Said command and control system would know perfectly what all of its hands are doing.
No it wouldn't.
One of the perennials of the great economic debate is those who insist that if we centrally planned how the economy would run, it would all work much better than this messy competition, profit-and-loss and duplication-of-effort system we're stuck with at the moment. And it didn't all start with the Soviets. Back in late- …
This post has been deleted by a moderator
This post has been deleted by a moderator
Remember that we can't predict GDP even a quarter in advance, to any decent degree of accuracy. Most countries can't even get their GDP calcs right in the month after the quarter has ended. It's not uncommon for major, sophisticated economies to adjust their quarterly GDP data by as much as 0.3%age points - on figures that are usually less than 1% to start with.
It takes a few seconds from a Central Bank changing the base rate of interest for it to start affecting the market. Stock and bond markets first, then business and consumers' perceptions of how the economy is going. But the main effects of a change don't start to really change the real economy for around 3-6 months. And those changes can be slowly cascading through the economy for 2-3 years. All at a time when our figures on what the economy is doing are months out of date.
This is simply too complex to control. It's impossible to know what's going on in the economy now, let along what effect changes will make. And yet people think we can run a command economy?
Britain made a decent fist of it during World War II. It's the most effective example of a command economy I can think of. Most major combatants were doing the same, to various levels of success. But that was deliberately short-termist, aimed at an objective. And major nationalisations were inevitable in 1945, because so much of the capital infrastructure was worn out through over-use and under-investment. Then again, that seems to happen to most command economies, even when they're not fighting to win the biggest war ever.
Even if a command economy were desirable (which I don't believe it is), it's simply not possible. We don't have the data. Or the theory to know how to use it. Price is still the best way we've come up with to ration demand and signal what the market wants/needs.
"And major nationalisations were inevitable in 1945, because so much of the capital infrastructure was worn out through over-use and under-investment. "
All of the assets raddled by war were built by private enterprise with private capital, and the renewal could have been accomplished commercially (particularly if the state had paid for the damage its war requistioning had caused).
Nationalisation was simply populist Labour policy inspired by Marxist theology with no grounding in necessity. The longer term consequences of nationalisation included the loss of our previously diverse and competent aviation sector, the loss of our motor industry, and of our steel industry for that matter. The ineptly run and inefficient NCB (along with its militant employees) signed the death certificate of the UK coal industry.
And look at how government reacted to rail investment needs - first of all they built 2,500 steam locomotives which were then scrapped long before the end of their useful life (some as early as five years after being built), then they embarked on an ill advised attempt to build a vast diesel fleet using only UK makers both because failed Labour economic policies left the country bereft of foreign exchange, and because they really believed they could "create jobs" by trying to keep business in the UK by government command. Unfortunately the UK makers had little experience in the technology (primarily a handful of prototypes built by the private rail companies), leading to poor reliability, high costs and more early withdrawals. BR still failed to achieve standardisation leading to many types with small production runs, which worsened the cost problems. And in the meanwhile, despite government policies, car numbers were rising, and the rail industry would not adapt, resulting in the crisis that required the Beeching plan (which even then was not sufficient to address the move away from rail traffic).
Interesting that these days there is a need to re-open railway lines in the UK that were closed as a result of the Beeching report. I'll leave it to the economists to argue whether or not there is any link to the partially-privatised state of UK railways today...
"Interesting that these days there is a need to re-open railway lines in the UK that were closed as a result of the Beeching report."
So you'd have kept loss making lines open for fifty years on the off chance that demand might return? And what about the many closed routes where demand hasn't returned? Presumably you'd keep those open for another fifty years, just in case? No wonder you posted AC.
The underlying problems of the railways were monolithic government planning that treated capital investment as both free and a universal panacea, yet failed to take account of demographic change (eg more urban less rural balance of population) failed to take account of changing technology and rising living standards (more cars).
You're massively unfair on the 1945 Attlee government. They were one of the greatest governments this country has ever had. And I say that as a Conservative with certain Thatcherite economic tendencies, even if I am a social liberal.
There were good reasons for the decision to build new steam locos after the war. They weren't in a position to transition to diesel, but they needed new rolling stock. I'm not sure if Beeching didn't cut too far. But predicting the future is hard.
Remember that they were a government who'd been through two World Wars and one Depression. They had different experiences and wanted to try and work the economy a different way. They also had to deal with horrendous war debts, damage at home, and a horrifically complicated international situation. So while creating the health service, they were actually increasing defence spending over what it had been pre-war as a percentage of GDP. Secretly building a nuclear bomb, preparing for the Cold War, dealing with the Berlin airlift. Also having to maintain rationing in Britain inorder to be able to afford to feed the Germans in the British Zone, who's economy had collapsed.
If they made some mistakes along the way, they did a fuck of a lot, in a short time. They got the NHS and social security model about right. It was later generations of politicians who failed to adapt them to changing times and society.
I broadly agree that central planning doesn't work. I'd say that politically it had to be tried in 1945, because of what had happened in the 20s and 30s. Politics often trumps economics. In the short term at least.
you do know he was bought and paid for by the road builders yes?
and the government put him in charge of a review of the only competition to roads.....
A bit like having liam fox head an investigation into closeted public officials treating their boyfriends to international travel at the public's expense!
cut a bit far?
what is the real problem with rail travel? they don't depart from anywhere near where I am, and they don't go anywhere near to where I want to go.
And who do we thank for that?
>> "you do know he was bought and paid for by the road builders yes"
In as much as Ernest Marples, the Minister of Transport who appointed Dr Beeching, was a prominent member of the British Roads Federation, then I believe that it is an argument that is widely held.
Beeching himself, had no background in either transport industry being at the time the Technical Director of ICI.
"So while creating the health service, "
Well, not so much. They nationalised what existed which is a little different from creation. The first NHS built hospital opened in 1963.
May or may not have been a good idea, the NHS, leave that aside. But changing the method of ownership and financing of an extant health care system really is a little different from "creating" one.
All of that is explained by incompetent management, and whether the enterprise is government run or privately owned, we will always have PHB's fucking everything up.
_that_ is the british disease (we think 'management' is a specialist subject - divorced from the actual work of the business.... well it fucking isn't).
I would counter the nationalisation/privatisation argument with the simple fact that there is nothing, not one thing that has happened in any of the privatised utilities that couldn't have happened while the enterprise was state run - given appropriate instruction from the owners... us!. There was simply a lack of political will to do so. And that applies to all parties! The soviet system didn't fail due to some ideological shortcoming as all you hayek cocksuckers insist. the entire country was utterly corrupt. that's what caused the implosion.
About as corrupt as American society is today... just wait and see (i'll give you a clue... it's behind you!)
I declare, as a former civil servant, that the performance incentives in a government run organization differ from those in a private sector profit oriented one. This is true primarily at the top of the organization where strategic goal are set and in parts the organization that face its external world, but to a degree works its way into the interior and more bureaucratic parts as well. The working of an objective measure - profit - of success is critical to a profit oriented organization and largely lacking in many (most, nearly all) government agencies. The result is that in government agencies goals are more likely to be qualitative, diffuse, and ill defined, and productivity measures that exist are quite vague and disconnected from any external reality.
This is not to say that a profit motive ensures meaningful incentives in an organization; the number of failed startups strongly suggests otherwise. But the startups that don't generate profits may well fail, whereas government entities (and their private sector counterparts, charities), like "temporary" tax levies, tend to lumber on endlessly.
