What is a centralized and a decentralized economy.

[ArisVelouxiotis]

I know about centralization and decentralization when it comes to politics but I don't understand what we mean with those 2 terms about economics.
Also it is a question mark not a full stop sorry about that.

[ckaihatsu]

I'll proffer the following....


Multi-Tiered System of Productive and Consumptive Zones for a Post-Capitalist Political Economy

http://s6.postimage.org/ccfl07uy5/Multi_Tiered_System_of_Productive_and_Consumptiv.j pg (http://postimage.org/image/ccfl07uy5/)

[tuwix]

I know about centralization and decentralization when it comes to politics but I don't understand what we mean with those 2 terms about economics.
Also it is a question mark not a full stop sorry about that.

It's similar to politics. In centralized economy the most decisions is made by some center as well in centralized politics.

[Invader Zim]

Basically, it means how planned or directed is an economy. Does the state set targets for industry / commerce, direct labour, manage investment, regulate practices, own key industries / services, and so on.

A good example of a capitalist centralised economy would be Britain during the Second World War. In which there was conscription, direction of industry, economic controls on scarce products, nationalisation, regulation of pay in specific industries, etc.

[IWantToLearn]

Are planned and centralized economies synonyms?. To carry out a planned economy you need the power to take decisions in some kind of centralized manner or am i wrong?.
Sorry if im deviating from the topic, i didn't want to start a new post for such a small question.

[tuwix]

Are planned and centralized economies synonyms?. To carry out a planned economy you need the power to take decisions in some kind of centralized manner or am i wrong?.
Sorry if im deviating from the topic, i didn't want to start a new post for such a small question.

Yes, they are synonyms.

[ckaihatsu]

Are planned and centralized economies synonyms?. To carry out a planned economy you need the power to take decisions in some kind of centralized manner or am i wrong?.
Sorry if im deviating from the topic, i didn't want to start a new post for such a small question.


Centralization-Abstraction Diagram of Political Forms

http://s6.postimage.org/xxj3liay5/2374201420046342459e_NEwo_V_fs.jpg (http://postimage.org/image/xxj3liay5/)

[SmirkerOfTheWorld]

Yes, they are synonyms.

Well, I think anarchists and syndicalists would argue for a federalised and decentralised economy - but also a planned one.

So I don't think they are necessarily synonyms, although they often are...

[Kaoxic]

A centralized economy is what people who don't know anything about communism think commuism is.

[SensibleLuxemburgist]

Economies should be decentralized because centralization leads to the uneven distribution of economic power.

[exeexe]

A centralised economy means that all the products from labor has to be collected at one node. This node is typically also called the state. Then from this node all the products has to be distributed back to all the people. Its a pretty inefficient way to organize the economy and additionally it is very easy for those who is close to the node to take more than they are eligible to. Then those people who is far out in the distributionnetwork will be angry. So it can either lead to chaos or a very brutal regime.

In a decentralized economy you have strategically well thought placed nodes that are there for a reason and not like in a centralized economy where you just have one node because you didnt bother to organize the economy better.
And since any given node is much closer to the people its far riscier and harder to take products from the economy you are not eligible to. Thus what you get in return is much more likely to be order and people that has a healthy working spirit.

I heard a story once about how the Nazis transported food to the soldiers at the Russian front. Once the food had arrived all the good food was gone and the soldiers who were at the front and who did the hardest work and who put their life at risk had to eat the boring food.

[ckaihatsu]

A centralised economy means that all the products from labor has to be collected at one node.


No, a centralized economy means that there is one point of *administration*, to administer over all components and aspects of the planned economy. By doing it this way bureaucratic turf wars are avoided since the authority over mass production is clear-cut and unambiguous.

Consider:





Single-payer health care is a system in which the government, rather than private insurers, pays for all health care costs.[1] Single-payer systems may contract for healthcare services from private organizations (as is the case in Canada) or may own and employ healthcare resources and personnel (as is the case in the United Kingdom). The term "single-payer" thus only describes the funding mechanism—referring to health care financed by a single public body from a single fund—and does not specify the type of delivery, or for whom doctors work. The actual funding of a "single payer" system comes from all or a portion of the covered population. Although the fund holder is usually the state, some forms of single-payer use a mixed public-private system.




http://en.wikipedia.org/wiki/Single-payer_health_care





In a decentralized economy you have strategically well thought placed nodes that are there for a reason and not like in a centralized economy where you just have one node because you didnt bother to organize the economy better.


