A rant and a video.

[Skooma Addict]

"To prove that economic calculation would be impossible in the socialist community is to prove also that Socialism is impracticable. Everything brought forward in favour of Socialism during the last hundred years, in thousands of writings and speeches, all the blood which has been spilt by the supporters of Socialism, cannot make socialism workable. The masses may long for it ever so ardently, innumerable revolutions and wars may be fought for it, still it will never be realised. Every attempt to carry it out will lead to syndicalism or, by some other route, to chaos, which will quickly dissolve the society, based upon the division of labour, into tiny autarkous groups.


The discovery of this fact is clearly most inconvenient for the socialist parties, and socialists of all kinds have poured out attempts to refute my arguments and to invent a system of economic calculation for Socialism. They have not been successful. They have not produced a single new argument which I have not already taken account of. Nothing has shaken the proof that under Socialism economic calculation is impossible."




-Ludwig von Mises


http://mises.org/books/socialism/part2_ch6.aspx

I would recommend this book to every Socialist because it is still to this day the most powerful critique against socialism.



Also, what do you guys think of this video?

http://video.google.com/videoplay?docid=1544592954540546684&hl=en#

[gal3on64]

Well being a socialist doesn't mean you have "planners" . In an anarchist society It doesn't mean these people would control your life. in reality there would be no politicians.

[New Tet]

The video is unbearable to watch and its message is in some parts ahistorical and in others banal and superficial.

[mykittyhasaboner]

"To prove that economic calculation would be impossible in the socialist community is to prove also that Socialism is impracticable. Everything brought forward in favour of Socialism during the last hundred years, in thousands of writings and speeches, all the blood which has been spilt by the supporters of Socialism, cannot make socialism workable. The masses may long for it ever so ardently, innumerable revolutions and wars may be fought for it, still it will never be realised. Every attempt to carry it out will lead to syndicalism or, by some other route, to chaos, which will quickly dissolve the society, based upon the division of labour, into tiny autarkous groups.

In other words: "Socialism is this and that and it really sucks, so the masses will never get socialism to work". Great fucking argument so far. :lol::rolleyes:



The discovery of this fact is clearly most inconvenient for the socialist parties, and socialists of all kinds have poured out attempts to refute my arguments and to invent a system of economic calculation for Socialism. They have not been successful. They have not produced a single new argument which I have not already taken account of. Nothing has shaken the proof that under Socialism economic calculation is impossible." Again, a paragraph where Mises says nothing else but "I'm right and your wrong" without making an argument.




http://mises.org/books/socialism/part2_ch6.aspx

I would recommend this book to every Socialist because it is still to this day the most powerful critique against socialism. Seems like a piece of crap to me. With your introduction as hopelessly bland and lacking in substance as that, I'm surely not going to waste time reading that whole thing.




Also, what do you guys think of this video?

http://video.google.com/videoplay?docid=1544592954540546684&hl=en#It's absolutely pathetic. If your going to make a video critiquing socialism; you should actually try and debate their arguments, instead of presenting various strawmans on top of dull black and white pictures. None of that has anything to do with socialism. Seriously you Mises trolls seem to argue with yourselves; in that you present the socialist argument for them rather than debating their actual views. It's almost like your whole ideology is one of presenting strawmans.


Well being a socialist doesn't mean you have "planners" . In an anarchist society It doesn't mean these people would control your life. in reality there would be no politicians.
Yeah good luck with that. This isn't a very good argument, even against the whole Mises tirade. You can't have socialism without economic planning, nor without "politicians".

[scarletghoul]

Also, what do you guys think of this video?
i think it sucks

[Skooma Addict]

In other words: "Socialism is this and that and it really sucks, so the masses will never get socialism to work". Great fucking argument so far. :lol::rolleyes:

Again, a paragraph where Mises says nothing else but "I'm right and your wrong" without making an argument.



His actual arguments against socialism are in the book.


Seems like a piece of crap to me. With your introduction as hopelessly bland and lacking in substance as that, I'm surely not going to waste time reading that whole thing.

It's your loss. No socialist in history has been able to prove Mises wrong.


It's absolutely pathetic. If your going to make a video critiquing socialism; you should actually try and debate their arguments, instead of presenting various strawmans on top of dull black and white pictures. None of that has anything to do with socialism. Seriously you Mises trolls seem to argue with yourselves; in that you present the socialist argument for them rather than debating their actual views. It's almost like your whole ideology is one of presenting strawmans.


I would say the video has more to do with fascism than socialism. But still, it seems as though the video can be supported with historical evidence.

[1billion]

I'm assuming everyone here read Socialism, just as every ancap should have read Das Kapital.

[Plagueround]

So Von Mises set the blueprint for his followers to sit and slam Marx all day long while ignoring the expansion, advancement, and debate of his ideas, not to mention the overall diverse spectrum of socialists? You people remind me of the christians against evolution that focus their attacks on Darwin.


A socialist community can have only one ultimate organ of control which combines all economic and other governmental functions...It does not matter whether this organ is an absolute prince or an assembly of all citizens organized as a direct or indirect democracy. It does not matter how this organ conceives its will and expresses it. For our purpose we must consider this as accomplished and we need not spend any time over the question how it can be accomplished, whether it can be accomplished or whether Socialism is already doomed because it cannot be accomplished."This is how it must work, because I say so. But since it doesn't actually work I don't need to discuss it further."

I'd have a better time with Miseans if they weren't constantly telling the socialist what we believe.


That man must work, because his desire to consume is greater than that of the beasts of the field, is part of the nature of things. That the possessor is able to live without conforming to this rule is a gain derived from the existence of society which injures no one—not even the possessionless.This right here is another astounding gem. Why do I keep getting this image in my head of tiny bleeding hands stitching Nike logos into a shoe? You misanthropes are not worth my time.

[Dimentio]

So Von Mises set the blueprint for his followers to sit and slam Marx all day long while ignoring the expansion, advancement, and debate of his ideas, not to mention the overall diverse spectrum of socialists? You people remind me of the christians against evolution that focus their attacks on Darwin.

"This is how it must work, because I say so. But since it doesn't actually work I don't need to discuss it further."

I'd have a better time with Miseans if they weren't constantly telling the socialist what we believe.

This right here is another astounding gem. Why do I keep getting this image in my head of tiny bleeding hands stitching Nike logos into a shoe? You misanthropes are not worth my time.

Mises does not even criticise Marx. He is just claiming that planning is impossible because no one could know anything about everyone's individual preferences. And yes, it is a strawman argument. But so is praxeology.

Mises's ideology is too marginal to attack.

[Skooma Addict]

"This is how it must work, because I say so. But since it doesn't actually work I don't need to discuss it further."



You misread the quote. Also, he does discuss the flaws of socialism further. He did write an entire book on the topic...


Mises does not even criticise Marx. He is just claiming that planning is impossible because no one could know anything about everyone's individual preferences. And yes, it is a strawman argument. But so is praxeology.

If you actually read the book, you would know that Mises critisizes Marx. Praxeology is a strawman argument?

[Durruti's Ghost]

You misread the quote. Also, he does discuss the flaws of socialism further. He did write an entire book on the topic...



If you actually read the book, you would know that Mises critisizes Marx. Praxeology is a strawman argument?

I'll make you a deal. You read Das Kapital (or, if you've already read it, some other socialist classic), and I'll read Socialism.

[Skooma Addict]

I'll make you a deal. You read Das Kapital (or, if you've already read it, some other socialist classic), and I'll read Socialism.

Alright, that sounds fine. I have a friend who owns the book, so I will just borrow it from him.

[Durruti's Ghost]

Alright, that sounds fine. I have a friend who owns the book, so I will just borrow it from him.

I have a university library to draw on. I'm reading a book of essays by Voltairine de Cleyre at the moment, but once I'm done, I'll exchange it for Socialism.

[Havet]

I have a university library to draw on. I'm reading a book of essays by Voltairine de Cleyre at the moment, but once I'm done, I'll exchange it for Socialism.

I'm interested in Voltairine de Cleyre, where exactly did you got those essays, what are their titles, and are they available online?

Thanks for the trouble.

[Durruti's Ghost]

I'm interested in Voltairine de Cleyre, where exactly did you got those essays, what are their titles, and are they available online?

