Rebuttal to some points

[rezzza]

Hi everyone, I am new here. Recently I have been introduced to the wonders of communism, and I have found a lot of it very fascinating.

I go to high school, and considering how communism is frowned down upon, I have been standing up for it in heated debates in class.

This one guy who comes from a wealthy family is the top business and economics student and keeps bringing up some points.

The guy gave me three challenges:
1) "The problem referred to is that of how to distribute resources rationally in an socialist economy...price conveys embedded information about the abundance of resources as well as their desirability which in turn allows, on the basis of individual consensual decisions...Mises and Hayek argued that this is the only possible solution, and without the information provided by market prices socialism lacks a method to rationally allocate resources."

2) "The anarcho-capitalist economist Hans-Hermann Hoppe argues that, in the absence of prices for the means of production, there is no cost-accounting which would direct labor and resources to the most valuable uses."

3) "Milton Friedman, an economist, argued that socialism impedes technological progress due to competition being stifled."

Any nice, short replies would be great! Thanks

[LifeIs2Short]

1) "The problem referred to is that of how to distribute resources rationally in an socialist economy...price conveys embedded information about the abundance of resources as well as their desirability which in turn allows, on the basis of individual consensual decisions...Mises and Hayek argued that this is the only possible solution, and without the information provided by market prices socialism lacks a method to rationally allocate resources."


Pricing in a socialist economy price of products can be calculated directly from the hours of labour put in it, natural scarcity of its raw materials or the amount of energy put into its manufacturing, or a combination of those. These would reflect this information in the price much more accurately than the free market ever can.



2) "The anarcho-capitalist economist Hans-Hermann Hoppe argues that, in the absence of prices for the means of production, there is no cost-accounting which would direct labor and resources to the most valuable uses."


Well that can be calculated directly by the planning system/authority on work productivity and decide is the actual social value through democracy.



3) "Milton Friedman, an economist, argued that socialism impedes technological progress due to competition being stifled."


Well, how much of the technological innovations are made by corporations and how much by socialised government funded research? Capitalism keeps the price of labour under-priced by ensuring cyclical unemployment, therefore technology that would increase productivity isnt always utilised immediatly. Take for example sweatshops that do simple manual work that could easily be replaced by machines, but the workers come cheaper. A socialist economy that has a price on goods based on their resource usage (human labour, energy) on the other hand will be trying to increase productivity as well as it can.

[GiantMonkeyMan]

3) "Milton Friedman, an economist, argued that socialism impedes technological progress due to competition being stifled."
I'm not confident in my economics to offer a rebuttal to the questions posed from the perspective of Mises and the like.

However, in regards to competition and technological advancement. Huge amounts of money is directed towards discrediting renewable energy technologies from the oil industry, the computer industries race to patent and then restrict access to technologies to gain the upper hand over their competitors, research grants in universities are generally only given out to researchers who can build something that could become profitable for the university and their financial backers, medical advancement in drugs is patented and denied to millions in order to ensure a profit etc. This isn't a productive way to advance technological and scientific understanding. If research becomes purely on the basis of profit then the only people who truly benefit are a small minority of the world; ie the capitalist class.

If we lived in a society free from the shackles of class, money and the state then technological and scientific advancement would benefit the world as a whole. The scramble for, and the distribution of, resources wouldn't be based upon the potential profit garnered but the potential use value for all those in society who could need it. Capitalism, a society where the vast majority of the population is employed in menial tasks and unable to explore their human potential, is not conductive to the advancement of technology, science and art except in the rare cases that the capitalists can profit.

[Tim Cornelis]

Hi everyone, I am new here. Recently I have been introduced to the wonders of communism, and I have found a lot of it very fascinating.

I go to high school, and considering how communism is frowned down upon, I have been standing up for it in heated debates in class.

This one guy who comes from a wealthy family is the top business and economics student and keeps bringing up some points.

The guy gave me three challenges:
1) "The problem referred to is that of how to distribute resources rationally in an socialist economy...price conveys embedded information about the abundance of resources as well as their desirability which in turn allows, on the basis of individual consensual decisions...Mises and Hayek argued that this is the only possible solution, and without the information provided by market prices socialism lacks a method to rationally allocate resources."