Hari, you have it exactly backwards. The inefficiencies are primarily due to complexity and the inherent lag between a demand and fulfillment. Many kinds of demands are - more or less - predictable, e.g. how much water an urban area may need in a week, or how much gasoline will be used. But, not even the most consistent demands are fully predictable. There is secular variation due to uncertainty in every estimate of need. For instance no one can say on any given day how many people are in a given city. Smaller settlements are more predictable and less variable over time, but the population placing demands on a large city's infrastructure and supply system can vary by the size of an intermediately sized town or small city over periods of hours to weeks. No command and control system can deal with that with any precision. Instead, "inefficiencies" are largely what dampen systemic oscillations caused by the uncertainty of demand. Then entire concept of "just in time" production and delivery is a communist ideal that works until it breaks, and the breaks can be catastrophic.
You are wrong Harri Koppel.
Please google "Maxwell's Demon" for the physicist's reasoning why command and control won't work.
Quite simply put: It takes more work to micro manage it all than it takes to do the actual work!
Not to mention politicians are by definition corrupt.
I think you'll find that the internal organisation of a Mega Corp has more in common with a market economy than a commnd economy. It depends, to some extent, on the diversity of their activities. A tightly-focussed company like Ford can probably be relatively dirigiste.
For many years, General Motors operated an internal market economy, and were highly successful and very profitable. Different divisions competed with each other as well as the likes of Ford and Chrysler, and individual plants were competitors with other plants within their division to supply designs and components. Those less successful in winning bids for supply contracts made lower profits (or losses) and might need to shrink, while the more successful ones were more profitable and would grow. This might have declined or been abandoned in the '70s or beyond, as the major divisions came, for efficiency, to rely on more uniformity and common designs and parts, Detroit management laid a heavier hand on overall control, and the different brands became largely indistinguishable except by ornamentation and finish details. That may have contributed to the decline and near extinction of the corporation.
The extent to which the decline of the internal market you describe is sort of irrelevant to the larger point anyway. Once GM was solidly a command and control company, it ceased to respond to the market. Today it only exists because it is regarded as "too big to fail" and government stepped in to cover their mistakes.* Indeed, even with its "completed recovery", it isn't clear it's going to make it another 5 years without needing another bailout.
*leaving aside the question of what the opportunity costs of the bailout were, which is a valid concern.
It's true that most large corporations operate internally as mostly command economies, and many or most of the complaints that people have with large corporations as customers, employees and other stakeholders can be directly tied to that aspect - they are the same complaints heard about socialist economies. For example, since the feedback loop based on value given and value received is broken, personal influence and backroom deals are essential to getting things done within a corporation - a recent business book discussed the importance of recognizing that every corporation has two structures, the formal hierarchy, and the network of people who get things done. In the outer world this is how corruption becomes essential and endemic in every socialist economy - since you can't buy what you need, you have to bribe, cajole, or be related to someone who can help. We see over and over again how command decisions within corporations - that were often strongly opposed by people within and without the corporation - cause inordinate damage to the company and others - HP has a chain of disasters; Time Warner's merger with AOL; and many others. A recent study showed two things: nearly all major corporate mergers fail, for reasons that were known in advance; and corporate heads, even knowing this commonly convince themselves that "we'll be different" - but they're wrong in the end.
Any economist will tell you that above a certain size, nearly all corporate growth comes from mergers and acquisitions, not internal growth - this shows that these large command economies are failing at what one might consider their primary purpose. These 'successful' large corporations are growing by purchasing those smaller businesses that have been doing all the real growing. The majority of new jobs are also created by small business, while the majority of job losses are the result of 'downsizing' or merger-related layoffs by large corporations.
High tech has some occasional exceptions, including growing by acquiring technology as well as business per se, but even there mergers and acquisitions are primary factors.
This is a point well made, and one which politicians would do well to remember. Economic growth is driven primarily by small businesses forming and becoming slightly larger small businesses; big corporations rarely grow other than by mergers once they hit a certain size.
Because of this, a country's tax and regulatory system must not act in such a way that it inhibits small businesses forming and thriving. In this matter Britain is something of a flop; such insanities as tax on account (i.e. getting businesses to pay what HMRC thinks they will owe before they actually produce the runover to owe the tax) are responsible for killing many a small business at the end of its first year, and, I dare say, forcing many owners into a phoenix-like death and resurrection of businesses annually.
Similarly the EU's demand that any company using any chemical must each demonstrate its safety and the safety of the final product is similarly a small business killer. Repeatedly demonstrating that dihydrogen monoxide is safe isn't in anyone's interest, save for big manufacturers who can absorb the cost and like this bar to new competition forming.
This post has been deleted by its author
"Command and Control DOES work"
Erm, no, it really doesn't. Lets take a simple example and work from there. Hookers. There IS a demand for working girls, and there is likely always going to be. In a command economy, someones daughters have to be assigned that task. I assume you'll be happy if we assign yours to it? Or your sister, mother, girlfriend, wife? No, me either.
Now just because its illegal, that doesn't mean the state doesn't have to fill the demand. If the state doesn't, then money & resources are being allocated to areas the state doesn't know about and can't model, thus bringing about Worstalls point.
Socialism and communism are the ideology and dogma of failure. They can never succeed because they run counter to human nature. Even if we assume a robotised future, you'll never reach post scarcity due to a requirement for energy and raw materials.
"Command and Control DOES work. BP, HSBC, Ford etc all perform over decades, and typically out perform."
That's partly because you've just chosen the ones that haven't gone bankrupt yet, and partly because they aren't a complete society. The comparison just doesn't stand up.
Even the largest "Mega Corp" only has a tiny fraction of the economy. A handful of products and customers.
There is also the concept of incentive alignment. When the shareholders and managers of "Mega Corp" get it right, they get rich. When The Bureaucrat gets it right, there is only his usual take home pay, which is the same even if he gets it wrong. So why work hard to try?
Command and Control DOES work. BP, HSBC, Ford etc all perform over decades
However, that doesn't mean they work with any great efficiency (if you think that you've never worked for a large corporation). They are just marginally better than others, and will be slightly better than a large government.
One of the weird beliefs that has political currency, which will seem as curious and antiquated to future generations as the imperial beliefs or radium healthcare of our predecessors are to us, is that markets make everything better, or that every political problem is a type of problem that can be solved by a market.
It is, of course, idiocy. But it is idiocy of the kind that is very fashionable around the world's politicians right now - and also commentards, I anticipate a flurry of downvotes here - so I suppose there will need to be some terrible disasters before anybody with any authority has the wit to question it.
Markets aren't perfect. Very few people claim that they are. Markets don't solve all problems. What markets can allow you to do is to allocate resources in the way people want them allocated. In some ways it's democracy in action. Except you only get as many votes as you have pound notes, so it's not all that fair.
Take education as an example. Everyone knows there are good schools, OK schools and a few truly crap schools. Talk to the parents in an area, and they all know which is which, and which they really don't want. At the moment you broadly get into the good schools by living near them. So house prices are higher in the catchment area. Obviously it's more complicated than that.
But in a lot of cases, you get what you're given. There's been an attempt by government to have inspections, and try to force change on some of the worst schools. Which has had mixed success. It's a big old unweildy system, and there's a lot of competing interests pulling in slightly different directions.
