Economic calculation problem?

Not really.

The price form doesn't tell you much about consumption trends. Changes in it can tell you about the relationship between supply and demand, but this is just the appearance of trends below the surface. Why those changes occur is relative to the mode of production.

If we want to object to the fundamental premise of the calculation debate, it would be the objection to the notion that the needs under socialism will be the same as the needs under capitalism. We wouldn't (or rather shouldn't) have to decide between whether to produce gum #1004 now or later under socialism. But what about necessary goods?

While I think parecon is stupid misguided, besides the issue of empirical or mathematical relevance there have been several "solutions" for the production of necessary goods proposed. For example in the PDF, we find Cockshott who is an advocate of hyper calculation as advocated in his book Towards A New Socialism. I think Cockshott errs by trying to calculate value based on labour time. If I remember correctly, Engels says something along the lines of "Calculating the value of goods based on their labour time in socialism with be akin to a chemist calculating the value of goods in their actual weight instead of their nuclear weight.". What Engels advocates, is that the method we use for calculating the value of goods in socialism will be based on the laws and needs of socialist production. This plays back into my original point, which is that the method of calculation, the allocation of goods is relative to the mode of production.

But I digress. As far as parecon goes, I think it's mostly shit. However, Pat Devine constructed a model I think is intriguing. I'll just leave the PDF of his ideas here to avoid going over them, but I think some of what he theorizes could be incorporated into a centrally planned state, if not being tried (with some tweaks) the way he lays it out.

The "calculation problem" is one of those aspects of Marxian economics that no matter how many times, and no matter how many different ways it is answered, it will persist.

Nothing new here

Sorry, that should read "calculating the value of commodities in socialism based on their labour time would be equivalent to a chemic measuring the weight of atoms based on their actual weight, instead of their atomic weight". He says this in Anti-Durhing.

Austrians also seem to forget that there was quite literally a formal debate about this between Mises and Marxian economist and the Marxians are considered to have won the debate which led to Hayek reformulating the calculation problem.

Prove it or it didn't happen.

Look up the theoretical solutions Oskar Lange offered Mises and Hayek, and Hayeks later reformulation of it.

You have not provided any mechanism through which this can be determined objectively, nor have you shown how this is any less ambiguous than the use of labor-time. Marxbux tokens doled out via labor-time or via "socially necessary" labor time still require inefficient central arbitration that utilizes non-market data collection. Even with the best supercomputer to preocess the data, the artificial method of data collection necessary for this to work remains both inefficient and oversimplified. Cumshott's proposed mechanism is still reliant on price signals, btw.

Lange's argument was for market socialism, not classical Marxist socialism. You're also ignoring how most of the debate was, rather hilariously, between Marxists, and not between a unified Marxist front of economists and the Austrians.

Sorry, I forgot that Lange was the neoclassical socialist. I confused him with Otto Neurath. I believe that Devine's ideas I will go over are closer to "calculation in kind" (in the sense it aims to capture the information that money obscures) than they are closer to Lange's scheme.

I recommend you take a look at the PDF I posted in . Devine deals with this issue by opening up production to the tacit knowledge of everyone involved, including consumers. If I'm not mistaken, the Austrian view of Capitalism is not the same as Neoclassical economics in the sense that you don't agree that the market allocates good efficiently according to marginal cost, but that Capitalism brings on innovation and encourages individuality

So with that being said we must ask: what is it price indicates? Consumption trends. But the reason for those consumption trends is held within the tacit knowledge of the consumers. It should be noted that the ECP is a qualitative issue, and therefore requires a qualitative solution. A qualitative solution is the entire socialization of production, transforming production into the free association of all those involved in both stages of the realization of a use value (the production and the circulation). In that same vein, production of already existing goods, and the allocation of resources for new goods becomes a debate among all those involved. Not only will the "planners" have the tacit information of the populous to act on, but due to the socialized nature of production they will be forced to act on that knowledge. The price signals, are transformed.

Now regarding my issue with calculating in labour time. As socialism progresses as history progresses, the renumeration and allocation of surplus use values will be the application of the law of value under socialism. My critique of Cockshott is related to historical materialism (presenting calculation based on labour time as the end of history, or rather not stressing its transience).

I wouldn't call market socialist Marxist. A debate between Marxist about the role of money in a socialist society predates the ECP, and would inevitably make it into the debate regardless.

And the idea that markets allocate resources efficiently is laughable. Austrians have agreed with Marxist, and Post-Keynesians that there is no necessary tendency towards general equilibrium in a market economy. Uncertainty means production will not align with consumer purchasing trends. A lack of effective demand means that value produced can not be realized and crisis of overproduction occur. At any given time, the market is flooded with MILLIONS of "wrong" prices, prices that don't represent relationships of supply and demand.