Prices subject to market forces convey flawed and distorted information due to the disequilibrium of markets. Using these flawed prices as sole criteria for economic decision-making is in itself, thus, flawed. Additionally, the sole criteria for economic decision-making -- namely profits based on flawed information as conveyed through disequilibrium prices -- leads to absurdities, e.g. exporting food from starving regions, food speculation leading to a rise in prices and amplifying, for instance, the Somali famine, which resulted in the death of 250,000 people. Such economic decision-making is hardly "rational".

Note, I assume you don't have to convince the person in question of the disequilibrium of prices as he seems to be an adherent to the Austrian school of economic thought. If he isn't this argument will make less sense. Of course, that for-profit production results in the "rational" deaths of millions annually is still valid.


2) "The anarcho-capitalist economist Hans-Hermann Hoppe argues that, in the absence of prices for the means of production, there is no cost-accounting which would direct labor and resources to the most valuable uses."

Socialism would use the average socially necessary labour time to calculate costs and values of economic decisions. Such an economic means of allocative calculation is flawed and not perfect, as labour is heterogeneous. However, it does prove that some objective common denominator can be found by which to make economic calculations. Additionally, take into account that for-profit production leads to the death of 9,2 million Indians that die annually as a result of hunger and hunger-related diseases that do not result to natural disasters (the total number, including hunger-related deaths as a result of natural disasters is 10 million), while 30-50% of all produced crops and foods are destroyed as destroying it is more profitable to the farmers than selling it, I'd say using the flawed method of labour time calculation is preferably to the disastrous for-profit calculations.


3) "Milton Friedman, an economist, argued that socialism impedes technological progress due to competition being stifled."

Any nice, short replies would be great! Thanks

This is circular reasoning in a sense. In today's world we need technological progress to compete and stay ahead of competitors. Even assuming socialism will innovative nil, we can still provide a comfortable life to every person in terms of material and social well being. Innovation is not necessary. Additionally, research has shown that innovation stifles using monetary incentives, and that in fact three factors contribute to innovation:
1) mastery (internal motivation)
2) purpose (internal motivation)
3) autonomy (external factor)

Socialism, being based on free association of equals, will enhance autonomy and thus, likely, innovation.

See this video for further elaboration:

http://www.youtube.com/watch?v=u6XAPnuFjJc

[Theophys]

1) "The problem referred to is that of how to distribute resources rationally in an socialist economy...price conveys embedded information about the abundance of resources as well as their desirability which in turn allows, on the basis of individual consensual decisions...Mises and Hayek argued that this is the only possible solution, and without the information provided by market prices socialism lacks a method to rationally allocate resources."

The state extracts the resources, ships the resources, refines the resources, and distributes the resources. The state can know what the "embedded information" is as it is taking direct part in the extraction of those resources and their sale as well as pricing. The desirability of these resources is determined through demand. Prices can very well be affected by supply and demand, scarcity and abundance, and so on and so forth. This is effectively seen in video games with such calculation taking place based on demand and supply. Add such a configuration to a large-scale economy that has an extensive use of computers to calculate costs of production, demand and supply, etc. to formulate a price and there you have it.


2) "The anarcho-capitalist economist Hans-Hermann Hoppe argues that, in the absence of prices for the means of production, there is no cost-accounting which would direct labor and resources to the most valuable uses."
Records can be kept of expenses versus sales. The state, since it manages the economy, is able to do the cost-accounting on a social level and then relay information to the individual factories. Inefficiencies can be dealt with through closure, firing, lowering pay, etc. Market Socialism, nevertheless, solves this.


3) "Milton Friedman, an economist, argued that socialism impedes technological progress due to competition being stifled."
Socialist competition. Even the USSR had its space agencies in competition with each other as opposed to the US's single-agency NASA. I also do not recall inventors inventing purely for the sake of profit, I've even seen inventions stifled due to the uncertainty of the market, lack of investments, etc. which if allowed to be produced would aid many individuals. Market Socialism also solves this.