inefficiency under Socialism/Communism

[kylieII]

I am interested in how you think that under Socialism, or Communism, or any economic system where all production is public, you plan on avoiding the problems that face a monopoly.
Because the two are the same thing, it is just that the firm will have a different motive other than profit. But this will not change the characteristics of that market, with in fact a lot of private firms having different objectives other than profit maximisation. Hence firms in the past when there was more industry publically owned, such as British Rail, the Postal Service, etc, these were known as 'state monopolies'.
Well these suffered similar problems to what private monopolies face, as they will under socialism/communism etc.

Firstly Allocative efficiency is not possible. That is, peoples demands or needs if you like, will not be met, with some goods oversupplied, others under. This being because of how with no alternative suppliers of goods, people cannot switch to a different good if they would prefer that. This is relevant to being efficient and using scarce resources as best as possible, because it may be that a similar good could be produced for the same amount of resources, or even less, that would satisfy peoples needs better. Resources are not being used as best they could be.
Now with competition in the market, this inefficiency can soon be corrected. Because with all its customers moving to a different supplier, a firm is forced to produce a product that will satisfy people better, otherwise it will go out of business. So this is the preferable market type for allocative effiency to be achieved.

Secondly productive effiency, producing the good for as little resources as possible, is not achievable under a monopoly. The way that firms are usually pushed to become more efficient is that to stay in the market they must - lower costs = lower prices and more demand/more profit from current demand. Now under a monopoly there isnt this incentive, well its not an incentive its a neccessity, to try to be more efficient.
It also being harder to find if you're being as efficient as possible in a monopoly. There is no way for you to compare the firm with others in the industry.
So more resources will be spent on producing goods than what is neccessary, or as what would be the case was there competition.

How do you think Marxism is able to address these problems, which would result in a Marxist economy being inevitably weaker and less beneficial for society than an competitive Capitalist market. The latter being able to make use of resources to provide more to the individual than the former, as explained above.

[LSD]

Firstly Allocative efficiency is not possible. That is, peoples demands or needs if you like, will not be met, with some goods oversupplied, others under. This being because of how with no alternative suppliers of goods, people cannot switch to a different good if they would prefer that. This is relevant to being efficient and using scarce resources as best as possible, because it may be that a similar good could be produced for the same amount of resources, or even less, that would satisfy peoples needs better. Resources are not being used as best they could be.
Now with competition in the market, this inefficiency can soon be corrected. Because with all its customers moving to a different supplier, a firm is forced to produce a product that will satisfy people better, otherwise it will go out of business. So this is the preferable market type for allocative effiency to be achieved.

The idea in a small communist community is that the people can directly communicate that which they need/want. As opposed to the bizarre "market" system or indirect purchase-level communication.

Furthermore, often in capitalism demand is artificially stimulated so as to allow for more production, and thereby not really serving the people's needs.


Secondly productive effiency, producing the good for as little resources as possible, is not achievable under a monopoly. The way that firms are usually pushed to become more efficient is that to stay in the market they must - lower costs = lower prices and more demand/more profit from current demand. Now under a monopoly there isnt this incentive, well its not an incentive its a neccessity, to try to be more efficient.
It also being harder to find if you're being as efficient as possible in a monopoly. There is no way for you to compare the firm with others in the industry.
So more resources will be spent on producing goods than what is neccessary, or as what would be the case was there competition.

To argue that there is no inspiration for technological/industrial development save capitalistic competition is ludicrous.

Surely, you don't claim that all scientific advances were due to a desire for material gain. In a communist society, there would be no material rewards for any activities, but one would work on improving an industry or product because one cared or because one was interested in the field or because one had an idea. In such a society everyone would not only have more free time, but would not be starving or homeless and so would be able to work on such a project.

Furthermore, insofar as gauging the efficiency of a product or a production, comparing with "others in the industry" is useful, but in a communist world one can always compare with the production methods of other collectives, or simply enough, test a new method against an old one.


How do you think Marxism is able to address these problems, which would result in a Marxist economy being inevitably weaker and less beneficial for society than an competitive Capitalist market. The latter being able to make use of resources to provide more to the individual than the former, as explained above.

