What’s your point here?
How can the director build a ship in the absent of economic calculations without resorting to prices abroad and perhaps a previous capitalistic era? There is no longer a modern industrialized economy based on the division of labor.
Let me ask in in the following way. By what method can you even devise a plan that shows that it is economically feasible?
look, Mises’ argument is devastating, it doesn’t need to be overplayed.
exactly, acknowledging that brutality, technical knowledge and inherited capital can be applied to purposeful ends (even as this is economically irrational).
I’m afraid you’re going to have to elaborate. Is economic calculation possible or not? And is there some alternative method to economic calculation on which the director can rely on in order to plan? Even in an inefficient manner?
I am not overplaying the argument. I think some may be underplaying it. Now you can argue that the pure socialist commonwealth is an abstract idea. Fine, I will agree, but in this abstract imaginary commonwealth, there can be no planning of a warship, according to Mises.
economic calculation without money and a market for capital goods is indeed not possible. as such production that was embarked upon could not hope to be economically rational (i.e. no economically rational planning). however we have only junked the economically rational plans. all other plans are as yet on the table. a mad plan to make a boat out of gold?get slaves to build you pyramids? etc. etc. The way you state it DD5 its as though Human Action. i.e. purposeful action. is not possible without monetary calculation. that’s not true. its only economically rational purposeful action which is dependant on it. Can we agree on that? (perhaps I misunderstood your position and we were always agreed), or perhaps you see flaws in my thinking. Let me know.
Let’s say the plans are already made for a warship. Now you have to aquire labor and the resources to build it. Without economic calculation you won’t know if it’s economically feasible, or even possible (economically). If the warship is something like the Death Star which would take a gargantuan amount of labor and resources, you really have no idea what’s going on economically, and would most likely be operating at a loss. Is it physically and theoretically possible? Maybe. Economically? Maybe, but without economical calculation, no. You would have to literally direct all labor and resources without question to the construction of something such as that. You might as well burn the balance sheets because the numbers are useless and won’t mean anything if the prices don’t reflect real prices on a free market.
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)
You see. I’m not overplaying his argument.
I do of course agree with that. …but its definitely tempered down from the position I first read you make. I don’t think I made an unfair reading. perhaps it was a misunderstanding all the same.
Yes, I agree.
But to move beyond the small and primitive barter tribal economy and actually develop into a modern economy where hundreds, thousands, and currently millions of people, who do not know each other but can cooperate to build the things that require the knowledge beyond any one single man, requires the economic calculation made possible only with money prices.
A warship (and even the mass production of a modern pencil) requires the vast knowledge beyond any single man. I know that you know what I’m talking about. I’m just trying to elaborate on the point I tried to get across.
If you agree with the above, then I’m sure you’ll agree that a warship cannot be built by the imaginary socialist commonwealth.
Precisely!
The point is to actually have a plan that enables you to finish the project. The plan is of no use if the workers will die before the project can be completed.
that will be a contingent fact based on the sheer technological possibility of achieving the feat (and to heck with the economic rationality of doing so), by that is meant technological knowledge of how to produce it and the material/capital required to do so (and be wasted, futiley dimishing the stock of such goods and further diminishing the technological possibilities of further attempts at economically irrational production)
Boiled down it comes to: what do the communists have to play with at the start of the game? that they might fiddle whilst rome burns until they can’t fiddle at that level anymore, and eventually their capability sinks to maintaining a small population in poverty.
If we imagine a socialist commonwealth as the first and permanent society of mankind (never having had the benefit of capitalism) then I will join you in recognising that battleships are out, and hacking stones to sharpen them for hunting are in (but never more than that).
Agreed.
Great. Now all you have to do is also recognize that as conditions change overtime from the initial period of transformation, the economy gradually disintegrates until warships are out again. Do you agree?
yeah, I wrote that explicitly.
Meanwhile I note that throughout the period in question: economic calculation and economically rational planning is not happening. but technological calculation and technological planning is happening (whatever good that does the poor souls).
Why is that?
So we are in agreement.
I don’t see how I overplayed the argument. Saying that a warship is possible in the socialist commonwealth only because there is some capitalism in its vicinity (space or time) allowing it to still calculate, hardly means the same thing as that a warship is possible without economic calculation, as was clearly suggested here upthread about socialists building good warships and tractors.
There’s still scientific knowledge, which is all that’s required for production (not efficient production, which actually allocates scarce resources rationally). Eventually the socialist society will disintegrate to the point where the scientific knowledge becomes superfluous (which would probably take a while), simply because there aren’t enough resources to actually create a warship. But again, you’ve misunderstood the calculation/coordination argument.
The really dramatic insight put forth by Mises’ calculation argument, is the interconnectedness of all economic phenomena; the fact that all goods are heterogeneous, and complimentary. It allows you to see the system as an actual organic system. This was revolutionary.
I think you are misunderstanding the Economic Calculation problem. The problem isn’t that without a market building complex products would be impossible. Rather, the problem is that it is impossible to distribute resources rationally to benefit consumers.
what sucked me into this discussion was what I saw to be equivocation over ‘economically rational plans’ and ‘plans fullstop’… The problematic = sign just jumped out at me.
scientific knowledge is not the same as the economic knowledge required for production. The only reason the socialist commonwealth can hang on for a while is because it can still calculate (economic knowledge) due to some capitalist entity in its vicinity. See above exchange with Nir.
Ensuric, don’t start with the “you’ve misunderstood…” declaring your firm position that isn’t going to change now. You’re claiming the possibility of modern production without prices and giving me examples of Russian tractors and warships, all which were addressed by me up-thread. Let’s come back to this some other time. Maybe we won’t need to.
What if it’s a totalitarian regime that has no care about what benefit’s the consumers. Their plan is to build a warship (in which I picture the Death Star) and all resources and labor are directed at this. Is this economically possible? Is this physically possible even if it’s not economically possible?
I remember watching a show about building bridges and tunnels that would go from North America to Russia, and North America to England (if I remember correctly). It went into the design and the physics of it all (which the train in the tunnel would be going so fast I don’t think it’s physically possible for a human to withstand it). Then it goes into the cost and how much it would take (capital and time) to build it that it’s near impossible (unless you directed all man power and resources to the project, then it could be possible to make, worthwhile? No.)