Thanks for the trouble.

Well, the title of the book is Exquisite Rebel: The Essays of Voltairine de Cleyre. I checked it out from my school's library, so it's probably not available as a collection online. However, you could probably find the individual essays. They include:
"Why I am an Anarchist",
"Anarchism",
"Events Are the True Schoolmaster",
"Anarchism and American Traditions",
"A Correction",
"The Dominant Idea",
"Crime and Punishment",
"In Defense of Emma Goldman",
"The Economic Tendency of Freethought",
"Secular Education",
"Those Who Marry Do Ill",
"The Case of Woman Versus Orthodoxy",
"The Woman Question",
"Sex Slavery",
"The Political Equality of Women",
"Modern Educational Reform",
"Direct Action",
"The Eleventh of November, 1887",
"Our Present Attitude",
"McKinley's Assassination: From the Anarchist Standpoint", and
"Literature the Mirror of Man".

I'm about halfway through right now.

[mykittyhasaboner]

His actual arguments against socialism are in the book.
OK, well then why not post some relevant arguments rather than a paragraph where Mises bloats in his own ignorance.




It's your loss. No socialist in history has been able to prove Mises wrong.

:laugh: Prove what wrong?



I would say the video has more to do with fascism than socialism. But still, it seems as though the video can be supported with historical evidence.
Historical evidence? It didn't seem very relevant, at all. That is all I watched of it. It's about as dull as Mises and his advocates.

[Hiero]

What is economic calculation?

[Kwisatz Haderach]

The discovery of this fact is clearly most inconvenient for the socialist parties, and socialists of all kinds have poured out attempts to refute my arguments and to invent a system of economic calculation for Socialism. They have not been successful. They have not produced a single new argument which I have not already taken account of. Nothing has shaken the proof that under Socialism economic calculation is impossible.
In other words, "I am right. End of story."

That simple assertion means nothing. Mises can scream that he is right all he wants. His actual arguments - which you have not quoted - have been refuted several times over. If his response is simply to deny that he has been refuted, without offering any counter-arguments, then he was an idiot and there is nothing further to discuss.


Every attempt to carry it [socialism] out will lead to syndicalism or, by some other route, to chaos, which will quickly dissolve the society, based upon the division of labour, into tiny autarkous groups.
Ummm, I'd like to point out that although past attempts to build socialism have failed, they have never failed in this manner. They have not led to syndicalism, and they have not led to chaos either. Mises' prediction is flat out wrong.


Also, what do you guys think of this video?

http://video.google.com/videoplay?docid=1544592954540546684&hl=en#
I have not seen the video, but I have read the book. Hayek claims that state intervention in the economy - even welfare-state intervention of the kind advocated by social democrats, as opposed to full socialism - will lead to dictatorship and tyranny.

That argument was made in 1944. Since then, 60 years of social democratic history have proved the argument wrong. Where is your tyranny in the social democracies of Europe, Hayek?

Even the history of Soviet-style societies proves Hayek wrong. His argument was that economic planning would lead to dictatorship. But, in the USSR and all other Soviet-style societies, dictatorship existed before economic planning.

[Dimentio]

You misread the quote. Also, he does discuss the flaws of socialism further. He did write an entire book on the topic...



If you actually read the book, you would know that Mises critisizes Marx. Praxeology is a strawman argument?

Praxeology is pre-scientific and is built around logical assertions and statements. By logic, Aristotle was able to prove that women have fewer teeth than men, even though experience states otherwise. Logics could be useful, but are ultimately inferior to empirical testing.

[Skooma Addict]

OK, well then why not post some relevant arguments rather than a paragraph where Mises bloats in his own ignorance.

"In any large undertaking the individual works or departments are partly independent in their accounts. They can reckon the cost of materials and labour, and it is possible at any time for an individual group to strike a separate balance and to sum up the results of its activity in figures. In this way it is possible to ascertain with what success each separate branch has been operated and thereby to make decisions concerning the reorganization, limitations or extension of existing branches or the establishment of new ones. Some mistakes are of course unavoidable in these calculations. They arise partly from the difficulty of allocating overhead costs. Other mistakes again arise from the necessity of calculating from insufficiently determined data, as, e.g. when in calculating the profitability of a certain process, depreciation of the machinery employed is determined by assuming a certain working life for the machine. But all such errors can be confined within certain narrow limits which do not upset the total result of the calculation. Whatever uncertainty remains is attributed to the uncertainty of future conditions inevitable in any imaginable state of affairs.

It seems natural then to ask why individual branches of production in a socialistic community should not make separate accounts in the same manner. But this is impossible. Separate accounts for a single branch of one and the same undertaking are possible only when prices for all kinds of goods and services are established in the market and furnish a basis of reckoning. Where there is no market there is no price system, and where there is no price system there can be no economic calculation.


Some may think that it is possible to permit exchange between the different groups of undertakings so as to establish a system of exchange relations (prices) and in this way create a basis for economic calculation in the socialistic community. Thus within a framework of a unitary economic system which does not recognize private property in the means of production, individual branches of industry with separate administration could be set up, subject of course, to the supreme economic authority, but able to transfer to each other goods and services for a consideration reckoned in a common medium of exchange. This, roughly, is how people conceive the productive organization of socialistic industry when they speak nowadays of complete socialization and the like. But here again the decisive point is evaded. Exchange relations in productive goods can only be established on the basis of private property in the means of production. If the Coal Syndicate delivers coal to the Iron Syndicate a price can be fixed only if both syndicates own the means of production in the industry. But that would not be Socialism but Syndicalism."

[Skooma Addict]

That simple assertion means nothing. Mises can scream that he is right all he wants. His actual arguments - which you have not quoted - have been refuted several times over. If his response is simply to deny that he has been refuted, without offering any counter-arguments, then he was an idiot and there is nothing further to discuss.

Socialists have attempted to refute Mises, but they have failed to do so. Many socialists claimed to have solved the calculation problem, but Mises explained why they were wrong. He did not simply claim he was right and stop there. This went on for decades.


Ummm, I'd like to point out that although past attempts to build socialism have failed, they have never failed in this manner. They have not led to syndicalism, and they have not led to chaos either. Mises' prediction is flat out wrong.

There has never been a true socialist country. All of the so called Socilaist/communist countries were able to rely on prices from the markets of other countries. This still lead to major calculation problems, but it was not the same as Socialism.


I have not seen the video, but I have read the book. Hayek claims that state intervention in the economy - even welfare-state intervention of the kind advocated by social democrats, as opposed to full socialism - will lead to dictatorship and tyranny.

That argument was made in 1944. Since then, 60 years of social democratic history have proved the argument wrong. Where is your tyranny in the social democracies of Europe, Hayek?

Even the history of Soviet-style societies proves Hayek wrong. His argument was that economic planning would lead to dictatorship. But, in the USSR and all other Soviet-style societies, dictatorship existed before economic planning. Yesterday 21:28

I read the book as well, and I also do not fully agree with Hayek. I do think he makes some very good points though.

[Durruti's Ghost]

Where there is no market there is no price system, and where there is no price system there can be no economic calculation.


Why not? Also, has Mises never heard of a little thing called mutualism? Even if he is correct and economic calculation is impossible without a market, this does not render socialism impossible. It just renders communism impossible.



Exchange relations in productive goods can only be established on the basis of private property in the means of production. If the Coal Syndicate delivers coal to the Iron Syndicate a price can be fixed only if both syndicates own the means of production in the industry.

Bullshit. The means of production could be owned by the community as a whole, with the Coal Syndicate using a portion of the means of production and the Iron Syndicate using another portion. Each could retain ownership of the product without having exclusive ownership of the means of production. In this way, a market could be retained even in a system with communal ownership of the means of production.

Oh, and by the way, "private property" in socialist theory does not necessarily refer to ownership of the means of production by someone other than the community. It refers to ownership of the means of production by someone other than the workers of said piece of land or capital.


But that would not be Socialism but Syndicalism.

No, no, no. As long as the means of production is controlled by the people working the means of production--regardless of whether it is owned communally or by those people specifically--"that" is indeed socialism. Mises apparently is not familiar with the key demand of the ideology he is criticizing.

