Economic calculation

Erichs_Pastry_Chef wrote:

And what's exactly wrong with that while a decent other model of economic organisation is being worked out? Tell us, o great one.

What is your alternative if absolutely every other currently workable and sane solution is apparently "state-capitalist" and therefore bad? Also, why did you bother posting this entire thread when there were a few already around? Was it to just answer your own question and repeat the same, trite catchphrase you have become associated with?

What is so wrong with it? Well, the fact that they had to build a wall to keep everyone in for a start. If it really was that great why did they have to shoot people who tried to leave?

The fact that the economies were inefficient and could not even meet the basic needs of their population. The fact that like capitalist countries there existed an elite that got the hindmost.

Is that enough or do you need more?

When did any country except the GDR in extreme circumstances build a wall?

Well, I think you'll find Britain imported as much grain as the GDR throughout the 1970s. Ineficcient? Don't make me laugh.

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Not just "some" improvements. The USSR had unparallelled levels of social spending that rose throughout the 30s. The system of social insurance was likewise unlike that of the capitalist countries (which such services docked the pay of workers.)

Social spending and worker's rights were seriously attacked by the Stalinist bureaucracy. From the reduction of paid maternity leaves to the reintroduction of "production fines" ( which had been abolished even in capitalist countries by then ), the position of workers in say 1932 was significantly worse than in 1922. And "social insurance" in the USSR was a joke. Propiska and other such ingenious Stalinist inventions made losing one's job and consequently one's ration card and apartment ( more like half a room ) a mortal danger. That was one of the ways the bureaucracy oppressed the rest of the population and kept people in fear and submission.

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The ideas of the 'impracticability' and 'unviability' of socialism put forward immediately after the Octoebr 1917 Revolution were the theoretical foundation on which anti-communists of all persuasions prophesied breakdown of the USSR's five-year plans. But the unprecedented rates of its socialist industrialisation and the defeat of Hitler Germany demonstrated the indisputable superiority of the planned system of economy. The liberals' thesis of socialism's 'ineffectiveness' was quite discredited, so that it was no accident that the neoliberals' idea of the 'totalitarian' or 'command' economy became predominant in the 40s and 50s among the many capitalist interpretations of planning and balanced development. The neoliberals, in contrast to ideologists of old liberalism, consider that operation of the mechanism of free market competition is ensured by government intervention rather than automatically. They therefore do not reject a certain positive significance for centralised planning under socialism, since it makes it possible to secure high economic growth rates. Of course, they also argue at the same time, that it is achieved at the expense of suppression of the individual consumer's interests and infringement of his sovereignty. The planned system, they say, suppresses the consumer's sovereignty because it starts from the interests of expanding production and not from those of individuals, and because it is incapable of responding to the rapidly changing structure of needs.

These views reflect the exaggeration of the role of the market typical of 'barter' conceptions, and a striving on that basis (a) to belittle the possibility of meeting consumer demand under a planned economy, and (b) to counterpose personal consumption to productive accumulation and productive consumption. The 'command' economy, the neoliberals try to show, has only one merit, the possibility of mobilising resources (which are said to be used irrationally).

Present-day ideologists of the neoliberal trend, following von Mises, employ the notion of 'command economy', to criticise real socialism. In spite of what actually exists, planning decision are interpreted as purely administrative and subjective, and plan indices - in both value and physical terms - are counterposed to one another. The main reason for that is seen to be in the planned, rather than spontaneous, character of price formulation.

Notions like that clearly reveal a desire to saddle socialist countries with the self-discredited market model of the economy, with its inescapable features of overproduction crises, unemployment, and anarchy of production. The actively obtruded market economy, moreover, is counterposed to a 'centrally controlled' model of the socialist economy as guaranteeing not only rationality and efficiency but also freedom from bureaucracy. In this case Weber's theory of bureaucracy as a form of management adequate to an industrial economy is reproduced, so as to represent centralised management of the socialist economy as bureaucratic.

...more characteristic now is an apologia for the market that is not only isolated from the real conditions in which the economies of socialism and capitalism develop, but also contains substantial faults of theory and methodology. In spite of certain substantial divergences in their approach to the evaluation of plan and the role of government in the economy, the theoretical and methodological platforms of the liberals and neoliberals coincide. They have a built-in apologia for the capitalist market system, and ignore such manifest ills of capitalism as crises; they also ignore the decisive role of ownership of the means of production (private capitalist objectively hampers planning, while socialist facilitates planning on the scale of society); and interpret planning under socialism in a subjective psychological way as a form of political coercion, and a bureaucratic system's imposition of its will on the economic subjects.

Reality has dealt the concept of 'command economy' a knockout blow: on the one hand, by the practice of capitalist economic management, with its continuous chain of contradictions and conflicts grounded in crises recurring periodically with growing destructive force, inflation, and the growth of strikes; on the other hand, by the practice of socialist economy management, and the planned, dynamic development of real socialism.

Kaltakhchian, N. M. (1981, pp. 243-246). Interpretations of Planned and Balanced Development of the Socialist Economy. In Smirnov, A. D., Golosov, V. V. & Maximova V. F. (Eds.), The Teaching of Political Economy: A Critique of Non-Marxian Theories. Moscow: Progress Publishers.

lol yami thinks full socialism can happen without any transitional period. at the same time, the workers must not take power ever. instead (!!), it's going to happen "from below" (??), as in people will just decide to throw out all the money and start sharing everything in a mass transformation of consciousness aka 2012. too bad that didn't happen.

Loz wrote:

Social spending and worker's rights were seriously attacked by the Stalinist bureaucracy. From the reduction of paid maternity leaves to the reintroduction of "production fines" ( which had been abolished even in capitalist countries by then ), the position of workers in say 1932 was significantly worse than in 1922. And "social insurance" in the USSR was a joke. Propiska and other such ingenious Stalinist inventions made losing one's job and consequently one's ration card and apartment ( more like half a room ) a mortal danger. That was one of the ways the bureaucracy oppressed the rest of the population and kept people in fear and submission.

Maternity leave was expanded under Stalin. Even the decree to restrict abortions was accompanied by greater access to such leave.

The fact is that the USSR was spending far more on social insurance than any capitalist country at the time. Considering the very poor conditions of living the USSR inherited from Tsarist Russia (including "half a room" apartments), it's pretty good.

With the restoration of capitalism by the revisionists, job insecurity became a fact of life for many.

This could be of some use. It's Janos Kornai's outline of his own "Two-Level Planning" model and probably therefore of interest to some of you, it appears to hint quite strongly at systems theory like Katsenellenboigen's own take on it. Not read it all yet, but I shall get round to it in the next day or two, other things are going on right now. I am looking into getting some Kantorovich and the Katsenellenboigen on "Indeterminate Economics" much later.

The economic calculation problem is not one of socialism vs capitalism. Its a problem of administration and is a specific case of the problem of local information versus global information.

The very same economic calculation problem was treated by Marx when he spoke about the ciclic crisis of capitalism. Over production cannot be prevented by capitalism because the economical information is not actually present in prices right now. Price responds to production AFTER the product reaches the market, not before.

If two economic groups decide to produce the same product at the same time, they can overproduce and nothing can prevent that. Because that information is local to the producers and it was needed a global information to prevent overproduction.

If price trully prevented overproduction, we could not have crisis, because - under a certain point of view - a capitalist crisis is usually one of overproduction (but not true overproduction, because usually overproduction in capitalism can be both true overproduction - producing more than is neded - and monetary overproduction - producing more than people can buy with the money they have - even if they wanted to buy more). As capitalism tends to concentrate incomme into the accounts of few, people lose purchasing power and cannot buy as much as they would or wanted.

You might say that those wanting to procure more would want to procure more than they give to society as work, but capitalism fails there too, were we see few people buying useless ferraris while the working class cannot afford to buy a beetle.

The problem of the locality of information (the information being not where its needed to produce a correct decision) can - and is - be solved by informatics. The whole porpuse of informatics (computer science) is to solve that specific kind of problem.

There is a model of production called production just-in-time, where a new commodity is produced right after the information about consumption is received by a computadorized system. This is used - under capitalism - to prevent the production of goods that could be obsolescent a month or so after being produced. When you implement just-in-time, you guarantee that every sell is about a good that is cutting edge.

We can implement that under socialism as a means to predict production and solve the economic calculation problem.

Base industries (Steel, cement, aluminium etc) can be predicted quite easily under URSS system of economic calculation, and thats not much to change there. Was on the consumer goods that URSS failed. But as i said earlier, computer science can solve that.

The economic calculation problem was raised under a specific historical era where we could not count on computers to solve that problem. It does have an ideological bias because it ignores that the very same problem happens under capitalism as well. It ignores that prices are hardly set by demand versus offer alone. Usually prices fall as time goes by, because under competition there is a tendency for the fall of the profit margins, prices fall towards their work-value ideal.

So in economic courses people talk a lot about demand versus offer, then later silently switch back to work-value-like formulas (sum all fixed expenses, sum all wage expenses, then sum all revenue etc. those kind of excel spreadsheets). So price is only set by demand in specific and out-of-ordinary events like when a heavy rain kills a crop etc, not on ordinary conditions. That idea is more ideological than practical. Demand can very well create the will to start a certain industry by a group of capitalists (people usually do market analysis before starting a company), but as soon as production adjusts, prices fall, and they cannot fall indefinitely (because them we would reach a point where the price is below the cost of producing the good). This means that price falls towards the cost, and thats exactly what Marx meant by the lowering margin of profit.

Under that realistic model, if two or more companies decide to attack a new market without knowing that other company is going to attack that too, they collide with overproduction and might very well go bankrupt.

Like i said earlier, its a information problem, and for information problems we have informatics, computer science.

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What is so wrong with it? Well, the fact that they had to build a wall to keep everyone in for a start. If it really was that great why did they have to shoot people who tried to leave?

Thats an oversimplification. I am not a proponent of URSS style ditactorships. And i usually - at least here - refrain from defending the URSS tyrany. But the wall was created to prevent the labour from escaping URSS. The state spent a lot of money to train medics, engenieers, doctors etc. But under socialism the wage of those workers was not much above the wage of menial labourers, like janitors etc. By fleeing they expected to be received as heroes and to work on companies that would give them more wage than in URSS, while having a high level education for free. In other words, they wanted the good side of URSS (free healthcare, free education etc) and the level of spending of ocidental Europe. That was not possible in that era. European richness is made out of the exploitation of poorer countries. To pacify their local proletariat the consumerist market was created. The proletariat becomes a consumer. If under older capitalism forms proletariat was utterly exploited, receiving as much was needed to survive but nothing more, capitalism in the metropolis countries reaches a stage where consummerism is the norm. But this can only be done as much as imperialism allows the international division of work. Poverty is exported to third world countries, while richness is imported into europe. We see there a phenomena called spetacular society, etc, but this is something for another topic.

In other words if two or three russians flee, they are received as heroes and might very well have a much higher standard of living than they had at home in urss, because they are symbols to be exploited by the propaganda machine of the state. But as soon as thousands and thousands of russians flee, they become second rate workers, just like mexican migrants work the worse tasks in USA, or arabians/morrocans/koreans do the worse works in Germany, and so on.