So, with centralization, any of the nodes could be anywhere, geographically...





[T]o illustrate this, consider a region that's been well-known for its woodworking -- perhaps there are 7 steps to its supply-chain: [A] sourcing the timber, [B] transporting the logs to a mill, [C] initial processing to turn the wood into boards, [D] warehousing the lumber, [E] transporting the wood to any given workshop, [F] the craft of turning the lumber into finished wood products such as tables, and, finally, [G] distribution of the products to their intended destinations.


...But the decision-making process and authority over these nodes would be centralized so that there's no question as to what the policy is regarding the entire production process.





Economies should be decentralized because centralization leads to the uneven distribution of economic power.


'Centralization' does not automatically mean 'authoritarianism' -- rather, it should be thought of as 'consistency'.

Also, any feasible system for a post-capitalist society would *not have* a domain of 'economic power', since there wouldn't be any commodity production. With no use of abstracted valuations (currency) there would be no possibility for the *concentration* of economic valuations. All value would be use-values only, derived from liberated labor, within the planning of the whole political economy.

[exeexe]

Originally Posted by exeexe http://www.revleft.com/vb/revleft/buttons/viewpost.gif (http://www.revleft.com/vb/showthread.php?p=2752845#post2752845)
A centralised economy means that all the products from labor has to be collected at one node. No, a centralized economy means that there is one point of *administration*, to administer over all components and aspects of the planned economy.

Well the one explanation doesnt exclude the other. Infact by having both explanations will just result in even more chaos or brutal regime.



By doing it this way bureaucratic turf wars are avoided since the authority over mass production is clear-cut and unambiguous.
Well if you wanna avoid bureaucratic turf wars, you should let the economy be driven from below. That is to have a federated system where each local group decide how much involved they wanna be in the whole system.

Authority is probably the most direct way to have bureaucratic turf wars because authority can never satisfy the economic wishes different local groups may have. If you wanna put all the different groups under one system many will not accept this and resist.

Its like in the name of authority we will be feeding dogfood to a dog, a cat and a mouse. Does that sound clever to you?

[ckaihatsu]

A centralised economy means that all the products from labor has to be collected at one node.





No, a centralized economy means that there is one point of *administration*, to administer over all components and aspects of the planned economy.





Well the one explanation doesnt exclude the other.


Yes, it does -- either there is a single policy and administration, or there isn't.

Even a *decentralized* approach would require a singular policy -- that it be decentralized, instead of being centralized.





Infact by having both explanations will just result in even more chaos or brutal regime.


This sentence doesn't make any sense.





Well if you wanna avoid bureaucratic turf wars, you should let the economy be driven from below.


I actually agree with this, and I'll point to my 'Multi-Tiered' illustration at post #2 as proof of my position.

Also consider that the labor itself, for anything, is usually locally based, and would have to be in agreement with any overall, centralized policies.





That is to have a federated system where each local group decide how much involved they wanna be in the whole system.


The problem with a federated system, though, is that it requires *lateral* agreements, for each and every linkage of cooperation over production. This would constrain production on the basis of geography and would also encourage competition over those partnerships.

It's because of this lack of centralization that decentralization is effectively the same as market socialism:





[T]here could very well be *intense* inter-firm competition, with each firm's workers mercilessly self-exploiting themselves for the sake of their respective company, in order to make (syndicalist) profits. It would be like the nation-state competition of today, but initially starting on a small-scale, patchwork, feudal-like basis.





Authority is probably the most direct way to have bureaucratic turf wars because authority can never satisfy the political wishes different local groups may have. If you wanna put all the different groups under one system many will not accept this and resist.

Its like in the name of authority we will be feeding dogfood to a dog, a cat and a mouse. Does that sound clever to you?


I hear you, and I'm not suggesting any *institutionalization* of authority, as is instinctively thought of -- especially since that's the type of authority we're used to living in under capitalist social relations.