Hey did you work out how to assign factors of production to their most productive uses as well?

What do you think there is to calculate?

I suppose it's mostly

Without prices for factors of production, you don't have any easy way of telling the opportunity cost of using a factor of production (say, someone's labour, or some concrete, or a piece of land) in a certain way (for example, assigning the person's labour to a shoe making factory)

Since you don't have prices, you have to use some other way of assigning factors of production. Eventually it becomes arbitrary, and you have a central planner just shrugging his shoulders and deciding between shoe factory, restaurant and cinema based on which one he happens to have pleasanter thoughts about (whereas in a capitalist economy the worker would be assigned based on which one was willing to pay the most, ie which one really had the most use for another worker)

You use demand. You know, the same demand that, according to your own theory, takes part in the formation of price, and therefore preexist price.

They are inevitably going to wonder how you communicate demand without a price mechanism.

So I'll answer before they ask: you can communicate in ways other than monetary exchange. a foreign concept to a capitalist, perhaps.

Holy shit, for a moment I was actually getting angry at you because I read it as you arguing that the only way to communicate demand is through money

Sorry for almost getting mad at you

That's what is so funny about all this: it's not even foreign at all to capitalists. When my local, capitalist supermarket runs out of a product, they order this product to their furnisher. Only later does the price intervene.

Telling the central planner to 'use demand' doesn't really solve much. That is a very vague instruction. He needs to know at all times what demand is and how intense it is relative to other demands.

Communication can be used to approximate demands, and try to rank them, but ranking preferences between people is quite difficult without prices. And given all the different combinations of goods that would need to be presented to people the operation would get even more complicated.

As well as that, gathering information and communicating it between departments poses a cost on people's time and the community's resources.

That's what any dealer needs to know, genius. What do you think customers surveys are about?

He needs a lot more information than just 'any dealer'.

You realise that the "he" you're talking about is not an actual person, that it's precisely the collection of said dealers, right?

Do you think a general needs to know the exact location of every single enemy soldier in order to win the war? Of course not. And yet his army needs to know it, in order for its soldiers to shoot every single enemy soldier.

A central planner faces more problems than a collection of dealers. That's the whole point.
A dealer makes decisions based on prices which communicate information based on people's actions in the market place, which ultimate give information about real human demand

Absolutely not: a dealer makes decisions based on both prices and real human demand.

If the enemy soldiers were spread out, and he had only a limited number of soldiers, he would need to assign all his soldiers to the right place

wew

even non-socialists have said it isn't a problem. in Capitalism, Socialism and Democracy Schumpeter shows within a chapter that The ECP is easily countered by the use of 'units' to distribute resources and labour according to a previously sketched out plan and can react to changes in the economy.

This isn't accurate though. Markets have price distortions themselves, no one denies this.
The argument is whether a central planner is able to deal with enough information to avoid heavy price distortions or not. Price distortions in of themselves are not fatal as we can see by the fact that market deals with them everyday without shitting itself.

I see.

Prices tend to equilibrium even if they don't settle there. The incentives on actors act to encourage the movement of prices to equilibrium.

Since prices tend to equilibrium, they tend to reflect conditions in the real economy. The imperfection of prices depends on the economy, but as far as I'm aware they're always much better than nothing.

The ability of the market system to deal with price distortions doesn't say anything about central planning though. You can't even talk about price distortions under central planning. Prices would be abolished

I'll try to read the article later–I'm busy today. I apologize.
I don't see how this can be, since the duty of resource allocation placed upon the central planner must ultimately result in some quantified reallocation of resources, even if absolute socialization is achieved. I'm not saying that an accurate quantification cannot be made, only that it's a slower process.
The only way for the planner to gain this knowledge instantaneously were if he had knowledge of all prices instantaneously, and in the absence of price signals which firms receive instantaneously by trading on an open market, the only way for this to occur would be for humanity to achieve a hivemind-like collective consciousness, something surely you will even admit is a fantasy. Holism or whatever gives you the notion that humanity can achieve collective social cohesion is a notion that I reject entirely. Subsequently, I reject any materialist view of history, especially those that rely upon this purported trend towards socialization, as these all rely upon a posterioiri assertions without empirical evidence. Also, there is no reason to believe that anyone participating in production or consumption in any kind of economy will make a concious distinction between "use value" and the other types of value that Marx claims to exist.
The fact that such a debate must occur is a testament to this system's inefficiency.
Again, short of humanity being reduced to a network of computers, acquiring this knowledge would require a non-trivial amount of time and resources. Even Cockshott admits that in the first PDF, if I understood him correctly.