The fact is that even if a communist "economy" were less efficient (which I demonstrated it would not be), it would still serve society better. It doesn't matter how efficiently a product is made if no one can use it.

A society in which only a select elite can actually take advantage of this vaunted effieciency is far worse than an inefficient one.

[Osman Ghazi]

The inneffiency of state monopolies is not universal. It often happens yes, in capitalist economies because they have no direct mechanism to deal with inneffiency in their monoploies.

In the USSR however, they had a fairly good system of dealing with supply and demand. It wasn't as good as the in a market-oriented economy, that's true. However, it is possible to analyze and determine more or less what the total consumption of a certain product will be over the course of a quarter of a year. Under usual circumstances, habits of consumption change over time in very broad patterns. Therefore, it should be possible to determine by what was consumed last quarter, what will be consumed this quarter and produce that amount plus a reasonable surplus.

Probably the best mechanism to deal with this was Krushchev's short-lived 'regional economic councils' in the USSR. Unfortunately, these were dissolved by Brezhnev, Podgorny and Kosygin after they overthrew Krushchev. They were supported by the industrial ministries which they put back into power. Because of their centralized nature, and their division into arbitrary categories (i.e. you had the Ministry of Heavy Industry, the Ministry of Light Industry, etc.) they were very innefficient and they were one of the mechanisms that led ultimately to the inability to reach consumption goals which led directly to the collapse of the Soviet Union.

I think that a combination of syndicalism and the regional economic councils would be an effective means to ensure a good idea of the supply and demand that is necessary to run an efficient economy.

Probably weren't expecting such a well thought out answer, eh? :lol:


The fact is that even if a communist "economy" were less efficient (which I demonstrated it would not be), it would still serve society better. It doesn't matter how efficiently a product is made if no one can use it.


To back up LSD's point: in 1964, the average person in the USA had $3000 per year (approx.) and in the USSR they only had $1200. However, in the USA they spent 50% on necessities whereas in the Soviet Union they spent only 15% plus they recieved all their necesary social services for free.

[Hoppe]

which I demonstrated it would not be)

Where exactly?


Furthermore, insofar as gauging the efficiency of a product or a production, comparing with "others in the industry" is useful, but in a communist world one can always compare with the production methods of other collectives, or simply enough, test a new method against an old one.

What? Are you now a marketsocialist?

...

[Osman Ghazi]

You know what i hate about hoppe: he acts like he has a Phd but ive never seen him actually make a point.

[LSD]

Where exactly?

When I addressed Kylie's two concerns,

here...

The idea in a small communist community is that the people can directly communicate that which they need/want. As opposed to the bizarre "market" system or indirect purchase-level communication.

Furthermore, often in capitalism demand is artificially stimulated so as to allow for more production, and thereby not really serving the people's needs.

...and here.

To argue that there is no inspiration for technological/industrial development save capitalistic competition is ludicrous.

Surely, you don't claim that all scientific advances were due to a desire for material gain. In a communist society, there would be no material rewards for any activities, but one would work on improving an industry or product because one cared or because one was interested in the field or because one had an idea. In such a society everyone would not only have more free time, but would not be starving or homeless and so would be able to work on such a project.

Furthermore, insofar as gauging the efficiency of a product or a production, comparing with "others in the industry" is useful, but in a communist world one can always compare with the production methods of other collectives, or simply enough, test a new method against an old one.



What? Are you now a marketsocialist?

um....no.

wow....that was a non sequitor.....

[Osman Ghazi]

Actually, there would be material and spiritual rewards for improving productivity. In a practical communist society anyway. They would simply be small.

[LSD]

Actually, there would be material and spiritual rewards for improving productivity. In a practical communist society anyway. They would simply be small.

Spiritual rewards are a personal affair and remarkably subjective.


Material rewards for improved productivity already has a name....

Capitalism.

[Osman Ghazi]

Spiritual rewards are a personal affair and remarkably subjective.


Material rewards for improved productivity already has a name....

Capitalism.

Actually in the USSR it was called wage differentials. :lol:

By spiritual rewards i mean the respect of your family and colleagues etc.
I don't think that a lack of material rewards is healthy at all. The simple fact is that material rewards (even small) do stimulate improved productivity and so it is necessary.

