Without the pricing mechanism you cannot decide
- What to create (Whats demanded)
- How much of what to create
- For whom to create it for
- Whats the most effecient way of creating it
Essentially planners can only guess, what to produce for consumers. To perform this successfully it requires that the planner operate in a state of omniscience, that he is aware of all the wants and needs of every individual, and that he is aware of all factors and costs that go into production of all things. This ofcoarse is an impossible expectation to meet. Additionally, with socialism there is no consumer sovreignty, there are no key inputs which tells producers where best to allocate scarce resources. Where are raw materials most preferred to be developed as decided by consumers.
I describe the process in more detail here.
It’s important to point out that the economic calculation problem does not only effect full scale socialized economic society’s. But can effect isolated industry’s which assume a socialised model. Any coercively provided/distributed government service for example is going to suffer from inadequate economic calculation to the extent at which they restrict the market from functioning as normal. Sure t hey can measure their service and compare it to current prices and metrics on the market, but since their service is coercively provided they have no way of knowing if customers are satisfied, and how much customers would actually be willing to pay had the service been provided voluntarily. Furthermore they can’t even decide how many customers would actually even want their service, since by default everyone is forced to partake in it’s services against their will regardless.
This is why some of us believe that Economic Calculation is an additional argument for privatized domestic and national security agencies, arbitration, and law creation.