Rather, the policy over any given mass production (singular centralized authority) should be decided based on unfulfilled needs and demands from the entire population, for any given scale of production. In other words, not all production has to be global in scope (see illustration at post #2), so mass demands from below should be mass-prioritized according to the scope of production indicated, to arrive at a clear picture of what production is needed in the first place.

Here's from a framework I developed:





Ownership / control

communist administration -- All assets and resources will be collectivized as communist property in common -- their use must be determined through a regular political process of prioritized demands from a locality or larger population -- any unused assets or resources may be used by individuals in a personal capacity only




http://www.revleft.com/vb/blog.php?b=1174


---


Then the rest of it is all logistical, and even logistical issues could also be individually politicized and mass-prioritized.

Again, from the model:





Infrastructure / overhead

communist administration -- Distinct from the general political culture each project or production run will include a provision for an associated administrative component as an integral part of its total policy package -- a selected policy's proponents will be politically responsible for overseeing its implementation according to the policy's provisions


And here's how prioritization can be done:


[17] Prioritization Chart

http://s6.postimage.org/jy5fntvcd/17_Prioritization_Chart.jpg (http://postimage.org/image/jy5fntvcd/)

[exeexe]

Yes, it does -- either there is a single policy and administration, or there isn't.

Even a *decentralized* approach would require a singular policy -- that it be decentralized, instead of being centralized.
Well since every node is autonomous and can make decisions for themselves, there is no need to make a centralized agreement. Its like saying a majority of human beings drinks beer. Why? Did they make a centralized decision to come to that conclusion? That they should enjoy beer? No, they all drink beer because it just makes sense to them individually.


The problem with a federated system, though, is that it requires *lateral* agreements, for each and every linkage of cooperation over production. This would constrain production on the basis of geography and would also encourage competition over those partnerships
Well i dont see lateral agreements as a problem but as a solution. Why? Because the whole is greater than the sum of its parts. But of course you shouldn't sacrifice everything for this.
Also there is no constrain on production. Say you have an agreement to produce 400 tonnes of bananas, what should prevent you then from producing 600 tonnes of bananas if you wanted to?

Also i dont understand why there would be competition.

[ckaihatsu]

Yes, it does -- either there is a single policy and administration, or there isn't.

Even a *decentralized* approach would require a singular policy -- that it be decentralized, instead of being centralized.





Its like saying a majority of human beings drinks beer. Why? Did they make a centralized decision to come to that conclusion? That they should enjoy beer? No, they all drink beer because it just makes sense to them individually.


This is a red herring because you're mixing contexts -- this topic is about *production* and how it could be organized, while you're referring to the *consumption* side of the equation. Consumer activity doesn't require coordination and liberated-labor-based planning.





Well since every node is autonomous and can make decisions for themselves, there is no need to make a centralized agreement.


Again, I disagree with your 'decentralized' approach, for the reasons I've already stated.





The problem with a federated system, though, is that it requires *lateral* agreements, for each and every linkage of cooperation over production. This would constrain production on the basis of geography and would also encourage competition over those partnerships.

It's because of this lack of centralization that decentralization is effectively the same as market socialism





Well i dont see lateral agreements as a problem but as a solution. Why? Because the whole is greater than the sum of its parts.


I don't want to bicker over the fine points of our disagreeing -- as I mentioned before:





[N]ot all production has to be global in scope (see illustration at post #2), so mass demands from below should be mass-prioritized according to the scope of production indicated, to arrive at a clear picture of what production is needed in the first place.


This means that much production *could* in fact be emergent, on a bottom-up basis, as you're saying -- I don't disagree with this one point since there *is* some overlap in our respective approaches.

However:





[T]he basic idea is to *generalize* productive activity as much as possible, yielding broader and deeper expanses of coordination.


---





But of course you shouldn't sacrifice everything for this.
Also there is no constrain on production. Say you have an agreement to produce 400 tonnes of bananas, what should prevent you then from producing 600 tonnes of bananas if you wanted to?

Also i dont understand why there would be competition.


There would most likely be competition because of the lack of an overall, centralized coordination -- if, for example, there's an agreement for Locality B to produce 400 tons of bananas for Locality A, what would Locality B get in return -- ?