For people who assume that there would be no developement, look at the Soviet Union where they had scientists making all kinds of breakthroughs simply because they want to create new breakthroughs. The best option is no doubt to leave scientists to their research but have them well supported. All capitalism does is give the rich a reason to fund scientific research when in fact they could just have state supported scientists. Am i wrong?

[LSD]

Actually in the USSR it was called wage differentials.

I say astronauts, you say cosmonauts.

whatever.


By spiritual rewards i mean the respect of your family and colleagues etc.

Yes, agreed.


I don't think that a lack of material rewards is healthy at all. The simple fact is that material rewards (even small) do stimulate improved productivity and so it is necessary.

The fundamental point of communism is that it doesn't give material rewards.


Not only does would such a practice lead to classes based on these "small" bonuses.

But whoever decide the allocation also become a distinct and dangerously powerful class.

[Osman Ghazi]

It would be the people of a factory/collective that would determine if their colleague recieved a reward. Also, I'm not talking about a wage-increase, but a one-time bonus. Solve your problems?

[Hoppe]

Originally posted by Osman [email protected] 11 2004, 09:15 PM
You know what i hate about hoppe: he acts like he has a Phd but ive never seen him actually make a point.
Still 4 years to go.

Yet if Oskar Lange finally had to give in, I don't understand why people still continue to defend something on wishfull thinking. Every argument is countered with some quote saying that somehow everyone will work for the common good and the laws of economics simply don't apply anymore.

[LSD]

It would be the people of a factory/collective that would determine if their colleague recieved a reward. Also, I'm not talking about a wage-increase, but a one-time bonus. Solve your problems?

But it's entirely unnescessary!

Fundamentally, it contradicts the central philosophy of communism. Besides that society should already be providing for its members equall, if I recieve a "one-time bonus" than some resources are going only to me and are not bennefiting society as a whole. Equal distribution nesseccitates equality.

[Osman Ghazi]

But the thing is that your invention/innovation/improvement will benefit society as a whole. Besides, if anyone accumulated a fair amount of wealth out of it, it would end when they died and their persnoal wealth would be repossessed by the collective.

The only tenet of Communism that i do not agree with is the fundamental equality implied by it. All men are not created equal, in my opinion.

Hoppe:
Every argument is countered with some quote saying that somehow everyone will work for the common good and the laws of economics simply don't apply anymore.

And every Communist argument is countered with some quote on how humans are barbaric animals that will never be able to live together in peace. If you really feel like believeing that, there isn't really much i can do. But know this: your breed will be dead and gone some day and those who wish to create a new society based on universal human values of equality and respect will do so without the sideline criticism of people who contribute nothing positive to our society.

[LSD]

Every argument is countered with some quote saying that somehow everyone will work for the common good

I haven't answered a single argument with a "quote", and all your arguments are predicated on the assumption that people will only work for material gains.

If you actually look back, you will see that a great deal more has been said on the subjects than "quotes" and "human nature".


laws of economics simply don't apply anymore.

yes...the laws of economics....

a bunch of descriptions of what's going on that somehow "must" be natural to the universe.

Modern economics is, without a doubt, the most ridiculous of "sciences". A wierd perversion of sociology that tries to explain human behavior while ignoring human behavior.

You're damn right the "laws of economics simply don't apply anymore", hell, they don't apply now!

[Osman Ghazi]

Very true. (Wait, im not supposed to say things like that)

Even capitalists don't know all the rules of economics because there are far too many outside influences.
They attempt to look for natural experiments but the whole point of an experiment is that there are controls so that you can test the variables. In economics everything is variable. It is definately not yet a scince but i think that it good be.

At best right now it is witchcraft:
"Sir, people aren't spending any money. What should we do?"
"I dunno. Umm... lower interest rates?"

[LSD]

But the thing is that your invention/innovation/improvement will benefit society as a whole.

But that would happen without material rewards. Rewards which only serve to divide and fracture society.


The only tenet of Communism that i do not agree with is the fundamental equality implied by it. All men are not created equal, in my opinion.

um.....you'll have to clarify that one, because it's a pretty disturbing statement by itself.