Another approach might be to give all parents a voucher, and let them spend it where they will. With safeguards. It could be chaos at first, and this might make it unworkable. However, there's a chance that it might lead to a more responsive system. And fewer kids might get a chance at a decent education that otherwise wouldn't have been open to them.
One advantage of this, is that we could re-open the village schools. If parents wanted it, they'd pool their vouchers. It probably wouldn't be enough to pay for it alone, but with use of say a free church hall, some volunteer help and top-up from parents or the parish council, it could be possible to have a village primary again. Which would be a decent example of local democracy in action, something this country could do with.
To be honest I'm not sure about education vouchers, and whether they're workable. But there's a perfectly valid argument for them. Monolithic state services tend to get into a habit of saying "you'll get what you're given."
What I think would benefit from change is the NHS. Take Belgium as an example. You get a better service over there, and it costs them less money. As a country they're far to the left of us, and yet their health service is semi-private. The state and universities run the teaching hospitals, there are private ones, state ones, charity ones, union ones and company ones. Your GP will point you in the direction of where to go. Ten years ago they were doing heart bypass surgery for 1/3rd the cost of the NHS, with better survival and post-op infection rates. And virutally no waiting lists. My friend ran a company bringing UK private and government patients over for treatment. They took 1/3rd and spent it on hotels, travel, translation, hand-holding, form-filling and profit for them, the UK patients or taxpayer saved 1/3rd. Admittedly I wouldn't go for the complex mutuelle and top-up insurance system that pays for it, I'd go with taxation and vouchers. But no-one complained that GPs were never nationalised in this country, and have always been private contractors to the NHS. I think a mixed system would be much better, and could be achieved piecemeal as well.
Why expect downvotes for that? Of course markets don't solve everything. We even have a word (a phrase and a word actually) to describe two sorts of problems that markets don't solve. Public goods and externalities. Both of which are central to any study of when the market might be a viable solution and when it won't be.
I am very much a free market extremist but even I'll agree that there are problems they just won't solve.
I just knew this would come up. There are more people now working in the NHS than used to be required to administer the whole of the British empire, upon which the sun never set, having expanded to cover about 2/3rds of the world.
And yet, despite the mamoth staffing levels, and truly epic budget, 33,000 people will die this year due to negligence and incompetence in the NHS.
If that's really all you've got for command and control working, then you ain't got shit.
This post has been deleted by its author
interesting points well made Tim but you've missed a big trick: what happens when the everyone's jobs start to be automated away and no one can work anymore? Not only will everyone be bored they'll also have no money to earn and spend...and the robot companies will not have any further revenue and then we all end up with a collapsed economy. It's the main argument of Martin Ford's 'The LIghts in the Tunnel' and one which you fail to address in your piece. Ford strangely enough advocates an elaborate taxation and centrally planned governement payout scheme to ensure people still have money to spend in the economy.
Some form of economy would still exist, though. People would exchange value for value in some form or other, even if it's just uptwinkles on facetwat.
Ignoring the consideration of value is the failure of all central planning. The value I place on some old toys I still have hanging around is immense. Some people wouldn't pay pennies for them. Someone else might value them enough to offer me a lot of money (or something else that I value), which I might consider a worthwhile exchange.
That's all an economy is, in the end. Exchange of value for value. Money is simply one means of measuring value but it is not the only means of measuring it. In a post-scarcity society we may not need a medium of exchange for commodities that can be manufactured on demand, but there will still be items that are valued by people and they will still want to exchange other things of value for them. A painting by a great artist. He may give it away for free. He might not. He could be induced to part with it for something of sufficient value. Or someone helps their friend move a couch around their living room, and in exchange they get a few beers. Exchange of value for value. That's an economy in action.
The claim that the notion of economy would be absurd in some far-off post-scarcity society is itself absurd, because it ignores that central element of what forms an economy in the first place. Forget "utility" and grand theories of things. Economies form from the bottom up, through transactions between entities. They emerge from the value those entities place on things.
That's why central planning fails in the end. It has no notion of value outside of what the planners consider to have value, and what they consider to have value has no relation to what you or I or anyone else considers to have value.
"Another robotic task?"
There would always be "connoiseurs" who claimed to be able to tell the difference between a robot and the real thing. More darkly, there would always be some who did it for reasons of power over another rather than the physiological response.
"Not if everyone could get anything they wanted, without having to work or give anything in return. People could be exactly as promiscuous and perverse as they liked, but wouldn't ever have to do it for money or reward."
And you think a middle aged fat bloke with a face like a well slapped arse is going to get in bed with an achingly pretty twenty-something girl in tip-top shape how exactly?
The demand will still be there, so eventually a means with which to persuade said girl to part with her time & virtue will emerge.
@dogged I think you've missed a stage here, this would be true if we immediately flipped to a system where all things we required were catered for (I still believe however there would be problems of ultimate finite supply, thus forcing scarcity and thus value and cost onto items, but that's another issue).
How do you propose we get to this utopia? Our traditional free-market economy is not going to support this transition all the way because people will be unemployed and thus non-players within the whole system before the companies that create your utopia machines can design them. they will automate themselves out of customers.
> a post-scarcity condition where every demand can be instantly met at no cost.
That only works for material things. As a society we all place great value on intangible things: time, choice, security, freedom, health (including a pleasant environment), knowledge and entertainment and some higher human functions such as recognition and respect. These cannot be manufactured and in some cases require the collaboration of those around us to achieve. Just as soon as one person's needs become dependent on the actions of another, you immediately find yourself back in a trade/barter situation where "what's in it for me" kicks in and you find you have to give up something you have in order to obtain something you value more.
That immediately brings cost back into the game.
In that condition, the notion of an economy is absurd.
Marx anticipated "the withering-away of the state" when Communism was completely implemented. It sounds like Tim anticipates the withering-away of the economy when robot automation is complete.
Both cases suffer from the reductionist fallacy of assuming that anything in the real world will reach its logical conclusion. To put it crudely, in a world where all desires are met, human ingenuity will invent new desires.
"When everyone's job is automated away, we can probably be said to have achieved a post-scarcity condition where every demand can be instantly met at no cost."
Ideally yes at the 'end result' although the problem is the road to get there. What happens when half the people's jobs have been made redundant, and the other half plus roboty are the only producers? Current capitalist theory precludes taking the surplus from second group to give to the first... even though ultimately what is implied by the 'end result' is that robots are a universally or collectively owned resource rather than individually owned by the richest 1% which would be the case right now.
"Current capitalist theory precludes taking the surplus from second group to give to the first"
It does? I rather missed that complete absence of a tax and benefit system. Even over with the libertoons the argument is about how to have a more efficient one rather than the complete absence of one (and it is the libertoons in the US who think that a universal basic income would be a good idea, strangely, the Greens in the UK. And me.)
"And what about your other inputs that aren't labour based, such as raw materials."
Why aren't raw materials labour based? The cost of getting them is just labour plus capital, capital being only saved labour.
Give me unlimited labour and I could give you (virtually, certainly vastly more than the demand for them) unlimited amounts of any raw material you care to mention.
"Give me unlimited labour and I could give you (virtually, certainly vastly more than the demand for them) unlimited amounts of any raw material you care to mention."
You might be able to if you owned the land in which the materials exist, and if you could somehow automate the obstructive processes placed in the way of anyone wanting to mine anything in Europe. Planning will still get in the way.
Think the greenies will give out with their hoax? Or will they step it up a gear now they have unlimited free time (I'm assuming at least some of them work now).
that's the way the Luddites thought. That production would destroy people's livelihoods.