Whatever 'B' would get from 'A' would then be *material compensation* of some sort, which is basically the same as commodification. What if a Locality C said it could produce *600* tons of bananas for 'A', for the same compensation that was offered to 'B' -- ? There's the competition.

My previous point still stands:





[T]here could very well be *intense* inter-firm competition, with each firm's workers mercilessly self-exploiting themselves for the sake of their respective company, in order to make (syndicalist) profits. It would be like the nation-state competition of today, but initially starting on a small-scale, patchwork, feudal-like basis.

[exeexe]

There would most likely be competition because of the lack of an overall, centralized coordination -- if, for example, there's an agreement for Locality B to produce 400 tons of bananas for Locality A, what would Locality B get in return -- ?

Whatever 'B' would get from 'A' would then be *material compensation* of some sort, which is basically the same as commodification. What if a Locality C said it could produce *600* tons of bananas for 'A', for the same compensation that was offered to 'B' -- ? There's the competition.

Lets assume location C could offer coffee beans:

You should ask yourselves what do you want. Do you want people around you to be happy? People who you have a lot in common with and are pursuing the same goals as you or do you want coffee beans?

Lets say you are a parent to two children and you can give them chocolate and lets assume you like the one child more than the other other, but you still like them both, would you then give them the same amount of chocolate to your two children or would you distribute the chocolate unevenly?

(I assume you will answer evenly distribution ?)

Ok so if you can give something out and distribute it evenly, and not expect anything in return, why then would it be a problem when you do can get something in return?

[exeexe]

which is basically the same as commodificationAccording to wikipedia commodification is the process where you change something from being not buyable to be buyable, like an idea.
So
material compensation is not the same as commodifation..

[ckaihatsu]

Lets assume location C could offer coffee beans:

You should ask yourselves what do you want. Do you want people around you to be happy? People who you have a lot in common with and are pursuing the same goals as you or do you want coffee beans?

Lets say you are a parent to two children and you can give them chocolate and lets assume you like the one child more than the other other, but you still like them both, would you then give them the same amount of chocolate to your two children or would you distribute the chocolate unevenly?

(I assume you will answer evenly distribution ?)

Ok so if you can give something out and distribute it evenly, and not expect anything in return, why then would it be a problem when you do can get something in return?


Sure, I get it -- when there's abundance all around, everything's hunky-dory.

The reason for my efforts in this regard, though, is because the world is usually *messy*, and we can't *guarantee* that a future socialist society will cater to everyone's last little whim in a Garden-of-Eden kind of way.

You're still side-stepping my main point, which is that a *decentralized* system would have to create / resolve linkages in some way, and since those connections are always made in an ad-hoc way, there could easily be *competition* around those connections, as well as cooperation.

[A Revolutionary Tool]

Lets assume location C could offer coffee beans:

You should ask yourselves what do you want. Do you want people around you to be happy? People who you have a lot in common with and are pursuing the same goals as you or do you want coffee beans?

Lets say you are a parent to two children and you can give them chocolate and lets assume you like the one child more than the other other, but you still like them both, would you then give them the same amount of chocolate to your two children or would you distribute the chocolate unevenly?

(I assume you will answer evenly distribution ?)

Ok so if you can give something out and distribute it evenly, and not expect anything in return, why then would it be a problem when you do can get something in return?

What if I don't want coffee beans though? What if my federation has absolutely no thoughts about drinking coffee but the coffee bean farm worker's federation needs the supplies of my federation for plumbing materials? Okay we can just give our supplies to you because we're so comradely. But then the comrades at the federation where the bananas are farmed just offered us bananas and asked us for plumbing supplies. So I can give my comrades some plumbing material so they're not knee deep in shit but get nothing in return or I could make sure my comrades on banana farms are not knee deep in shit while also being happy about having bananas to eat. More people around me are happy because of the decision it's just bad luck the coffee bean workers couldn't broker a deal with us fast enough before the banana workers did, hopefully they'll find someone else or wait for us to produce more. See this could easily turn to competition, market socialism, and all sorts of "evils" that capitalism makes. Uneven development, how are we supposed to deal with that in a system of federations? Transporting goods across far places, how are you supposed to decentralize a railroad system or the Panama Canal?