You don't seem to understand that, in communism, "the planner" is society as a whole.

Fucking spooks

I understand that, I just don't believe that it's possible to achieve that level of organization with humans. And even if collective society were the planner, it'd still be subject to the same economic laws as a central bureaucrat.

A market doesn't necessarily tend to equilibrium, that's the key difference between the neoclassical and Austrian conception. However, internet Austrians will often jump between the two conceptions (not being faithful to either). Regardless, I think the Sonnenschein–Mantel–Debreu theorem is equip to deal with this nonsense. en.wikipedia.org/wiki/Sonnenschein–Mantel–Debreu_theorem

It's important to clarify that neither Lachmann, nor Mises ever asserted that intertemporal misallocation could not occur in a market. The argument is that the tacit knowledge of the producers, coupled with price signals will result in the market allocating resources more efficiently than if they were not present at all. Intertemporal misallocation due to price distortion and lack of opportunity cost is one of the arguments often propounded against socialist and Keynesians alike, so we must emphasize that the Austrians who came up with the ECP never denied this could occur in a market.

Therefore, it is a qualitative issue - not a quantitative one.

Devine is dealing with decentralized planning, however there is "social heads" of production who run the production. They do not, have all the leverage in how deciding how resources shall be allocated.

And this is where we get down to the heart of the issue. For one, no entrepreneur has knowledge of all prices instantaneously. As I mentioned earlier, at any given moment in time millions of commodities are on the market with prices that don't represent supply and demand. The entrepreneur likewise, can only base his pricing on: a. the prices that are available to him (which could be a distortion) and b. the frequency with which customers say "yes", or "no" to the price he offers. It is by necessity, a trial and error process and does not move with the efficiency that you propose (that somehow, the entrepreneur changing his prices in real time is equivalent to having all knowledge of all prices of the commodity, and factors or production instantaneously).

So now that we are not dealing with unrealistic, false dichotomies lets continue.

cont

I have no idea what you are even trying to say here. Language is probably the best example of how society negates aspects of their individuality so that they can function as a collective whole. But besides getting into the vulgar semantics of that (usually this just regresses into ad-hoc claims that "I did that because I wanted to!), the axioms of Marx's materialist view of history are empirically verifiable - we all have to eat, therefore we all have social needs. Maybe you are confusing this with Mises, who starts with a synthetic aposteriori axiom (Man acts is an empirical observation) and then goes on to conclude that he can deduce literally fucking everything from that axiom. Marx on the other hand, takes a more scientific approach making use of empirical evidence to identity the causes of the evolution of the productive forces, and how that evolution is related to social change. See Chapter 17 of Capital Volume 1 for an example of just that, where Marx traces the evolution of the handicrafts, to manufacture, to the factory proper.

Actually, you already do make a distinction between "use value" and "exchange value". This an uncontroversial view in economics. When I go to the store to buy toilet paper, it is irrelevant if I am going to use it to wipe my ass or I want to make a toilet paper fort. This does not change the fact that I have to pay $15 for the pack of toilet paper. If you mean labour value, then this is a misinterpretation of Marx. Marx's views on labour is a theory of how the allocation of labour effects the long term tendencies of production. How industry productivity rewards those who are more productive and punishes those who are less, what labor creates profit, what labour changes the material base of society so that expanded reproduction can take place, how the allocation of this labour is related to periods of booms and bust, etc.

I don't think anyone said it would be "trivial".

For one, the aspect of renumeration of labour (i.e., how the division of labour should be numerated in a socialist society) is a distinct, but closely related to how much of X or Y should be produced. As I've pointed out earlier, the contention from Mises and the like was not that markets could do perfect calculation. Indeed, Lacchman even admitted to supporting Keynesian efforts to improving effective during the 30's.

The contention is that without these price signals, there is no direction at all. So this is a qualitative issue.

cont.
*improve effective demand.

And two: This is where we get to the heart of the discussion on the calculation problem. Whether: - the tacit knowledge of consumption trends is really available outside individual producers
- that knowledge can be gained and applied before it becomes irrelevant
and
- if the application of whatever methods are proposed will result in exchange ratios that are as effective, or more effective than the coordination of market forces

This is why I like Devine's approach. First, recognizing that this an issue that revolves around the tacit knowledge of producers, he opens up the window of knowledge to include the tacit knowledge of consumers. On the other hand, the point about opportunity cost is a valid one as well. This is why he opens up the window of leverage in production to democratic bodies negotiating with each other (and of course, due to the extensive ownership of production a large part of this negotiation will be a matter of free association). That way, the decision of whether to produce now or later is representative of (nearly) the totality of views, and more likely to be closer to equilibrium.