[Skooma Addict]

Why not? Also, has Mises never heard of a little thing called mutualism? Even if he is correct and economic calculation is impossible without a market, this does not render socialism impossible. It just renders communism impossible.

I know Rothbard discussed mutualism, but I am not sure about Mises.


Bullshit. The means of production could be owned by the community as a whole, with the Coal Syndicate using a portion of the means of production and the Iron Syndicate using another portion. Each could retain ownership of the product without having exclusive ownership of the means of production. In this way, a market could be retained even in a system with communal ownership of the means of production.

Unless I am misreading your example, it looks like each Syndicate exclusively owns part of the means of production.


No, no, no. As long as the means of production is controlled by the people working the means of production--regardless of whether it is owned communally or by those people specifically--"that" is indeed socialism. Mises apparently is not familiar with the key demand of the ideology he is criticizing.

It is not that Mises was not familiar with what your saying, he just didn't agree.

"The liberals had demanded the limitation of the authority of the state and the transfer of government to the representatives of the people; they had demanded the free state. Marx and Engels tried to outbid them by unscrupulously adopting the anarchistic doctrine of the abolition of all state authority regardless of the fact that Socialism would not mean the abolition, but rather the unrestricted expansion of the power of the state."


By the way, my socialist friend just gave me Das Kapital, so I will begin reading it soon.

[Durruti's Ghost]

Unless I am misreading your example, it looks like each Syndicate exclusively owns part of the means of production.



Ownership of the means of production implies the right to do what one wills with it. In the case of my example, the community as a whole would own the means of production, but any member of the community would be free to use it to produce and retain the product. It's sort of a middle-ground between mutualism and communism. If it turns out that economic calculation is indeed impossible without a market, this model could be used to retain the market while also maintaining the socialist mode of production. If even that didn't work, a socialist society could use the mutualist model of a free market with a modified property rights system.


It is not that Mises was not familiar with what your saying, he just didn't agree.

Yes, but his act of "not agreeing" is tantamount to him telling me what policies I want to enact. It would be like me saying "The essence of anarcho-capitalism is the abolition of central banking" and then, when the ancaps protest "But that isn't what we're on about; it's the existence of a monopoly of force," me simply replying "Well, I disagree."

Sorry, but we are more qualified to identify the central claim of our own ideology than Mises is.

[Skooma Addict]

Ownership of the means of production implies the right to do what one wills with it. In the case of my example, the community as a whole would own the means of production, but any member of the community would be free to use it to produce and retain the product. It's sort of a middle-ground between mutualism and communism. If it turns out that economic calculation is indeed impossible without a market, this model could be used to retain the market while also maintaining the socialist mode of production. If even that didn't work, a socialist society could use the mutualist model of a free market with a modified property rights system.


Hmm. Interesting concept. Is there any literature on the topic? To tell you the truth, I don't think I understand it well enough to comment on it. For example, I don't know who decides what the means of production will be, when capital goods would be produced ect. But doesn't mutualism adhere to the Labor Theory of Value?


Yes, but his act of "not agreeing" is tantamount to him telling me what policies I want to enact. It would be like me saying "The essence of anarcho-capitalism is the abolition of central banking" and then, when the ancaps protest "But that isn't what we're on about; it's the existence of a monopoly of force," me simply replying "Well, I disagree."

Sorry, but we are more qualified to identify the central claim of our own ideology than Mises is.

Fair enough. Maybe Mises was trying to say that Socialism would lead to the expansion of the state, regardless of what its supporters wanted.

[Durruti's Ghost]

Hmm. Interesting concept. Is there any literature on the topic? To tell you the truth, I don't think I understand it well enough to comment on it. For example, I don't know who decides what the means of production will be, when capital goods would be produced ect. But doesn't mutualism adhere to the Labor Theory of Value?


The workers at factories that produce capital goods would decide when capital goods would be produced. They would then sell these goods to the community in exchange for money, which could be divided amongst the workers and exchanged for non-capital goods produced by other factories/cooperatives/whatevers. It's similar to Bakunin's concept of anarcho-collectivism.

The Labor Theory of Value is a very misunderstood concept... But yes, mutualism does adhere to the LTV. One should note that, on a basic level, the LTV simply identifies the equilibrium price of a good on the market as the result of the socially-useful labor used in it; it does not identify the exact price at any point in time. I'm not really an expert on it.

Keep in mind, though, that this isn't a blueprint for how society would work under a socialist system. It's just one of a nearly infinite number of models that workers could choose to follow. As long as the means of production is controlled by the workers, the system is still socialistic.

As for who decides what the means of production is...if someone is using something to produce, that thing is an example of the means of production. The most basic form of socialism simply redefines property rights so that the person using an object is regarded as the owner provided that use was gained with the previous owner's consent or by using labor to create said object.

[Skooma Addict]

The workers at factories that produce capital goods would decide when capital goods would be produced. They would then sell these goods to the community in exchange for money, which could be divided amongst the workers and exchanged for non-capital goods produced by other factories/cooperatives/whatevers. It's similar to Bakunin's concept of anarcho-collectivism.


So it is basically like a typical free market but the means of production are owned by workers instead of a capitalist?


The Labor Theory of Value is a very misunderstood concept... But yes, mutualism does adhere to the LTV. One should note that, on a basic level, the LTV simply identifies the equilibrium price of a good on the market as the result of the socially-useful labor used in it; it does not identify the exact price at any point in time. I'm not really an expert on it.

I don't know, the labor theory of value has some pretty serious flaws in my opinion. Even if the LTV did identify the equilibrium price of a good on the market, it still is false because it assumes the value of a good is derived by the Labor that went into producing that good. Assuming I understood you correctly, the system you are advocating above seems better than mutualism. Have you heard of the Marginal Revolution?

[Durruti's Ghost]

So it is basically like a typical free market but the means of production are owned by workers instead of a capitalist?

Well, that's essentially exactly what mutualism is. In mutualism, the community as a whole doesn't own the means of production; the workers of said means of production do.


I don't know, the labor theory of value has some pretty serious flaws in my opinion. Even if the LTV did identify the equilibrium price of a good on the market, it still is false because it assumes the value of a good is derived by the Labor that went into producing that good. Assuming I understood you correctly, the system you are advocating above seems better than mutualism. Have you heard of the Marginal Revolution?

I've heard of the Marginal Revolution. However, the LTV really isn't all that important to mutualism. It's more a part of the ideological justification for it. Since I reject the idea that property is a natural right, the LTV isn't necessary for my justification of mutualism.

[Kwisatz Haderach]

Socialists have attempted to refute Mises, but they have failed to do so. Many socialists claimed to have solved the calculation problem, but Mises explained why they were wrong. He did not simply claim he was right and stop there. This went on for decades.
Yes, I know. And it continued after Mises' death, too. Actually, I wrote a paper on this recently. I can send it to you, if you are interested in reading it.

I can summarize my argument, but of course the summary will be overly simplistic. It is as follows:

1. After a lot of back-and-forth argumentation, the economic calculation debate comes down to a disagreement about the nature of information. Austrians claim that there is some type of information that is essential for calculation but is inherently impossible to centralize (not just difficult to centralize for technical reasons, but completely impossible regardless of technology). Socialists flat out deny this claim.

2. The Austrians have produced no convincing evidence that their phantom "tacit information" actually exists, or that it is important for economic calculation even assuming it existed. They have only asserted its existence and importance. In fact, tacit information is by definition unknowable and unmeasurable. Thus, the entire Austrian argument rests on the existence of something which is by definition impossible to detect or measure - like the invisible pink unicorn. Their claims are unfalsifiable, and therefore unscientific.


There has never been a true socialist country. All of the so called Socilaist/communist countries were able to rely on prices from the markets of other countries. This still lead to major calculation problems, but it was not the same as Socialism.
I am familiar with this argument. It is nonsense. Is the price of milk the same in Japan as in Brazil? If Japan wanted to set a price for milk, what good would it be if it knew the price of milk in Brazil? The conditions in the two countries are different. The prices ought to be different. Setting Japanese prices based on Brazilian prices is no better than setting Japanese prices at random.

Knowing the price of commodities in other countries, which produce those commodities in a completely different manner from the way your country produces them, is no help at all in setting internal prices. The Soviet price system did not have the external help that Mises claims it had.