[Osman Ghazi]

um.....you'll have to clarify that one, because it's a pretty disturbing statement by itself.
Well, obviously, the white race is superior (joke) Is that what you thought?
All i meant is that some people are smarter than others, some stronger, etc.

The thing is that i'm not sure that people would develope without incentive.

Give me an example of an invention that wasn't made because they wanted more money. I mean more in the area of an innovation really. Something that would increase output rather than a wholly new invention.

I just realized that you would also have to seperate innovations and inventions.
For example, it is very rare that people just randomly come up with a new invention. Innovation occurs in this way all the time though.

[LSD]

All i meant is that some people are smarter than others, some stronger, etc.

Well yes, of course, but rewarding people for natural abilities is akin to social darwinism, (the most evolved deserve more, etc...)


The thing is that i'm not sure that people would develope without incentive.

Well, everything you do is because of "incentive" of some sort but it is not neccessarily the material type.


Give me an example of an invention that wasn't made because they wanted more money.

The wheel.


I mean more in the area of an innovation really. Something that would increase output rather than a wholly new invention.

What? I'm not sure what that includes....

does the diesal engine, for example, qualify as "wholly new invention" or something that "[increases] output".

[Osman Ghazi]

I guess so but the wheel was invented so that it would require less work to do the same thing. Is this the kind of incentive you want? What will be the mental attitude of people when they develope new inventions and innovations?


Well yes, of course, but rewarding people for natural abilities is akin to social darwinism, (the most evolved deserve more, etc...)


Sort of... but it isn't that they are 'evolved' really. Not rewarding them is not acknowlegding that they have rare talents. Besides which, the sum of the reward that we are speaking of is not that high... say maybe a month's wage.

[Iepilei]

Under socialism there is a small system of wage bonuses based on performance. It's a method which slowly weans people off capitalism, yet retains a small section of it. Of course, the principle of communism states against material bonuses - but that is still a ways off. In communism there wouldn't really be a need for a bonus, considering the bulk of everything would be free (if you're talking in pure, idealist, terms).

[LSD]

I guess so but the wheel was invented so that it would require less work to do the same thing. Is this the kind of incentive you want?

Yes and no. Sre there's an element of reducing work, but it is about reducing work for everyone (themselves included of course, but not alone).


What will be the mental attitude of people when they develope new inventions and innovations?

Workers would innovate and invent either because they are interested the field, because they have an idea, or because of both, they would rather work on innovation and have an idea which the other workers in their field believe is good enough to warrent allowing them to work on it rather than do their normal requirements.


Sort of... but it isn't that they are 'evolved' really. Not rewarding them is not acknowlegding that they have rare talents.

This "acknoweledgement" will already come to them in terms of the "spiritual" rewards you mentioned earlier. There is no need to institutionalize it by materially rewarding them, besides:

In communism there wouldn't really be a need for a bonus, considering the bulk of everything would be free (if you're talking in pure, idealist, terms).

[Pete]

Efficency is not the point of communism, as Redstar said in another thread earlier tonight, EMANCIPATION OF THE MASSES is.

We don't give a damn about capitalist measures of 'success.'

We give a damn about being able to survive and be free with our brothers and sisters.

[Hegemonicretribution]

Originally posted by [email protected] 12 2004, 05:07 AM

We don't give a damn about capitalist measures of 'success.'

Exactly. Once goals are complete, the status attached to material items becomes irrelevant. Practicallity becomes far more relevant than sentimentallity.

I concede that the allocation of resources is complicated, and yes neither the left or right has it quite yet...however I would say that this doesn't matter too much, because distribution will be more equal...and there will be more produced for consumption.

The division of labour is better suited for communism than capitalism. Reason....industries are more secure, and people will become more specialised, because they can become more experienced in a job they can keep.

This also helps to overcome the problem of over-specialised workers when there is structural unemployment. People will not drain the economy because of the lack of a job, and will not cut production in a particular area....they will all be employed.

100% employment is probably not desireable or possible under either system, however you can get damn close...closer under command economies. Again less people taking money, more putting in...it is all good.

Perhaps if you asked about innefficiency of distribution it would be different, although as most people have pointed out no-one really knows. However for efficiency in terms of production it only makes sense that free arkets will loose.