Now the third point is related to social needs in socialism. Obviously, if you have 1000 types of gum to produce and allocate, you are going to be more likely to produce heavy distortions than if you are producing 20. I think the disappearance of commodities that serve no other purpose that perpetuating rabid consumerism is one of the few issues most socialist agree on, and the debate about whether the individual has a "right" to demand 1000 types of gum be produced is an ethical debate, and irrelevant to whether identifying consumption trends, and producing according to those is technically possible.

I'm simply pointing out that if the price is above the equilibrium, supply will rise and price will fall, and if the price is below the equilibirum, demand will rise and price will fall. For individual goods.

Sending links about the general equilibrium in an economy doesn't counter that point. I don't see how any of this has anything to do with it.

you assume infinite price elasticity
which is ridiculous

I know. I'm pointing out while this may be better than nothing, sticky prices, information gathered all price distortions, lack of effective demand relative to cost price etc means that often individual commodities won't even be cleared.

I don't think the market is perfectly competitive. I assume downward sloping demand, upward sloping supply

Yes, I agree with that
I would have to investigate further into the nature of the most common imperfections, and how often they occur, and what the effects are

so you assume that all people have to have the same tastes and that each person’s tastes remain the same as his income changes

yep, not ridiculous at all

does not compute

so you assume that all people have to have the same tastes and that each person’s tastes remain the same as his income changes

yep, not ridiculous at all

does not compute

I don't assume those things and they're not inherent in what I said

Can you give an example of what you are assuming (like show a graph), and how this relates to socialism? A downward sloping demand curve can be linear, same with supply.

They can be linear but in the real world it's not likely. They're probably crooked, and they make jumps at points like $0.99 vs $1.00

You can't collect demand curves in the real world because conditions change between different prices being tested

I know. Wait what are we arguing about here? I'm confused which side you're taking, if any.

I don't know, I thought we settled it at I agree there are cases like sticky prices where price would not be at equilibrium

Then someone is saying I believe strange things about people and the nature of supply

Why do you assume upward sloping supply? You don't need to tell me to read an econ book. I know this is the default assumption. I want you to state in your own words what makes you think that is a good rule-of-thumb assumption. Because it's not.

If the amount of money you can get for a good goes up, you will make more of it / more people will want to make that good.

The reason is because money is good retardt

Did Marxhead btfo the retards?

That would be demand -_-;

lol this whole system requires markets:

goods, as proposed by Lange to provide information on final requirements,
then the process of deriving a balanced plan is tractable.

I didn't say I agreed with Cockshott, this was just addressing how much information would actually be required for a planner (the idea that they have to have knowledge of all prices that will ever be, which is false).

I can't make sense of it.

I know the concept rate of return from capitalism, and it makes sense in capitalism as an indicator of how the situation improves from the viewpoint of the ruling minority. That is, even though money is not really an aggregate measure for wealth in use values, it works out as such for the minority. It works out for individual all-else-equal thought experiments. It is true for you as an individual that you can buy the same basket of products twice when your income doubles.

What does Pat Devine mean by rate of return in his proposed system? It looks like a ruling-class idea with some nice words about people who are affected added to it.

I'm having a hard time making sense of this, it seems like you're mistaking Devine using economics slang to get his idea of a transitional society across easier for contradiction. I will address what I can.

In this situation, there is no ruling minority as there is no owners of anything. Even if enterprises distribute their goods themselves, all the enterprises lack an owner except in spirit.

Keep in mind: the goal of socialism (or atleast, the post capitalist society. No, I would not consider this capitalist despite there being decentralized exchange) is to reduce the workload of the population while increasing productivity. For this reason, we should have an idea of how "efficient" labour is. This is distinct from Capitalism, by where this efficiency (you could also think of this as the rate of return of surplus use values) is mindlessly put back into production with the hopes of further expansion.

Marx never said that there would not have to be production of surplus use values, the value relationship in Capitalism is a lot more fundamental than that. Something like this, implies a degree of localization of production and a decrease in the division of labor. No such tendency exist in Capitalism, where revenue is used to increasing the size of a sphere for circulation to get commodities to all over the world.

for increasing the size of a sphere of circulation*

The point is this: Under capitalism, money, a one-dimensional measure of wealth, poses no problem for a rentier minority using that. They can exchange that money for different use-values after all, and may think of that as the money turning into these use-values (which is wrong, but creates no problem for them). Society as a whole cannot do this. And society as a whole won't be able to do this after getting rid of the ruling class either.

What is this one-dimensional yet non-capitalist efficiency supposed to be then? The minimal time for producing a given and fixed heterogeneous basket of different stuff? Use values cannot be trivially compressed into a scalar. What Devine is offering is this: