From: Lee Corbin (lcorbin@tsoft.com)
Date: Sun Nov 03 2002 - 22:52:49 MST
Jeff writes
> Regarding this thread. A week or so into the
> discussion, it dawned on me that the participants were
> all over the map as to just what socialism was. In
> the words of the Red Queen (not Humpty Dumpty)
> everyone seemed to be in "Words mean what I want them
> to mean" mode.
> One [info source] that I liked was by Robert Heilbroner, at:
>
> http://www.econlib.org/library/Enc/Socialism.html
>
> The Mises-Hayek argument met its most formidable
> counterargument in two brilliant articles by Oskar
> Lange...Lange set out to show that the planners would,
> in fact, have precisely the same information as that
> which guided a market economy. The information would
> be revealed as inventories of goods rose and fell,
> signaling either that supply was greater than demand
> or demand greater than supply.
Amazing. But then later your excerpt says
> In 1982, to stimulate the
> production of gloves from moleskins, the Soviet
> government raised the price it was willing to pay for
> moleskins from twenty to fifty kopecks per pelt.
> Smelev and Popov noted:
>
> State purchases increased, and now all the
> distribution centers are filled with these pelts.
> Industry is unable to use them all, and they often rot
> in warehouses before they can be processed. The
> Ministry of Light Industry has already requested
> Goskomtsen [the State Committee on Prices] twice to
> lower prices, but "the question has not been decided"
> yet. This is not surprising. Its members are too busy
> to decide. They have no time: besides setting prices
> on these pelts, they have to keep track of another 24
> million prices. And how can they possibly know how
> much to lower the price today, so they won't have to
> raise it tomorrow?
What? Twenty-four million prices? Clearly this is
beyond the means of the most determined bureaucrats.
So the implication must be that with the help of
computers, the decisions could be made automatically.
But even updating the computers with new products
seems too formidable. Yes, if the inventories could
be on-line, I do see how a static economy might be
centrally controlled. But no economy is static.
Furthermore, how could the profit incentive be built-in?
Someone has to be highly motivated to notice that product
A could be used in place of B (for one example). The
free market depends on people wanting and needing money
so badly that they get very creative about this kind of
thing.
> This story speaks volumes about the problem of a
> centrally planned system. The crucial missing element
> is not so much "information," as Mises and Hayek
> argued, as it is the motivation to act on information.
Yes.
> After all, the inventories of moleskins did tell the
> planners that their production was at first too low
> and then too high. What was missing was the
> willingnessbetter yet, the necessityto respond to
> the signals of changing inventories. A capitalist firm
> responds to changing prices because failure to do so
> will cause it to lose money. A socialist ministry
> ignores changing inventories because bureaucrats learn
> that doing something is more likely to get them in
> trouble than doing nothing, unless doing nothing
> results in absolute disaster.
Seems right.
> My own view on discussions of socialism on this list?
> About equal to Christian fundamentalists engaging in a
> discussion of Satan's talents as a chief executive.
> Americans are weaned on anti-communism the way
> Christian zealots are weaned on Christian dogma.
That's funny. Ever since age 12 I could give you
the names of a number of friends or acquaintances
who denounced anti-communism, without exactly being
communists themselves. But then, perhaps your
analogy isn't so bad: for the last few hundred
years, every village is said to have its atheist.
> Superstition armored with prejudice doesn't lend
> itself to, much less participate in, open and fair
> discussion.
Yes ;-) but that cuts both ways.
> I would much rather hear about how the present diverse
> 'ecology' of economic/social systems can make the
> transition to the next stage.
THAT'S the best question! I can imagine distribution
systems (mostly charity) that may exist when the most
productive 1% of the population does 99.99% of the
work, instead of doing only about half. But I have
never succeeded in imagining how we get there from
here. (If anyone wants to run with this and not
discuss socialism further, a new thread would be
appropriate, of course.)
Lee
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