, ie. status quo, that are remain in order for the socialist system to maintain it’s already declared redistribution is to happen from point A to point B, ie. institute A to institute B. Since the dynamics of value/preferences are not being ‘thought-of’ or considered as part of the process (sure the socialist knows there are consumers but the consumers are not considered because the price signal would be the only way for them to consider the consumers), then the socialist is only maintaining the more concrete, ie. empirical data, and to not lose the data means at times to sustain the status quo as they become and thus are the data on the spreadsheets.
Think of GDP. It already has categories that are determined and don’t change. Numbers need to fill those already pre-made GDP data sheets each time it comes out. Those unchanged category columns in the GDP data sheet are part of the status quo.
Now there is a car czar and that car czar surely has data sheets that are pre-determined when they hit the desk of some bureaucrat who fills in the numbers. One obvious determined category will be ‘Cars sold at GMC’. That category hitting the desk of some gov’t official on the number of cars sold is now gov’t institutionalized. It is a status quo category. And that’s a extremely simplistic static data that will remain and will not change in accord with consumer driven market dynamics.
Filc is completely correct.
Again, read the following quote very carefully. (emphasis mine)
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)
It’s not that what you say is not a serious problem. It’s just that Mises grants this problem of what to produce to his opponents, and still shows that they cannot resort to any method or calculation to produce anything. If you don’t understand this critical part, you are basically missing the crux of the argument.
Sure you can guess in your planning. Nobody ever said that you cannot blindly makeup some numbers and give people orders, but how likely is it that you actually complete anything as complex as anything that is produced by our modern methods of production? The answer is 0 or pretty damn close to 0.
To be honest, I don’t think that means DD5 is incorrect
This point is irrelevant. You’re right when you say that Mises, for the sake of argument, concedes the possibility of efficient distribution of consumer goods. His argument does indeed focus on the necessity of prices in the allocation, distribution, and structuring of capital. But from this we cannot deduce the conclusion you’ve somehow reached, namely that once a society takes over the means of production (therefore eliminating money and money prices), that all scientific knowledge is lost, and that the production of capital intensive/complicated goods must a priori come to an end.
The burden of proof is on you. You must show why this is necessarily the case.
I have not made such claim. And I have been very careful not to make such an absurd claim. And I have explained to you several times already that I have not made such a claim.
I did not make any claim about scientific knowledge. They can have all the scientists, Engineers, and books they want.
The argument is not about once a society takes over… as you just put it. I have said many times. Once a society takes over, you can still resort to the prices of the preceding capitalistic era. I don’t know for how long so don’t ask me. They system will disintegrate the system of division of labor will completely break down.
Here is the argument again:
The argument I have made and the argument that I am quite sure Mises is making is that in the socialist commonwealth, assuming no capitalistic entity in its close proximity of space and time, there will be no money prices and therefore, no economic calculations. Such a commonwealth cannot develop an economy based on capital intensive and complex production methods. Such an economy cannot build ships and tractors and a modern pencil… “it is no economy at all” as Mises puts it. Of course, he’s not talking about small primitive barter economies.
Do you agree with the above or not? That is my argument and that is the calculation problem put forward by Mises.
I agree with the position stated above. Socialism is not an actual alternative to capitalism; it is the destruction of the economic system. If a society never develops a functional economic system (what we call “capitalism”), then the production of a warship, or even a pencil for that matter, is indeed impossible. The reason is now obvious, thanks to Mises. This part of the argument is a more general position aimed at the Neo-Marxists, which quickly defeated their nonsensical proposals (Bohm-Bawerk really did this in Positive Theory of Capital). But the controversy didn’t really begin until the Neo-Classical’s joined the fight and argued against the Austrian’s (this part was tricky, and this is where Mises really presents his revolutionary argument).
Socialism explains that an economic system, without capital markets, is no economic system at all (attacking Schumpeter and Lange); rational economic calculation is not solely contingent upon consumer good markets. The neoclassicals believed that you could impute the proper production techniques with the use of economic calculus. Mises explodes this myth (perpetual change, radical subjectivism, uncertainty, and the heterogeneity and complementarity of capital refute this position).
Schumpeter is the great whore of economics. He’s remembered not because of his theories or reasoning abilities, but because he was a “capitalist” who supported the socialists in the economic calculation debates. All the quasi-socialists of today love Schumpeter, and often cite him as a “reasonable capitalist” who was simply unable to completely remedy himself of “capitalist dogma,” blah blah blah.