What actually happened is that we just advanced. The price of a pair of socks goes down, the rich man can now afford a pair of socks and a bar of chocolate. Cadbury's makes a bar of chocolate cheaper, you can now afford tickets to a music hall. Someone makes a gramophone...etc etc.
I still don't have a car on my drive with the sort of speed and luxury of a Bugatti Veyron. When I do, I think we'll have reached the right stage of our development.
If one looks at the history of the Industrial Revolution, one will see that the Luddites weren't so wrong. The introduction of machinery made ordinary working people poorer, and factory owners richer, because the value of labor, hence the ability of laborers to bargain and demand goods was reduced. Technology is good, because it improves the ability of humanity as a whole to produce more with less effort, but who can actually get what is produced is not something that can just be ignored or dismissed.
"The introduction of machinery made ordinary working people poorer,"
Before the industrial revolution the average wage afforded one 2,000 wheat calories a day and a hovel. England in 1600 AD had GDP per capita of $1,000 a year. Yes, modern dollars (1992 actually) adjusted for inflation. With higher inequality that means the majority were living on what, $2 a day? £1 a day maybe?
We're poorer than that now, after the introduction of machinery?
>That production would destroy people's livelihoods.
And they were right - it did, for them. But the clumsy replacement tech of the day needed workers - who could earn enough to pay for it all, eventually.
But the sleeker replacements of the future will hardly need humans at all. A few specialists may be well-paid, but why should they support the rest of us?
I've argued directly with Ford on this very point. He fails to close the loop.
If the robots are making everything then those things don't cost anything. And it's no use insisting that the capitalists who own the robots will just take all the money. Because a truly robotic economy would mean that one robot could build another, they could build two more and so on. It would only require one robot, once, to be built and given away for that idea of the capitalists owning them all to fail.
Exactly, whilst perhaps the means of production may be irrelevant in a world where everything builds itself, someone still owns the raw materials. And those materials are not unlimited, so have cost and value. Which by extension makes the robots have intrinsic value. Which means someone will own them and want to sell them.
While I find the idea of the post-scarcity economy absurd, the robotic argument assumes robots mine the raw materials. You can equally substitute nano for robots for a different branch of utopianists. The thing is, while we've seen a lot of proto-dystopias, we've never seen a proto-utopia.
"what happens when the everyone's jobs start to be automated away and no one can work anymore?" and "advocates an elaborate taxation and centrally planned government payout scheme to ensure people still have money to spend in the economy"
You presuppose that all the people will still exist. As we move to a world where people have nothing to do, we'll also need to transition to a world where fewer people are allowed to have children such that the global population declines.
Once you understand that you can't tax the guy with all the robots anymore because he'll just arm them or shut them down, that realisation is not going to be popular.
To begin with, we'd have to stop all child related benefits, including housing. If the market couldn't work its magic, then we'd have to centrally plan who would be allowed to breed. The best & brightest would be the only logical choice. Got a hereditary health problem, no kids. Double digit IQ, no kids. And so it goes.
...that someone, somewhere has the right to remove an individual's right to private property fairly earned.
Make no mistake about it, Socialism is about exactly that: someone who deems themself to be our betters wants the power to control every facet of our lives to fit their superior ideology. If we would only listen, if we could only understand that they know better what is good for us all. The arrogance of the political class knows few bounds...
Nonsense, people have a natural right to determine their own destinies, even if they make the "wrong" choices. We are not children who must submit to the discipline of Ivory Tower idiots seeking to remake the world in their own image...
That viewpoint doesn't just apply to Socialism. I'd suggest it doesn't even apply just to politicians, there are plenty of corporate entities that try to do the same. Mandatory drug tests would be one example. I couldn't do some work for one of our US clients because they insisted on anyone who worked for them having one - even though we did try and explain that we don't do that in the UK. Or try asking a Japanese salaryman if the company dictates his entire life.
Basically anyone who aspires to a position of power has some belief that their way is the right way and should be followed - for the good of the followers, naturally.
Have we so soon forgotten the central planning to create the internet? No... because there wasn't any... I am always astounded that such a big complex system that "just works" (for the most part) in over 9000 countries had no real plan.
Think about it though the internet was not Soviet-style centrally-planned, but neither was it really built by capitalism. A true co-operative effort is the best way I can think of it and that's the model I personally would like to see for the economy generally.
You think the net happened by accident?
You need to take more water with it mate.
The internet is a prime example of precisely, and I mean that in it's technical sense, precisely the opposite of the point you are trying to make.
It's a fantastic example of forward planning and it is regulated all to fuck - just not by governments.
You don't believe me? try unplugging that cat 5 cable from the back of your computer and shouting 'google' really loudly into it. see how far you get.
just because you lack the wit to appreciate the organisation does not mean it is not there
way to fail!
Perhaps, but it was the state who gave the Internet the initial jumpstart with ARPAnet, much like modern space technology was pretty much jumpstarted by the state-run "space race". There are some places the market falters, and one of them is in what I'd like to call "industria incognita": novel industries where there is no prior data on which to draw possibilities. Basically, the market hates to take leaps of faith, and it's only by people willing to gamble or with the resources to safely take a change or two (like states) that we get any data on them at all.
As for efficiencies, perhaps there's another way to look at business strategies: forward planning. For example, does a business always strive for the immediate gain (what I'm seeing a lot today due to investor/voter pressure) or is a business willing to take a hit now (commit a "necessary evil") to secure revenue down the road? I suspect this latter is one big weakness of any elected government because it implies doing something necessary but unpopular such as raising taxes or cutting fundings to beneficial projects. Thus you see hemming, hawing, and can kicking because no one wants the blame for it. I recall that's at least one reason why Machiavelli favored an autocracy. Not saying he had it all right but rather he had a point.
> the centre of that system can never actually access all of the required information ...to be able to plan effectively.
When it comes to the big things, like making sure there are the right number of hospitals, schools, roads and police-officers, the gummint does a pretty good job. The decadal national census is specifically to allow these sorts of things to be done, based on actual data, rather than a few middle-class activists with placards, not wanting their bitsy-little rural hospital closed - giving way to whoever shouts loudest getting the most and best infrastructure.
We also see what happens when things are left to "the market": large areas of towns and cities that have no bank branches: where people have to travel miles simply to draw cash (and if you're elderly and reliant on public transport - this is more than a mere inconvenience). Another example would be TV programming. Economic theory tells us that the most efficient way for similar products or services to compete is for them to cluster together: either geographically which is why the best place to open a restaurant is next to another one, or by providing similar "stuff" which is why all the popular TV stations seem to all show the same sort of programmes, rather than providing diversity and choice.
For some aspects of our lives, competition and capitalism work well. They allow new products, things people actually want, to flourish and for the turkeys to die off. However, some things need either the investment that only state-sized financing can provide, are a public benefit but would never be a profitable prospect or need the hand of judicious regulation to stop the public getting stiffed. If you want to see the problems that raw commercialism can unleash - just look at american mobile phone or TV provision.
The government is crap at getting the right number of schools and hospitals in the right place. For years, successive governments have been trying to get the NHS to cut a few of the well-known inner-London hospitals, and build hospitals in outer London, where the people actually live. But no bugger will do it, and no Health Secretary wants to cop the horrendous publicity for doing it.
The last Labour government lost track of immigration from Eastern Europe between 2 censuses (censae?). Thus places like Slough and Hillingdon kept running out of money because they'd had vast increases in population which no-one was tracking. A perfectly easy problem to deal with, if only we had the information to know what to do. But we couldn't get that, because a lot of these immigrants turned out not to answer the door to the census people, or fill out the forms. There's a strong feeling that 2011 will be the last census - because the data quality is getting so much worse.
We had an un-planned net immigration spike of something like 2 million people in under 5 years. Many have since gone back - but that's an example of central planning being really hard.
How would the central planners know how many sandwiches to produce each lunchtime, for the whold nation?
It's just too damned difficult.
> There's a strong feeling that 2011 will be the last census - because the data quality is getting so much worse.
Which doesn't deny the need for the data that censuses have provided. It just means there are now better (faster, cheaper, more accurate) ways of getting the basic information required to efficiently spend the taxation that governments take from us.
> It's just too damned difficult.
The basic premise still stands: that if we want to have the right infrastructure in the right place at the right time, we need good data to permit its planning. Of course there are some cockups - anything that involves people (or governments) will inevitably go wrong - but that's no reason to say "therefore the whole thing is useless - there's no point even trying".
I don't deny the need for census data, and nor does government. They just don't think they can get it. Understand that they're not dumping the paper census for all lovely computerisation. The problem isn't the paper. The problem is the people. The people who don't fill the forms out. Sadly a large proportion of these are the exact people who move around a lot, and so the ones they most want to know about.
I'd imagine what they'll do is some sort of weighted survey. Rather like the unemployment figures. They have a number gathered from people going to job centres, but the one they mostly look at is a giant survey which picks up more data. Then you have to extrapolate to the national level. The assumptions I've seen from people are that this data will be worse, but it's all we're likely to get, and being cheaper we can at least run it more often.
I certainly didn't say there was no point in even trying. For example, I support HS2, even though the economic case supposedly doesn't stack up. Because we need more north/south links, and I suspect a new motorway would be even less politically acceptable. Only government can do stuff like that.
Government is best placed to run some services. Others it could usefully outsource. Here I don't mean give it to some other monolithic incompetents like Crapita. I mean give the service users the money to spend with whoever they want. That would spread the government coffers to less avaricious local companies, and force the big boys to actually deliver the service they promise or lose all the cash. Something government seems to be terrible at doing. For an example of this I suggest the Belgian/German/Dutch healthcare systems.
Anyway ignoring that, semi-privatising parts of the NHS to make it more like the more socialist Northern European model might be better than our current system, but would be electoral suicide. There's plenty to argue about what government can and can't do, but running a full planned economy is just impossible. It's just too complex. We'd need to have a department to work out sandwich production, another for tablets, another for fizzy drinks. Plus cars, racehorses, football teams. Just look at the quality of cars that planned economies have produced.
Or take the crappy solar industry the last government bequeated us. So fat with subsidy that it was possible for the greedy fuckers in the solar PV companies to give their panels away free - in exchange for the user signing away the flow of taxpayers cash. Meanwhile the far more useful heat-pumps and solar thermal systems didn't get the subsidy, even though they actually work in this climate on domestic properties. They also subsidised them on houses, which don't often use leccy during the day (as people are out). Whereas if they'd put them on the far larger rooves of schools and offices, they'd have actually made a difference to the climate.
Government also backed wind. Which has turned out to be about half as useful as we expected. This is because governments are crap at picking winners. Actually, so is the market. Some company would have set up to deliver solar PV. And would have gone bust to the guys doing heat pumps or solar-thermal. Not that I say no government. Because none would get off the ground without government persuasion. But something like the Merton Rule or Code for Sustainable Homes would have been a better route. With smaller subsidies to retrofit on suitable buildings.
> Government also backed wind
Governments always back wind - as they have so much of it.
While we appear to be largely in agreement, it does seem to me that governments *could* plan better, but they are so easily tempted away from the true path by short-term political opportunities. As you point out vociferous opposition to closing some hospitals - even though it would save lives (but dead people can't complain).
They are also venal, self-serving bastids who value the chance to stick-it to the opposition as much as they do the possibility of doing something good. And as for bending to newspaper headlines and "quiet words" from influential parties? Well, it's amazing that they do anything at all for the people who elected them.
Our current system (if not the individuals who are currently implementing it) might not be the best, but it's probably close to being the least-worst.
We elect the politicians. But we also pay for the newspapers. That's democracy. We can't complain that politicians both bend to loudly expressed public opinion and that they don't listen to us. People need to grow the fuck up and start taking responsibility. You can't whine about taxes, and whine about lack of government spending. It's got to be both or neither.
Many politicians go into politics because they believe in something. And would like to see some of it implemented. That means they have to deals with enough other politicians to form a governing group, and get at least some of what they wanted. That's life in the grown-up world. You can't always get what you want.
Much of this politician bashing is cheap, lazy and often ill-informed. How many people before the last election said they wanted no-one to win, and a coalition. And have complained ever since about having got a coalition? Because neither party stuck to their manifesto. Well of course they didn't! They didn't win. The voters told them to compromise. They did. They did it in a reasonably amicable and sensible manner, with the minimum of stabbing. And then the voters accused them of having no principals. The voters should take a long hard look at themselves.
Obviously no sensible politician should say that. And we should stilll keep an eye on them, so they don't get out of order.
I agree with your observations. The reason why government can't plan is twofold. First, try "herding cats". They don't want to do what you want and if they did, they wouldn't know how. That's a perfect allegory for most humans. You can't plan when no one is cooperative. Next, there are just too many variables to calculate the trajectory of the economy. It is too complex, much like the Climate debate; for anything to make a cogent result of it. There is always a "But If".
Your comment about immigration is interesting as it points to the US situation with illegal immigration. If they won't use the proper system, how are we ever to figure out how many we really have here? Besides of course, the overwhelming cost on society? The doors are still open for immigration, just not to those who will only bring a burden to our economy. It is impossible to supply the proper services in the right quantity knowing who and how many needs them.
Immigrants who come here legally (and current residents) should not be penalized by those who won't come here legally or conform to the rule of law.
If those who work within the system lose out to those who don't, how is that fair? I work hard for my income, and I pay my taxes. I expect that from everyone. I can't expect Social Services to keep a roof over my head and they won't.
Unfortunately that's NOT true in the case of illegals. They are being provided with benefits I cannot qualify for and at my expense.
The only thing I can say for sure is the system is out of balance and will topple if nothing is done.
I ain’t Spartacus,
The last Labour government lost track of immigration from Eastern Europe between 2 censuses (censae?).no, census is a fourth declension noun, so its plural is not “censae”. The phrase “between two censuses” requires the accusative in Latin, so could be translated as inter duos census.
Are driven by desire or want, if those things we want and desire today become freely available whenever we want them, then we will evolve to want something else that is not freely available.
Not everything is about what can be manufactured; the art and antiques trades are proof of that, trade and thus economy will always exist, even if what an individual wants or desires is an experience or an emotion, simply restricting one's view to consumerist production which is what a Command Economy would do would still miss much of what people would be willing to pay for in one way or another. There are reams of Sci-fi stories covering such things, particularly from the 50s and 60s.
Would be for them to suggest central planning for the necessities: housing, food, medicine, clean water, heat/power.
I wouldn't want that, but the resources required to provide these things, and information required to attempt to provide them centrally, would be orders of magnitude less than trying to work out an average utility function for the country.
Or, worse yet, deciding what the 'correct' utility function is so that we have Opera Houses on every second street and no pubs.
Utilities as I recall trend naturally toward monopolies because of the necessary evil of infrastructure. Allowing the market to compete here would mean multiples of pipelines, power rigs, and so on, which are considered eyesores. Not to mention for each redundant infrastructure, you reduce the RoI on each set, so the money stops adding up.
There's also the matter of medicine: an industry for which people don't always want money to be the determining factor. Plus certain medical circumstances prevent flexibility, meaning the market can become predatory.
"But isn't it fun to think that communism could be made possible by the productive powers of capitalism?" In fact semi-socialism can't exist without capitalism. As the Iron Lady said, "The problem with socialism is that you eventually run out of other people's money.”
It can be fun to think about it but implementing it always runs into the maxim, "In theory there is no difference between theory and practice. In practice there is."
And it all boils down to one question: who decides? Does a government bureaucrat decide what is best for you are do you decide? When you make the decision and it is wrong, you can correct it. When the bureaucrat makes the decision and it is wrong you are stuck with their decision because they will never acknowledge that they made a bad decision.
Who decides whether you are what you make yourself or you must become an air conditioning technician because your country needs more air conditioning technicians?
"And it all boils down to one question: who decides? Does a government bureaucrat decide what is best for you are do you decide?"
But in most cases, it's NEITHER. Usually, you can only decide if you're PROVIDING. Otherwise, you don't have much say. If it's not the government dictating terms, then it's a private provider. And one of the goals of the provider is to remove your ability to choose so that you can't just "walk away". Think of the situation of a town with only one well. Because it's so valuable, SOMEONE'S always going to make a move on it AND will have the means to keep out everyone else. Who would you rather have in control of the well? Public or private interests?
Rather than read this fairly workaday piece by Tim Worstall, then I'd suggest getting a copy of "Red Plenty" by Francis Spufford. It's a semi-fictionalised version of the attempt to produce a planned economy in the Soviet Union, mixing up real characters. It paints a picture of idealistic economists trying to produce workable and attempting to reconcile them with party dogma. It also paints the role played by black marketeers and attempts to handle the rigidity of the systems. For good measure, it's also got an evocative picture of how lung cancer develops and an incredibly painful insight into what might be called a Soviet baby factory.
It's written with a good deal of sympathy for those who were young and idealistic and is no simple condemnation of the system.
It's a bit difficult to categorise as a book, but as with all Francis Spufford's books it's written with enormous panache and style.
For the forward looking view I enjoyed Manna by Marshall Brain http://en.wikipedia.org/wiki/Manna_%28novel%29
The idea of a post scarcity society, but only as a small part of the world where the rest is truly awful was I fear a more likely road that we'll follow. Hopefully I'll manage to end up in Australia but if you don't then it's hardly life.
As an example of how bloody crap the Soviet system was, there were several instances where Stalin was forced as the guy at the top of that society to step into disputes and simply dictate answers as simple as "move factory machine A into building B, then import a second unit".
The basic reason was that the system could deadlock far too easily, and did.
@Tim_Worstall states that there is not a monopoly in the mobile phone market. Completely agree. But is that market working to our benefit? With the small number of big players at each others throats are the right long term decisions being made?
I would contend that whilst socialist solutions may not be appropriate, the idea that everything is hunky-dory in the free-market is not the natural conclusion to draw.
Why are we even having this argument?? We're hackers: we know that mostly you collaborate but occasionally the leadership becomes corrupted or the way ahead becomes murky and then you fork. We understand that there can be value in having parallel products that take differently approaches but that having two products embodying the same approach is a waste of effort.
We need to apply the same theory to economy: let's evolve it. This is what the pirate party should be campaigning for.
That depends what you mean by not working. The Soviet Union enjoyed consistent growth throughout it's history, with the exception of the last few years. I'm not suggesting it was a panacea, and outwith the big cities it was immensely poor. But clearly something was done correctly during it's economic history. I suspect very cheap gas had something to do with it, but central planning cannot be fatal to economic functioning.
There's two ways to get economic growth. One is use more resources. Put in more raw materials, more labour (some part of 20 the cent. economic growth was women doing less housework and more paid labour) and output will rise. The other way is to become more productive in the use of those raw materials and labour. In the jargon this is known as increasing "total factor productivity".
A slightly extreme claim is that the Soviet Union managed no total factor productivity growth in its entire 70 years of existence (from a Nobel Laureate). A less extreme claim is that 80 % of growth in the market economies in the 20 th cent. came from increases in total factor productivity (Bob Solow, another Laureate).
There is a difference in performance there.
My guess is that general economy C & C structures are sold by those who have most to gain.
So in a communist state it might be a politburo of sorts, in UK it would be (huck phthoo) (un)civil serventia mandarinery, in US either a mega-corp or mega-corp & Defense partnership.
Q: Would a C & C of general economy be good?
A: too many variables such intention over time, timeframe and measurement metrics?
But you humans seem intent on taking over everything that it may indicate a human folly to maintain gross, funded and aspirational follies?
May I take this opportunity to indicate that any rational planner would have not been aware / capable of coming up with new gizmos? His/her area of expertise is optimising that what the economy is taught to deliver, not adding to the uncounted factors that alter the outcome of the predictions!
Effectively planned / command economy means and is largely equivalent to stagnism: if it takes us a hundred years to built a computer capable of calculating and commanding today's economy, then we must not alter *anything* to said economy lest we need longer to build a computer that can model our changes. Also, once that computer is there, it is geared to one task: raise the efficiency of the economy that existed 100 years ago...
As a right-thinking man politically (blue collar, not blue blood) I support Worstall's preference for a free economy.
But as a techie with a physics degree, I claim his arguments are mistaken. Sure, there are 60 million or more individuals in the UK, but one group of a thousand individuals is very much like another such group. That is the science of statistics, which recognises what people have in common as opposed to what differences they have.
So a planned economy will be driven by statistics. For example, there are some 600,000 births per year in the UK. Of these, some 100,000 will have an IQ greater than 115 (i.e. above average by more than one standard deviation), and therefore ought to be receiving a grammar school education. If each grammar school admits about 100 pupils per year, as mine did, we need 1000 grammar schools. We currently have about 150.
This is the kind of issue where central planning can help It does not deal with 60 million individual cases but with a manageable number of statistics.
So, try again Tim!
"That is the science of statistics, which recognises what people have in common as opposed to what differences they have"
I think that's largely the problem with it as a system of planning - in aggregate we may all be similar, but on an individual basis we're quite different in many ways and don't much like being lumped together.
Marx was explicit: Capitalism is a necessary stage on the road to Communism. I'm surprised the author of the article is unaware of this.
China's Communist Party have finally understood this point, it isn't possible to leap-frog "stages" of development.
Modernist relapsi unite! We have nothing to lose but our sense of irony.
All economies are planned - the question is by whom and to what end...
History shows that having a government planned economy rarely (if ever) works. However, the government should NEVER totally abdicate the responsibility of influencing the economy for the greater good. Things like taxing companies based on how they distribute profits, setting personal income tax levels relative the the distribution of wealth (GINI coefficient), ensuring adequate supply AND access to money, limiting foreign tax exclusions, and prudently pursuing corrupt business AND executives.
The US government has increasingly abdicated these responsibilities, and the economy (and the majority of Americans) have suffered. Businesses and financial institutions have taken too much control, which has caused our economy to weaken to the point of collapse on more than one occasion. Providing prudent influent (through taxation and effective justice) would ensure even if/when the economy collapses, the majority of Americans would be able to weather the storm.
Going back to the Fischer equation MV=PY, the government's role should be to ensure that every aspect of the economy is balanced. When there's not enough money being distributed equitably, then prices and/or GDP will suffer.
Remember, not everyone uses the same definition of capitalism - some use Adam Smith's definition, some use Ayn Rand's. One is equitable, the other is oppressive...
... had USA not intervened in armed conflict in Europe then Germany would be the natural strongest nation in Europe.
But both UK and US do not seem to prefer the Germanic model and for why ... ? maybe individuals in UK and US have too much to lose therefore usurp political influence for self-protection?
I personally doubt whether those who perished in two world wars would consider their sacrifices worth it.
The UK still clings to its class warfare and is prepared to spend many tax dollars to maintain that war meanwhile Germany just goes from economic miracle to economic miracle taking preferred supporting nations along with it?
PS: the ba**ocks my local authority/guvmint makes in policy and practice along with similar ball**ks perped by regional and national institutions surely show UK model of C & C is doomed to Darwinian failure?
I mean, the photo of the hammer and sickle and whole premise of the piece scaring us about the concept of state run car manufacturers is really topical, seeing as pretty much nobody is advocating these things anywhere or has been in the last two decades or so.
However the deification of Friedrich Hayek, who Margaret Thatcher so admired gave the game away somewhat....... perhaps the author can explain why our major utilities such as electricity and railways are more efficient than our continental neighbours who own and run their own and are far cheaper. I reaaly would love to know why the IT industry which is full of such intelligent people is so susceptible to libertarian / thatcherite nonsense rather than social conscience.
Utilities are not cheaper on the continent, although railways are. I still pay 50% less for my electricity now than I did when I lived in a similar sized flat in Brussels 15 years ago. French rates are similar, and in Germany domestic rates are much higher, as they've been using green levies on domestic power to cross subsidise industrial energy costs. For which effective subsidy the European Commission is currently considering enforcement action.
By the way, it's perfectly possible to have a social conscience and believe that the more right-wing economists are correct. It says nothing about one's societal values, that you happen to believe that one economic theory works better than another. So the Scandinavians can run very free markets, but with high taxes, and very strong social safety nets.
It's all very well claiming to be more-caring-than-thou. But it's not much good to people, if in the process you fuck up their economy.
"whole premise of the piece scaring us about the concept of state run car manufacturers is really topical, seeing as pretty much nobody is advocating these things anywhere or has been in the last two decades or so."
Unfortunately I know too many people who advocate such rubbish. Who advocate a flat wage to everyone with the gov running pretty much everything. These people are scary in their insanity.
"perhaps the author can explain why our major utilities such as electricity and railways are more efficient than our continental neighbours who own and run their own and are far cheaper"
Energy is an interesting problem consisting of government made 'Big Six', the fact that we are not land locked and that gov interference to charge the population (tax) and industry (to subsidise) for a 'green' project which doesnt achieve its aims and apart from being a propaganda campaign (creating some delusional people who thinks this tech works, regardless of your opinion of MMCC). That money comes from somewhere and that is increased tax + bills. It isnt the energy companies choice not to build more power plants (necessary). Who's idea is it for smart meters? Energy companies are on board but instead of a free market choice it is government interference. As for rail, it is only partly privatised and not allowed to fail. Of course it is going to be a raw deal, yet I still hear how although it is more expensive it is much better than under BR.
"I reaaly would love to know why the IT industry which is full of such intelligent people is so susceptible to libertarian / thatcherite nonsense rather than social conscience."
Probably because IT does seem to attract (as you say) intelligent people instead of unicorn and fairy fools. Probably because our jobs require logical thinking, reason, intelligence and fact. We hang on reality instead of fluffy terms like 'social conscience' which is often used as emotional blackmail to inflict harm.
Only "65 million different mixtures of what contributes to human utility, in a country of 65 million humans"? Since utility amounts to a shared measure (needs > 1 person to measure anything) then there's *at least* (65*10^6)(65*10^6) versions of human utility. And that in only one country of 65 mil where congress only happens in pairs. There are in fact at least like 7 billion!^2 conspiracies to rule the Universe everyday. None of which amount to a pinch of prince shit.
Government is run by rent seekers, it always has been, and it always will be. Rent seekers fund the elections, and have the ears of the legislators. Legislators retire from office to become rent seekers. Legislators families are rent seekers who often transition into Legislators. Every NGO (Non-Government Organization) Red Cross, etc are staffed by the family members of the Legislators, they are rent seekers employed by organized rent seekers. We pay taxes to fund the rent seeker driven machine. I saw that a really big company in my town, one of the Dow 30 installed a few acres of solar panels. You guessed it, most of the money came from the government meaning that this large company like most all large corporations are somehow in the business of rent seeking.
Two ironies strike me there. First, we've effectively consolidated from 5 networks to 2 already, with T-Mobile and Orange forming EE, then EE combining operations with Three to form MBNL and O2 and Vodafone pooled masts under Cornerstone. (Which is one flaw in Cameron's new-found love of roaming: if you're miles from the nearest O2 mast, you'll be exactly the same distance from the nearest Vodafone mast too, so roaming to them would be futile. There might be an EE/Three mast - but a dual-SIM phone and a Three PAYG SIM will get you access to that right now, without any roaming hassles.)
Secondly, it was the government which benefited enormously from the competition, particularly for 3G licences, pocketing many billions from it! Would they have managed to extract that much profit from their own state mobile company, or would it all have been wasted in militant unions and inefficient operations?
I am not an advocate for the C&C economy, but in the US such arguments tend to be read as saying that there is no place for government in the economy. What this often means here is that massive government investment during one period is forgotten quickly, and those who made a lot of money from the investment or its effects imagine they did it all themselves. In the 19th Century there were railroads, heavily subsidized west of the Mississippi at least. The New Deal built big dams on western rivers in the 1930s. By the 1950s people making money in and off defense factories with subsidized hydropower imagined that they were rugged Western individualists. The administrations of the 1950s and on built up the interstate highways system, and now anti-government dogma is at the point Congress has a hard time approving the funding that keeps it in repair--it's on a short-term agreement at the moment.
By the way, one of the first government pushes Over Here for railroad consolidation came from the US Army during WW II: all the lines with incompatible arrangements made it hard to move men and materials at the scale needed.
The myth of the "Free Market" in the US is alive and well. It is a nice story for the masses, But it obscures the reality that those who govern can and do intrude on and regulate nearly every aspect of what comprises the economy at the micro level.
Forty years ago an economics professor made the comment that if you want to understand the true character of a country, look at their tax laws.
I believe that there is a level at which the US (and the global economy at large) are, in fact, out of control and uncontrollable. (A point made quite well by other commentards.)
Government has a role. The examples cited by DY are all good examples of where those who governed acted for what the perceived as the commonweal. This is very different from the situation today, where those who govern do so uncompromisingly for the benefit of special interests.
What's more surprising than an article about command economies not mentioning China is a comments page for an article about command economies not mentioning China.
China's command economy more-or-less works, doesn't it? They've managed to keep a lid on their housing bubble and apart from huge dystopia TVs in Tiananmen Square because you can't see the sunset for the pollution it's more-or-less worked out, amirite?