[Skooma Addict]

Well, that's essentially exactly what mutualism is. In mutualism, the community as a whole doesn't own the means of production; the workers of said means of production do.


I have some questions about mutualism. Does mutualism tolerate the existence of other forms of organization? Could a butch of like minded people form an anarcho-capitalist community?

Since the workers own the means of production, wouldn't they have to wait until the product is sold before they could make a profit? A capitalist will pay a worker before the product is sold, and then sell the product and hopefully make a profit. Also, there would be no capitalist to provide the necessary capital for the production process. Do you think workers could adequately fulfill this role?

Why does mutualism oppose usury?


I am familiar with this argument. It is nonsense. Is the price of milk the same in Japan as in Brazil? If Japan wanted to set a price for milk, what good would it be if it knew the price of milk in Brazil? The conditions in the two countries are different. The prices ought to be different. Setting Japanese prices based on Brazilian prices is no better than setting Japanese prices at random.

Knowing the price of commodities in other countries, which produce those commodities in a completely different manner from the way your country produces them, is no help at all in setting internal prices. The Soviet price system did not have the external help that Mises claims it had.

Obviously, setting prices in this way still leads to misallocation of resources for reasons you pointed out. But knowing prices in other countries can still be somewhat helpful, especially in the price is somewhat consistent. Take gold for example.


Yes, I know. And it continued after Mises' death, too. Actually, I wrote a paper on this recently. I can send it to you, if you are interested in reading it.


If you really want to know how well your paper stands against Misesian arguments, you should post it on the Mises discussion forums. Or at least summarize your arguments like you did for me. If nobody can prove you wrong, then that is a very good sign for you.



1. After a lot of back-and-forth argumentation, the economic calculation debate comes down to a disagreement about the nature of information. Austrians claim that there is some type of information that is essential for calculation but is inherently impossible to centralize (not just difficult to centralize for technical reasons, but completely impossible regardless of technology). Socialists flat out deny this claim.

Correct.


2. The Austrians have produced no convincing evidence that their phantom "tacit information" actually exists, or that it is important for economic calculation even assuming it existed. They have only asserted its existence and importance. In fact, tacit information is by definition unknowable and unmeasurable. Thus, the entire Austrian argument rests on the existence of something which is by definition impossible to detect or measure - like the invisible pink unicorn. Their claims are unfalsifiable, and therefore unscientific.

This is where we disagree. Prices are not unmeasurable, and they can be predicted by looking at current prices and consumer demand.


I am familiar with this argument. It is nonsense. Is the price of milk the same in Japan as in Brazil? If Japan wanted to set a price for milk, what good would it be if it knew the price of milk in Brazil? The conditions in the two countries are different. The prices ought to be different. Setting Japanese prices based on Brazilian prices is no better than setting Japanese prices at random.

Knowing the price of commodities in other countries, which produce those commodities in a completely different manner from the way your country produces them, is no help at all in setting internal prices. The Soviet price system did not have the external help that Mises claims it had.

Obviosly there would still be massive misallocation of resources for reasons you pointed out. But still, looking at prices from other countries can still be somewhat helpful, especially if the prices are pretty consistent. Also, if the price of a good increases in pretty much every country, then that should tell you something.

[Durruti's Ghost]

I have some questions about mutualism. Does mutualism tolerate the existence of other forms of organization? Could a butch of like minded people form an anarcho-capitalist community?

Theoretically, sure, although this isn't unique to mutualism--any anarchist theory would have to allow this in order to remain anarchistic. The anarcho-capitalist community would have difficulty retaining its capitalist character, though, simply because it would have to maintain a reserve labor force to prevent the workers from striking and taking over the factories. And why would workers want to live in an anarcho-capitalist community, when they could retain the entirety of the product of their labor in a mutualist community or have free access to all necessities in a communist society?



Since the workers own the means of production, wouldn't they have to wait until the product is sold before they could make a profit?

Yes, which is one of the reasons I prefer communism to mutualism.


A capitalist will pay a worker before the product is sold, and then sell the product and hopefully make a profit.

And if that were the whole story, the arrangement might be reasonable. However, the capitalist is invariably in a position of greater power than the worker, who is dependent, if not on a specific capitalist, at least on the entire capitalist class for his survival. This unequal power relationship is destructive to the liberty of the worker.


Also, there would be no capitalist to provide the necessary capital for the production process. Do you think workers could adequately fulfill this role?

Why does mutualism oppose usury?

These questions are actually very closely related. In the hypothetical system I outlined, capital would be sold to the community, which would make that capital freely available to all of its members. However, in mutualism, capital would be provided by means of a mutual bank--similar to a credit union--of which various cooperatives and individuals would be part owners. This mutual bank would extend credit to its owners at non-usurious rates, enabling them to gain access to capital and easily pay off their "debt" once their product were to start turning a profit. The reason mutualists oppose usury is because, under the current system, control of banking is centralized into the hands of the few--what Tucker termed the "money monopoly"--preventing the rise of effective mutual aid organizations such as the mutual bank and insuring that loans are given at usurious rates, making start-up capital difficult to obtain and even more difficult to maintain and thus preventing the rise of worker-run cooperatives to compete with and ultimately overpower capitalist firms. Whether expropriation would be a part of this process is a subject of some contention amongst mutualists; Proudhon was of the opinion that expropriation, while justified, should be avoided in order to prevent violence. Initially, Tucker felt the same. However, toward the end of his life, he saw the massive corporate structure that was coming to dominate the marketplace and expressed doubts that it could be overcome without the workers actually taking over the factories that they currently used.

[Kwisatz Haderach]

If you really want to know how well your paper stands against Misesian arguments, you should post it on the Mises discussion forums. Or at least summarize your arguments like you did for me. If nobody can prove you wrong, then that is a very good sign for you.
I can already predict what would happen. There is a deep methodological gulf between us. I would challenge them, "show me empirical evidence for the existence of tacit information!" They would reply, "we don't need empirical evidence", and proceed to argue based on a priori sophistry.


This is where we disagree. Prices are not unmeasurable, and they can be predicted by looking at current prices and consumer demand.
What do prices have to do with it? I was talking about tacit information. Austrians claim that prices are based on tacit information. But where is the evidence for this? Why aren't prices based on information that we can, in fact, collect and centralize?


Obviosly there would still be massive misallocation of resources for reasons you pointed out. But still, looking at prices from other countries can still be somewhat helpful, especially if the prices are pretty consistent. Take gold for example. Also, if the price of a good increases in pretty much every country, then that should tell you something.
The question is, how helpful is "somewhat" helpful? The more world prices diverge from the (unknown) domestic equilibrium price, the less helpful they are. World prices can be helpful in setting domestic prices only if, for whatever reason, the world equilibrium price happens to be similar to the domestic equilibrium price. Was this the case in the Soviet Union? For what goods?

Mises never even tried to answer those two questions. To be fair, they really can't be answered unless you know the proper equilibrium price of various goods in the Soviet Union - which, according to Austrian theory, you cannot possibly know. This is one of the problems with the Austrian argument: It claims that resources will be misallocated in a planned economy, while at the same time saying that we could not possibly know the proper allocation for that economy (since it is planned and lacks price signals). But if you don't know the proper allocation, how can you tell if the resources really are misallocated as you claim? If you don't know the "proper" price, how can you tell if the price set by the planners is different from it? There is no way to empirically verify Austrian claims. They are unfalsifiable.

My argument is that, although there was indeed some misallocation of resources in the USSR, there was far less of it than Austrian theory leads us to expect. And I don't believe Austrian theory can provide any explanation for the disparity. Thus, the evidence points to the Soviet system being far too efficient for the economic calculation argument to be true. There were no doubt many inefficiencies in the system, but these must have been of a different - and less severe - kind.

[bailey_187]

Didnt Maurice Dobb refute Mises?

Whatever though, Socialism proved itself in the Soviet Union, China etc

[Skooma Addict]

I can already predict what would happen. There is a deep methodological gulf between us. I would challenge them, "show me empirical evidence for the existence of tacit information!" They would reply, "we don't need empirical evidence", and proceed to argue based on a priori sophistry.

If you are respectful, then people will have a meaningful discussion with you. Yes, there will probably be a few people who will just blow it off. But still, if you really wrote a whole paper on the subject, you should try to get the opposing sides opinion. Although it may be better to summarize your
points because not everyone has the time to read an entire essay.

I think I am going to have to post a lengthy response to the rest of your post. But first I really have to get some philosophy and math homework done. So I will hopefully be able to give an adequate reply tonight.


(I will be looking to make sure you post on the mises forums. Dont let me down:))

[Kwisatz Haderach]

I think I am going to have to post a lengthy response to the rest of your post. But first I really have to get some philosophy and math homework done. So I will hopefully be able to give an adequate reply tonight.
There is no hurry. Reply whenever you can. Even days later is perfectly fine. I know I often need to spend a lot of time on other things, too.


(I will be looking to make sure you post on the mises forums. Dont let me down:))
I am sorry, but I will not. At least, not now. Any such discussion would inevitably require a huge time commitment, and I strongly doubt that we could reach any outcome other than agreeing to disagree. I may have written a paper on the subject, but I do not have such a high opinion of myself to believe that I found some revolutionary new insight that can persuade the members of the most dogmatic economic school in history to change their views.

From personal experience, trying to change the opinions of Austrian schoolers on anything is usually an exercise in futility. Trying to change their opinions on something that has been at the core of their ideology since 1920 is utterly hopeless. I wouldn't dream of attempting it unless I had some kind of hypnotic powers.

[Havet]

From personal experience, trying to change the opinions of Austrian schoolers on anything is usually an exercise in futility. Trying to change their opinions on something that has been at the core of their ideology since 1920 is utterly hopeless. I wouldn't dream of attempting it unless I had some kind of hypnotic powers.

You complain about the austrians? Try arguing with Stormfronter's white nationalists. I'm EXHAUSTED lol, especially since one of them has now included as his counter-argument that he doesn't agree with the Neo-Darwinist theory.

[Kwisatz Haderach]

You complain about the austrians? Try arguing with Stormfronter's white nationalists. I'm EXHAUSTED lol, especially since one of them has now included as his counter-argument that he doesn't agree with the Neo-Darwinist theory.
Well, I'm sure it's a valiant effort on your part, but...
http://www.iue.edu/hss/foreignlanguage/spain2009/img/donquixote.gif

[Havet]

Well, I'm sure it's a valiant effort on your part, but...
http://www.iue.edu/hss/foreignlanguage/spain2009/img/donquixote.gif

haha, Don Quijote de la Mancha ^^

[Skooma Addict]

And why would workers want to live in an anarcho-capitalist community, when they could retain the entirety of the product of their labor in a mutualist community or have free access to all necessities in a communist society?

I think an anarcho-capitalist society would be wealthier than A communist or mutualist society. I think the worker in the anarcho-capitalist society would be wealthier than the worker in the mutualist or communist society.


Yes, which is one of the reasons I prefer communism to mutualism.

Yea, that is a very big flaw with mutualism.


And if that were the whole story, the arrangement might be reasonable. However, the capitalist is invariably in a position of greater power than the worker, who is dependent, if not on a specific capitalist, at least on the entire capitalist class for his survival. This unequal power relationship is destructive to the liberty of the worker.

I could say Capitalists depend on Workers for survival. But regardless, it is a fact of nature that humans depend on each other for survival. Even if there was unequal power, I would still view the worker/capitalist relationship as mutually beneficial. I also think workers would be worse off if there were no capitalists.


However, in mutualism, capital would be provided by means of a mutual bank--similar to a credit union--of which various cooperatives and individuals would be part owners. This mutual bank would extend credit to its owners at non-usurious rates, enabling them to gain access to capital

This is where I see a problem. It is extremely important that the interest rate be allowed to rise or fall according to peoples time preferences. If the bank lowers interest rates below the market rate, then there will be malinvestments.


What do prices have to do with it? I was talking about tacit information. Austrians claim that prices are based on tacit information. But where is the evidence for this? Why aren't prices based on information that we can, in fact, collect and centralize?

Prices are determined by supply and demand.

But anyways, I will give a standard explanation of the Calculation problem, and you can just tell me where you disagree.

The calculation argument basically has to do with valuation of producers' goods, or goods that producers use to produce other producers' goods or consumers' goods.
So let's say that an economy has natural resources a, b, c, and d. In addition, it has capital resources x and y. It's consumer good outputs are q and z. Now, as a central planner, do you know how much a, b, c, and d you should allocate towards producing x, y, q, or z? Do you know how much x and/or y to allocate towards producing q and/or z? Unfortunately, you do not.
To use a more numerical explanation, assume that the production of x and y require a total of 100 natural resources and the production of q and z require a total of 50 capital resources and 50 natural resources. You have 100 of all resources to start out. So you have:
100 A
100 B
100 C
100 D
100 X (Requires 100 of a and/or b and/or c and/or d to produce 50 more)
100 Y (")
Q (Requires 50 x and/or y and 50 a and/or b and/or c and/or d to produce 50 more)
Z (")
Although as a central planner you know you could, say, use 100 A to produce more X, 100 B to produce more Y, and the rest of your resources to produce Q and Z, you don't know if your combination is more or less efficient than, say, using 50 B and 50 A to produce more X, 50 A and 50 Y to produce more Q, etc. A market price system, however, is able to allocate resources by using the profit incentive and communicating information from many dissemated sources.
However, this example is extremely simplified and doesn't even begin to tackle other problems that central planners have to tackle (e.g. time, use of different resources, etc.).



of the most dogmatic economic school in history

The most dogmatic economic school in history? That would either be Orthodox Keynesian Economics or Marxist Economics.

[IcarusAngel]

I'd agree with Kwisatz's statement not to go to Mises forums. Their goal is to gang up on you, not to debate you. I had one Mises member at Youtube message me asking to me to join "Mises forums" so that I could be "re-educated." I looked in his profile and he has been harassing under-aged girls on Youtube (jiffylubeification is his name on YT).

One of the moderators at Mises forums admits that if you disagree with Misean property, whatever that is, you will automatically be banned. Search Mises forums for 'revleft' there's a thread... Well, I'll just let anybody interested see what kind of sick mob mentality plays out there. (One member says he'd like to create an 'army' of men - not miseans per se, but strong men - and force people to agree with Austrian economics.)

They believe in outdated everything at that site, not just outdated economcs. A common theory on their website is the belief (now completely discredited) that all mathematics essentially boils down to A = A or the identity principle - this is a viewpoint not even held by most of the logicians of the twentieth century.

If you have time to post at other messageboards, I'd recommend something like political crossfire where there are people who are willing to debate rationally, at least once in a while.

Mises forums is a cult. It's also dying off, that's why they're actively trying to recruit new members.

[Skooma Addict]

What a terrible post....


I'd agree with Kwisatz's statement not to go to Mises forums. Their goal is to gang up on you, not to debate you. I had one Mises member at Youtube message me asking to me to join "Mises forums" so that I could be "re-educated." I looked in his profile and he has been harassing under-aged girls on Youtube (jiffylubeification is his name on YT).

Maybe you just don't want to visit the Mises forums because you know your Socialist arguments could never stand up to Austrian critiques? The rest of your post is just irrelevant babble about youtube.


One of the moderators at Mises forums admits that if you disagree with Misean property, whatever that is, you will automatically be banned. Search Mises forums for 'revleft' there's a thread... Well, I'll just let anybody interested see what kind of sick mob mentality plays out there. (One member says he'd like to create an 'army' of men - not miseans per se, but strong men - and force people to agree with Austrian economics.)

There is no such thing as "Misean property." Many of the members at the site disagree over property rights issues. Some think property rights are a social construct, while others don't. Some believe in IP laws, some don't.



They believe in outdated everything at that site, not just outdated economcs. A common theory on their website is the belief (now completely discredited) that all mathematics essentially boils down to A = A or the identity principle - this is a viewpoint not even held by most of the logicians of the twentieth century.

What are you talking about?


Mises forums is a cult. It's also dying off, that's why they're actively trying to recruit new members.


Actually, more people are interested in Austrian Economics than ever before.

For the most part, how friendly people are towards you will depend on your attitude.

[IcarusAngel]

If Austrians have such a strong 'case', they could make it at the forums that they flood in numbers, instead of commonly asking people to go to Mises forums. I've seen them flood more than one forum, but I've never seen you guys win any 'debates.'

[Skooma Addict]

If Austrians have such a strong 'case', they could make it at the forums that they flood in numbers, instead of commonly asking people to go to Mises forums. I've seen them flood more than one forum, but I've never seen you guys win any 'debates.'

The more likely scenario is that you simply refuse to acknowledge when an Austrian is right. Socialists often do this when Austrians disprove the LTV.

[IcarusAngel]

Yes, this is exactly what Miseans do, claim to have 'proven' things when no such proofs are given. Perhaps you'd like to prove that all matematics is reducible to A = A, as freiheit has claimed on that forum - or at least give me the names of the mathematicians who've proven it, or that theorems are true by definition (another way of saying they prove themselves). Miseans agree with this because it fits into their assumption that mathematics is an a priori science and thus, so is human action. Thus you think mathematical statements are 'definitions' which 'prove themselves' to be true.

If you can't even show how mathematics is 'all logic' and true by definition, and a priori, how can you show that human action is also a priori?

[Kwisatz Haderach]

Olaf, I will answer your example in detail, but first, I will give a (very simplified) generic answer to the Misesian criticism of planning:

Whenever Mises asks, "how will planners know X?", my answer essentially boils down to "ask the people what they want, and then find the most efficient way to do it".

For some reason, Mises never really seems to take into account that planners can find out a lot of things just by asking people. Soviet planners, of course, never did that - and this was the primary cause of Soviet inefficiency.


I think an anarcho-capitalist society would be wealthier than A communist or mutualist society. I think the worker in the anarcho-capitalist society would be wealthier than the worker in the mutualist or communist society.
And I think the worker in the communist society will be wealthier, while the worker in the mutualist society won't be anything because mutualism is unstable and would quickly change into another system.

I don't necessarily believe that a communist society as a whole would be wealthier than an anarcho-capitalist one. But the ancap society will have such extreme disparities of wealth that any advantage it might have over communism will just flow to the richest 1% of the population. Ancap workers will be much poorer than communist workers.

Assuming an open border between the ancap society and the communist society, you will have workers moving from ancapism to communism, and risk-loving individuals moving from communism to ancapism (because ancapism promises such high rewards for the lucky few). I predict the ancap society would collapse from labour shortages and excessive risk-taking. But, on the bright side, they'll never have unemployment - all the unemployed workers will just move to communism.


I could say Capitalists depend on Workers for survival. But regardless, it is a fact of nature that humans depend on each other for survival.
Yes, but some depend more than others. That's the point.


Prices are determined by supply and demand.

But anyways, I will give a standard explanation of the Calculation problem, and you can just tell me where you disagree.

The calculation argument basically has to do with valuation of producers' goods, or goods that producers use to produce other producers' goods or consumers' goods.
So let's say that an economy has natural resources a, b, c, and d. In addition, it has capital resources x and y. It's consumer good outputs are q and z. Now, as a central planner, do you know how much a, b, c, and d you should allocate towards producing x, y, q, or z? Do you know how much x and/or y to allocate towards producing q and/or z? Unfortunately, you do not.
To use a more numerical explanation, assume that the production of x and y require a total of 100 natural resources and the production of q and z require a total of 50 capital resources and 50 natural resources. You have 100 of all resources to start out. So you have:
100 A
100 B
100 C
100 D
100 X (Requires 100 of a and/or b and/or c and/or d to produce 50 more)
100 Y (")
Q (Requires 50 x and/or y and 50 a and/or b and/or c and/or d to produce 50 more)
Z (")
Although as a central planner you know you could, say, use 100 A to produce more X, 100 B to produce more Y, and the rest of your resources to produce Q and Z, you don't know if your combination is more or less efficient than, say, using 50 B and 50 A to produce more X, 50 A and 50 Y to produce more Q, etc. A market price system, however, is able to allocate resources by using the profit incentive and communicating information from many dissemated sources.
However, this example is extremely simplified and doesn't even begin to tackle other problems that central planners have to tackle (e.g. time, use of different resources, etc.).
First, the non-numerical explanation: As a planner, you could use various methods (I won't go into them now) to determine the aggregate preference ratios of consumers. For example, you may discover that consumers are indifferent between 3Q and 2Z - they like 3 units of good Q as much as they like 2 units of good Z. Then your goal should be to produce the largest possible quantity of goods Q and Z in a ratio of 3:2. And it's simply a matter of finding the best way to do this by proper allocation of A, B, C, D, X and Y. There may be many different possible allocations. Build a computer model and try them all. Then implement the one that gave the best results in the simulation.

The ability to build a computer model to predict the results of an allocation in advance is really key here. This is what allows us to try all possible allocations and pick the best one. Without computers, we need to use less precise methods of choosing between allocations, which could be a real problem.

Now, as for your numerical problem:

You did not provide any reason why the planners may wish to discriminate between natural resources A, B, C and D, or between capital goods X and Y. So, for the purpose of your problem, we can treat all natural resources as the same good E and all capital goods as the same good W. Then we have 400 E and 200 W, and we require 50 E and 50 W to produce 50 Q or 50 Z. We can measure the value of W, and the value of Q and Z for that matter, in units of E. This is now a very simple math problem, with the solution depending on how much Q and Z we want to produce. Let's say we want to produce Q and Z in the 3:2 ratio I postulated above. We allocate all our existing resources to production until we run out of one of them and must allocate some of the others to make more. In this case, that means we keep producing until we run out of W. That means we use 200 E and 200 W to produce 120 Q and 80 Z (3:2 ratio). We have 200 E left once this is done. To continue production, we need a 1:1 ratio of E to W. We allocate 134 E to produce 67 W, and have 66 E left over (200/3 is not a neat division). We use this to produce 40 Q and 26 Z (as close to the 3:2 ratio as you can get).

Final result:

160 Q
106 Z
1 unit of W left over

Granted, this problem was over-simplified. I simplified it further by taking advantage of the fact that you made all your natural resources and capital goods interchangeable among themselves. If you hadn't, I would have had to work with more variables. But it doesn't matter how many variables you throw at me. A computer can still find the solution.

But, in truth, this is not the real issue in the economic calculation argument. You set up a straw man for me to tear down. The Austrian argument is a bit stronger than that. What you should have said was:

"It takes some capital goods and some natural resources to produce Q. But you don't know how many, and what kinds."

This is the real Austrian argument. That I can't use a computer to solve the problem because I don't know what the problem is. But why wouldn't I know what the problem is? What's to stop the planners from finding out what combination of resources is used to produce Q? Maybe there is more than one possible combination, says Mises. Ok, fine. Then what's to stop the planners from discovering them all, or at least discovering just as many as the capitalists discovered?

And that's why the calculation debate can be reduced to a debate over information. The Austrians desperately try to come up with reasons why some information just cannot be discovered by the human mind. Such claims are bizzare and ridiculous, to say the least.

[mannetje]

Also, what do you guys think of this video?
I didn't even watched it out. bullcrap. and amateuristic too.:mad:

[Skooma Addict]

Whenever Mises asks, "how will planners know X?", my answer essentially boils down to "ask the people what they want, and then find the most efficient way to do it".

For some reason, Mises never really seems to take into account that planners can find out a lot of things just by asking people. Soviet planners, of course, never did that - and this was the primary cause of Soviet inefficiency.

But the point is that planners could not find out certain vital pieces of information simply by asking people.


But the ancap society will have such extreme disparities of wealth that any advantage it might have over communism will just flow to the richest 1% of the population.


Why do you think this?



Yes, but some depend more than others. That's the point.

The fact that some people depend more on others does not change the fact that humans depend on each other for survival. Capitalists also depend on workers.



First, the non-numerical explanation: As a planner, you could use various methods (I won't go into them now) to determine the aggregate preference ratios of consumers. For example, you may discover that consumers are indifferent between 3Q and 2Z - they like 3 units of good Q as much as they like 2 units of good Z.

Please explain how you could possibly know this. Also, consumer preferences are constantly changing. Even if it were possible for central planners to determine consumer preferences every moment of the day, it would mean diddly squat in terms of the possibility of socialist economic calculation. My entire argument revolves around the pricing of capital and natural goods - something which cannot happen in a socialist economy. This makes socialist economic calculation impossible, as prices without costs mean absolutely nothing in terms of providing information about how to allocate resources.


And it's simply a matter of finding the best way to do this by proper allocation of A, B, C, D, X and Y. There may be many different possible allocations. Build a computer model and try them all. Then implement the one that gave the best results in the simulation.


That is not the main problem though. The problem that central planners face here is that they may be able to receive the information of consumer prices, but they are blind when it comes to producer prices. Thus, profits virtually don't exist in such a system. Go back to my original postulation of the economic calculation problem.

What is important is the valuation of different inputs into consumer goods and into producer goods. Ultimately, since there is no market for producer or natural goods in any socialistic system, there cannot be a price system for these goods, which destroys the possibility of socialist calculation.

For example: There are two inputs, A and B, and each exist 100 in quantity. There are also two outputs (consumer goods), and consumer demand dictates that you produce each in an equal amount. Ultimately, you need 100 input into one output to produce at full capacity. It doesn't matter which input. Now, as a central planner, how do you know whether to:
1. Use 50 A and 50 B to produce Output 1 and 50 A and 50 B to produce Output 2?
2. Use 60 A and 40 B to produce Output 1 and 40 A and 60 B to produce Output 2?
3. etc.
The above combinations are, mathematically speaking, infinite in number. Pragmatically speaking, they would represent some measurable number, but still be incredibly large. Worse still, is that even if there were only a few combinations, a central planner would have no way of knowing which is more efficient. Worst of all is that there are many more inputs involved in the production of a single product and that there are literally thousands of inputs when you follow the line of production. A producer good that a producer uses to produce another producer good (mouthful, I know) could literally have hundreds of different combinations for production, and the good that producer good produces good also have many combination possibilities. No computer or human mind is able to even begin to comprehend the complexity of the problem.




You did not provide any reason why the planners may wish to discriminate between natural resources A, B, C and D, or between capital goods X and Y. So, for the purpose of your problem, we can treat all natural resources as the same good E and all capital goods as the same good W. Then we have 400 E and 200 W, and we require 50 E and 50 W to produce 50 Q or 50 Z. We can measure the value of W, and the value of Q and Z for that matter, in units of E. This is now a very simple math problem, with the solution depending on how much Q and Z we want to produce. Let's say we want to produce Q and Z in the 3:2 ratio I postulated above. We allocate all our existing resources to production until we run out of one of them and must allocate some of the others to make more. In this case, that means we keep producing until we run out of W. That means we use 200 E and 200 W to produce 120 Q and 80 Z (3:2 ratio). We have 200 E left once this is done. To continue production, we need a 1:1 ratio of E to W. We allocate 134 E to produce 67 W, and have 66 E left over (200/3 is not a neat division). We use this to produce 40 Q and 26 Z (as close to the 3:2 ratio as you can get).

Final result:

160 Q
106 Z
1 unit of W left over

Granted, this problem was over-simplified. I simplified it further by taking advantage of the fact that you made all your natural resources and capital goods interchangeable among themselves. If you hadn't, I would have had to work with more variables. But it doesn't matter how many variables you throw at me. A computer can still find the solution.

You do not have the prices of natural resources or producers goods, so you cannot combine them into one category. Look at it from this perspective....

In a hypothetical world where there is only one input for every good, socialism most certainly is possible. In the real world, even in the most primitive of economies, there are at least three inputs - time, labor, and energy. The more advanced the economy, the more inputs there are to choose from (e.g. a plethora of different capital goods, specialized workers, etc.). The problem in socialist calculation lies in the fact that although consumer goods can be priced, producer goods cannot be priced. This leads to absolutely no price signals. My case in point: only because a car is more expensive than a loaf of bread doesn't mean that more cars should be produced at the expense of bread. What matters are the profits: revenues - expenses. The problem is that expenses under socialism cannot be accurately measured. In our primitive economy, which combination of time, labor, and energy do you think is the most useful? You cannot tell as a central planner, since neither is priced in any way, shape, or form.


The Austrians have produced no convincing evidence that their phantom "tacit information" actually exists, or that it is important for economic calculation even assuming it existed. They have only asserted its existence and importance. In fact, tacit information is by definition unknowable and unmeasurable. Thus, the entire Austrian argument rests on the existence of something which is by definition impossible to detect or measure - like the invisible pink unicorn. Their claims are unfalsifiable, and therefore unscientific.

You assume that all knowledge is already perfectly available. But in reality, it has to be discovered through entrepreneurial action. For example, only some amateur chef knows, that in his hometown, there is not one pizzeria that can make as tasty a pizza as he can. Only some investor knows, that the price of stock XY is a bargain. Only some computer nerd knows, that he can create a search engine that can outcompete Google. Only Carl Icahn knows, that company ABCD is poorly managed, etc.

These are all examples of subjective, tacit knowledge. It is only available, when entrepreneurs take action, when they buy capital goods, employ their staff and sell their products on the market. It is not the task of a market economy, to create perfect equilibrium, but to improve consumer satisfaction, thereby creating perfect disequilibrium.

[Kwisatz Haderach]

Olaf, to cut down on length, I will quote your post selectively. But I will respond to all your points. Let me know if you think I skipped something important.


But the point is that planners could not find out certain vital pieces of information simply by asking people.
Why not? If someone knows X, the planners can find out X as well. One person's knowledge can be communicated to any other person. If no one knows X, then X cannot be used in any kind of economy, planned or unplanned.


Why do you think this?
Wherever there are markets, we observe greater disparities of wealth than in places where there are not markets. Over the past century, we have observed that the more an economic system relies on markets, the greater the inequality within that system.

As such, it is reasonable to expect that a system which raises the market to a godlike status will be accompanied by the greatest inequalities of wealth known to man.

Speaking of which, I hope you realize that great inequalities produce great social instability. Your ancap overlords are very likely to be lynched by an angry mob (which would be fun to watch).


The fact that some people depend more on others does not change the fact that humans depend on each other for survival. Capitalists also depend on workers.
If you depend on me more than I depend on you, I have power over you. In the simplest terms, suppose we depend on each other for survival, but I can survive a year without you and you can only survive a week without me. Then my power over you is very great. I can say: "Obey my commands or I will break off our relationship and you will die." What can you do then? You cannot withdraw from our relationship in protest, because you will die first if you do that. You cannot bargain with me in any way. You must do what I say.


Also, consumer preferences are constantly changing. Even if it were possible for central planners to determine consumer preferences every moment of the day...
Hayek made this point too. He is holding socialism to higher standards than capitalism. Do market prices change every moment of the day? No. Socialist planners don't need to adjust their plans any more often than the market adjusts its prices. Which is to say, a lot less often than "every moment of the day."


Worst of all is that there are many more inputs involved in the production of a single product and that there are literally thousands of inputs when you follow the line of production. A producer good that a producer uses to produce another producer good (mouthful, I know) could literally have hundreds of different combinations for production, and the good that producer good produces good also have many combination possibilities. No computer or human mind is able to even begin to comprehend the complexity of the problem.
That is a ridiculous claim in A.D. 2009 (though it made sense when Mises and Hayek originally wrote). Cottrell and Cockshott have already shown that an economy the size of the British economy could be fully planned using a "supercomputer" available in 1993. Since then, computer processing power has grown enormously, and continues to grow.

There is no such thing as a problem with too many variables for a computer to solve. Not any more. Your only hope to save the Austrian case is to show that some variables are inherently unknowable. Appealing to the complexity of the problem is no longer a valid argument. It was a valid argument back in 1920 and 1935, but not today.


You do not have the prices of natural resources or producers goods, so you cannot combine them into one category. Look at it from this perspective....

In a hypothetical world where there is only one input for every good, socialism most certainly is possible. In the real world, even in the most primitive of economies, there are at least three inputs - time, labor, and energy. The more advanced the economy, the more inputs there are to choose from (e.g. a plethora of different capital goods, specialized workers, etc.).
All inputs can be reduced to time and labour (or time and energy; since labour can be expressed in terms of energy and vice versa).

And we can handle the problem of choice between inputs the same way we handle the problem of choice between outputs. How does the socialist economy choose the outputs - how does it decide what should be produced? By asking people what they want. By measuring consumer preferences. Very well then. We can do the same for inputs. Ask the people about their time and their labour, and find out their aggregate preferences in this matter (i.e. ask them about the choice between waiting longer for products or working harder).

Once you've established a preference ratio, you can express labour in terms of time or vice versa. And then, the last thing you are left with, either time or labour, is something you can use to measure all production costs. That is your price.


You assume that all knowledge is already perfectly available. But in reality, it has to be discovered through entrepreneurial action. For example, only some amateur chef knows, that in his hometown, there is not one pizzeria that can make as tasty a pizza as he can.
If the amateur chef knows this, he can tell the planners about it, and persuade them to give him a job as a chef in a pizzeria. Think of the socialist planners like capitalist investors. They do not take all management decisions themselves. There is such a thing as middle management in socialism.


Only some investor knows, that the price of stock XY is a bargain.
Stocks won't exist in socialism, of course, but the investor's knowledge about stock XY is based on his knowledge about company XY. If he has this knowledge, he can tell the planners about it, and then they will have the same knowledge.


Only some computer nerd knows, that he can create a search engine that can outcompete Google.
Then he can tell the planners about it.


Only Carl Icahn knows, that company ABCD is poorly managed, etc.
Then he can tell the planners about it.

You see, if anyone knows something, then it is at least possible for that person to tell the planners about it. So then the planners will know it too. Now, of course, we can argue about whether it is likely that people will tell the planners these things, and we can come up with ways to make it more likely, but the fact remains that if anyone knows X, it is possible for the planners to find out X as well.

In order for the Austrian argument to work, you need to have some kind of information that NO ONE knows, yet somehow gets used in the market anyway. I contend that no such information exists.


These are all examples of subjective, tacit knowledge. It is only available, when entrepreneurs take action, when they buy capital goods, employ their staff and sell their products on the market.
Really? How so? In your examples, the chef, the investor, the computer nerd and Carl Icahn have some clear, definite knowledge that exists independent of the market. Why do you need a market to know that you can make better pizza than other people? Or to know that you can make a better search engine? Or to know that you can improve the management of a company?

Perhaps you will say that you cannot decide on your own what is "better", independent of the opinions of others. Fine. Replace the word "better" with "different" in the above statements. Maybe you don't know if you can do something better, but you certainly know you can do something different. You put your proposal before the planners, or before the people, and they decide if it is better.

In any case, the vital point is this: Nowhere do I see any kind of information that cannot be made known to the planners. Whatever I know, you can know. Whatever one person knows, the planners can know.

[Skooma Addict]

Olaf, to cut down on length, I will quote your post selectively. But I will respond to all your points. Let me know if you think I skipped something important.


Alright, I will try to.


Why not? If someone knows X, the planners can find out X as well. One person's knowledge can be communicated to any other person. If no one knows X, then X cannot be used in any kind of economy, planned or unplanned.


I was referring to the pricing of producers goods and natural resources.


Wherever there are markets, we observe greater disparities of wealth than in places where there are not markets. Over the past century, we have observed that the more an economic system relies on markets, the greater the inequality within that system.

As such, it is reasonable to expect that a system which raises the market to a godlike status will be accompanied by the greatest inequalities of wealth known to man.

Speaking of which, I hope you realize that great inequalities produce great social instability. Your ancap overlords are very likely to be lynched by an angry mob (which would be fun to watch).

Unless the living standards of everyone increase. This is exactly what I think would happen in an anarcho-capitalist society.


If you depend on me more than I depend on you, I have power over you. In the simplest terms, suppose we depend on each other for survival, but I can survive a year without you and you can only survive a week without me. Then my power over you is very great. I can say: "Obey my commands or I will break off our relationship and you will die." What can you do then? You cannot withdraw from our relationship in protest, because you will die first if you do that. You cannot bargain with me in any way. You must do what I say.

In your scenario, we would both end up dying. Also, nobody has the positive obligation to maintain relationships with people. But anyways, in the real world, the worker can work for many capitalists, not just one.


Hayek made this point too. He is holding socialism to higher standards than capitalism. Do market prices change every moment of the day? No. Socialist planners don't need to adjust their plans any more often than the market adjusts its prices. Which is to say, a lot less often than "every moment of the day."

Market prices are constantly changing. Although not all prices are changing at every moment of the day, a market will allow prices to change quicker than Socialism would.


That is a ridiculous claim in A.D. 2009 (though it made sense when Mises and Hayek originally wrote). Cottrell and Cockshott have already shown that an economy the size of the British economy could be fully planned using a "supercomputer" available in 1993. Since then, computer processing power has grown enormously, and continues to grow.

There is no such thing as a problem with too many variables for a computer to solve. Not any more. Your only hope to save the Austrian case is to show that some variables are inherently unknowable. Appealing to the complexity of the problem is no longer a valid argument. It was a valid argument back in 1920 and 1935, but not today.

There are problems that computers cannot solve. If you didn't change the variables in my initial scenario, the problem would essentially be unsolvable without market prices. Computers cannot solve problems when they do not have the information necessary to solve them.


All inputs can be reduced to time and labour (or time and energy; since labour can be expressed in terms of energy and vice versa).


Does your case rest on this being true? Because this is incorrect. There are MANY inputs. For starters, imagine all of the capital goods that exist.



And we can handle the problem of choice between inputs the same way we handle the problem of choice between outputs. How does the socialist economy choose the outputs - how does it decide what should be produced? By asking people what they want. By measuring consumer preferences. Very well then.


You could do that, although it would be a terrible way to determine what should be produced. Asking people what should be produced would lead to serious problems. Heck, by the time you ever produced what people asked for, they more than likely would have changed their preferences. Out of curiosity, how would you ask people? Give them a piece of paper and tell them to make a list?


We can do the same for inputs. Ask the people about their time and their labour, and find out their aggregate preferences in this matter (i.e. ask them about the choice between waiting longer for products or working harder).

This would destroy the economy. However I will not comment on this until you first explain why you think "All inputs can be reduced to time and labour (or time and energy; since labour can be expressed in terms of energy and vice versa)." (Becasue I am trying to make this shorter)


If the amateur chef knows this, he can tell the planners about it, and persuade them to give him a job as a chef in a pizzeria. Think of the socialist planners like capitalist investors. They do not take all management decisions themselves. There is such a thing as middle management in socialism.

Stocks won't exist in socialism, of course, but the investor's knowledge about stock XY is based on his knowledge about company XY. If he has this knowledge, he can tell the planners about it, and then they will have the same knowledge.

Then he can tell the planners about it.

Then he can tell the planners about it.

What if the people tell "the planners" information that is not compatible? For example, Bob says his pizza recipe is the best in town, while Jill says hers is the best? But the planners have decided that the town only needs 1 pizza place. What then?

But that is not the main problem with your argument. The fact is that the only way people could know if their pizza is really better than their competitors is through entrepreneurial action. How would the planners know which pizza store would be better? The only way is to let them compete under the markets price system.



Really? How so? In your examples, the chef, the investor, the computer nerd and Carl Icahn have some clear, definite knowledge that exists independent of the market. Why do you need a market to know that you can make better pizza than other people? Or to know that you can make a better search engine? Or to know that you can improve the management of a company?

The only way you can really know for certain is if you can outperform your competitors.



Perhaps you will say that you cannot decide on your own what is "better", independent of the opinions of others. Fine. Replace the word "better" with "different" in the above statements. Maybe you don't know if you can do something better, but you certainly know you can do something different. You put your proposal before the planners, or before the people, and they decide if it is better.

Wow, these godlike planners must be busy 24/7. But anyways, how do you know if your pizza would be preferred by the community without the markets price system?

By the way, this here is a separate issue we are discussing. It is not the calculation argument.


In any case, the vital point is this: Nowhere do I see any kind of information that cannot be made known to the planners. Whatever I know, you can know. Whatever one person knows, the planners can know.

So the planners are going to know everything that everyone in the entire Socialist society knows? I find that terribly difficult to imagine. But the calculation argument has to do with the pricing of producers goods and natural resources.

[Skooma Addict]

Also, since the discussion seems to be shifting towards Hayek's "knowledge problem", you or more importantly anyone who is following this discussion may wish to read this very short essay.

http://web.missouri.edu/~podgurskym/Econ_4970/readings/The%20Use%20of%20Knowledge%20in%20Society.pdf