You can extend this idea even further and ask yourself why pharmaceuticals never put serious work into full cures and permanent vaccines. An economist can easily answer the question: there's no long-term return on a one-and-done. That's why it's always treatment regimens and short-term vaccines where there's always a need for a return trip, guaranteeing one of those economic paradises: a captive market which guarantees repeat business. The only way to break this cycle is to seek an entity that isn't in it for money. About the only type of entity with both enough power and an ability to detach from a money motive is a state.
In the same way that it's both logically and physically impossible to actually plan a corporation?
Many corps are substantially bigger than many countries - so, what's special about countries that they can't plan?
A couple of points I think have been missed.
- Most people are commenting on the UK economy and view planning as part of that; however a planned economy has to take into account other economies that it is interacting with. The economy can not act in isolation. So a plan has to take into account the effects of the unplanned economies which is random.
- Politicians - Well the role of the politician is to be elected and the people doing the electing get the politician they vote for. To change the politician you would need to make changes on how the authority figure gets to an authoritative role.
- The real elephant in the corner, how does religion fit into this? If you religious element is not on board with your plan then there will be conflict.
That assumes no capitalism and probably more of a corrupt socialist paradise. Capitalism works due to a flow of money which requires people to spend. To spend there must be an income which capitalism dictates to be earned. To earn an income requires the will to do something for others that they are not willing to do for themselves (cant or wont). An employer buys the workers time, energy and experience and the worker is paid for that. As such the employer is paid by customers for organisation while the workers are paid by an employer for their contribution.
The logical steps follow to look after people between work as well as health and education to improve the workforce but this seems to fall apart as governments 'prescribe' the education while opening borders to countries with cheaper, better trained and/or willing workforces. Capitalism has its flaws but a lot of flaws seem to be added after interference by govs. Capitalism keeps things moving while a centrally planned organisation must somehow keep its eyes on everything and yet look ahead.
The western world's capitalist system is steadily increasing the gap between the 'haves' and the 'have nots'. My comment was a simple reductio ad absurdem argument. You though, seem to be one of the believers who will chant "There is no alternative!" as the world slides down the crapper..
You are right that the west seems to be going that way. But as I said it is not by capitalism. It isnt capitalism sinking france. It isnt capitalism sinking the EU project. It isnt capitalism sinking this country. Capitalism unchained is reckless and dangerous but that is not what we have nor is it the cause of our problems. The wealth difference comes at a time when people have more tax applied and more regulation. The people find it harder to start up business or to compete because the laws and tax are designed against such action. Instead the law is so complex it requires money and resources to deal with the stupidity and the thievery.
Yes there is a an alternative. It is called capitalism. With responsible government to regulate/protect the people. If you think we have capitalism then I am amused. And yes there is a wealth gap, which increases as capitalism decreases.
"That assumes no capitalism and probably more of a corrupt socialist paradise. Capitalism works due to a flow of money which requires people to spend. To spend there must be an income which capitalism dictates to be earned."
But when Capitalism reaches the end-stage, the ones who have it all don't NEED to hire out. They'll have everything they need ON HAND. You're talking about catering "For the Man who has Everything" (and I DO mean Everything). And if labor is required, they can either use a robot or just convince someone to do it for a crust of bread (or something else so ephemeral that it's gone before he even leaves).
At the heart of socialism lies its contradiction with rational behaviour. To introduce a socialistic system requires that humans stop behaving like humans. Capitalism, on the other hand, is aligned with how we think. It is in tune with evolution, it harmonises with the struggle for improvement; it is sympathetic to our emotions.
When the first humans walked out of Africa they weren't practicing socialism; they were looking for advantage, for a better life. As their wanderings took them from place to place they didn't negotiate on the basis of need and equity, they out-competed whoever was there before them. They were by any definition free marketeers, they were capitalists.
A centrally planned economy could work in a world where there was no scarcity and where all choices/preferences were aligned. Until then socialism will always be cross-grained relying on compulsion for its survival as a system of government.
I think some of you, article writer included, are looking at this the wrong way.
A command economy doesn't need to account for left hand screws being different in different towns. That way lies madness. Instead a command economy says THIS is the screw for the people.
When you are trying to align everyone into a short list of goals then a command economy is perfect. For example, fighting WWII. However, if you are trying to empower people to live their own lives in the way they see fit, then a command economy is the worst possible thing as it removes personal choice.
Trying to shoehorn the idea of personal choice into a command economy is just moronic.
"A command economy doesn't need to account for left hand screws being different in different towns. That way lies madness. Instead a command economy says THIS is the screw for the people."
And then you hit the brick wall of reality: that one size DOES NOT fit all. Inevitably, you get complaints of a physical nature, such that "Live with it!" is answered with, "Why don't YOU come and try this?!" Dictating square pegs doesn't work when life gives you round holes.
The economy - or rather the (idealised) free-market is just a collection of billions of individuals acting in their own self interest. Claiming you can plan an economy is as naive as claiming you can plan the weather, the trillions of interactions in the system are way too complex and their consequences unknowable - certainly to any reasonable degree of accuracy.
That aside, the real reason Communism and it's little brother Socialism don't work is because they assume someone, somewhere knows what's best for everybody all at the same time, and so deny that one individual might have different needs, wants and desires to another. Comrade we are all equal after all.
One of the reasons many people, misunderstand the free-market, is that they believe that there is a "rational" choice to be made by consumers, and that as human beings aren't rational (the counter homo-economicus argument), those decisions must be made on their behalf - and the "free-market" managed.
Aside from the fact Adam Smith never claimed participants were "rational" - he suggested they were "self-interested", human beings actually make "personal value judgements" - that may or may not appear "rational" to a 3rd party. By accepting that decisions in a free market are individual value judgements - not absolute rational choices, the entire counter-homo-economicus argument becomes irrelevant.
My missus owns a pink sports car. She waited longer for delivery, paid more for it, and will probably find it harder to sell and for less money. In my book that is not a "rational" choice. However, as her value judgements are different to mine, the cost/benefit of that decision is something she finds acceptable.
I very much doubt any collection of civil servants centrally managing the economy would ever have created the jet engine, the iPhone, eBay, or pink sports cars.
The sad reality is though, there is no free-market, and in the next major economic downturn, "free-market" principles will get the blame - rather than the interference by politicians and their lackies, not least for magicking swathes of money out of thin air, whilst attempting to arrogantly and benevolently conduct the needs and desires of humanity like some grand orchestra.
"The sad reality is though, there is no free-market, and in the next major economic downturn, "free-market" principles will get the blame - rather than the interference by politicians and their lackies, not least for magicking swathes of money out of thin air, whilst attempting to arrogantly and benevolently conduct the needs and desires of humanity like some grand orchestra."
The sadder reality is that people pretend to live on islands when they really don't. As a result, individual choices have a greater effect even if we're unable to see it. Consider someone who buys himself drunk on booze, gets a hangover, and can't come to work the next morning. Which then leaves the boss scrambling to fill in a work gap because today's an inspection day or some other critical day, which can have significant effect on the rest of the boss's business, which can have ripple effects down the line and so on. And all because of one man's inconsiderate decision.
So you see, we can't help but micromanage because of the potential for snowball effects. Unless you're trying to say that we're caught in a no-win situation: being forced to manage an inherently unmanageable situation. In which case, what's the bloody point of society if we can't reduce these catastrophic externalities?
Biting the hand that feeds IT © 1998–2020