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When I was younger I heard that a planned economy can never be as potentially as efficient over time as a free (not capatilist) market due to the “lack of perfect information”. Meaning, not one authority can fully and effectively makimulsy optimize each supply/demand connection across all types of markets (pencils, food, trucks, medicine, tutors, etc…). The benefit of allowing markets to form organically (again, not monopolies, not regulatory capture, but person to person markets) is that each market will self-optimize for their own local maxima of efficiency.
This local optimization represents the implicit information that each market maker (buyer vs seller) brings to the table: effectively making every small market a mini-planned market. Now, many local maxima does not equal one true global maxima, but with many such algorithms local maxima produce very efficient and high quality results.
Hence, the challenge with a planned economy is not the control, but the lack of total information necessary to meet a higher efficiency target for all markets than would be possible if each market self-planned.
Like most things, scaling does introduce complexities that require more and more knowledge and the ability do be effective with it while making local adjustments. Some things don’t benefit from scale as much as others too, so there needs to be smart decisions.
That is why the worldwide food distribution network does lead to less expensive food due to large scale efficiencies overall, but some foods only work locally because they don’t hold up to transportation or the transportation costs are significantly higher than other foods.
What is being planned and the scale of what is being planned are extremely important, plus the decision makers need to not be malicious egomaniacs…
Capitalism is completely planned and controlled. Ask anyone who’s been colonized. People who believe in “free markets” are brainwashed ideologues.
Cool how that works in a simulated gaming environment where you don’t have to worry about shit like humans who actually have free will and stuff.
We unfortunately already have observable microcosms of centralized planning: boardrooms. They fucking suck.
I prefer the even further left position where the workers producing the goods democratically make the managerial decisions…
What I’d really love to see though is attempting a hypothetical as yet untried option where the population democratically influences production decisions of firms, something that only became possible with electronic communications technologies.
That is a big leap from slide 2 to slide 3. As Broton33 says, one central authority will never have perfect information across the entire market and thus will not “maximally optimize each supply/demand connection”.
Centralized planning has been tried many, many times in the past 100+ years and it has failed miserably every time. Computers and the Internet won’t make it work any better, if tried again in the 21st century, either.
Computers and the Internet won’t make it work any better, if tried again in the 21st century, either.
Why not? The internet seems like the ideal technology for more efficient production and distribution. It doesn’t even seem like a difficult problem absent the obstructions of capitalism. Not to mention the current system is literally destroying the planet…
Venezuela has access to the internet for their 21st century experiment with socialism and it hasn’t turned out very well.
Emails and Web Browsing work almost instantly around the world, but solid economic data that a central planning agency needs to use to make decisions takes time to gather. This it the core of what Broton33 talks about when he mentions the “lack of perfect information”. As an example, US businesses make extensive use of the internet, yet despite this, the US Government routinely has to revise the economic data it gathers, months and sometime years after the original surveys. Gathering accurate and timely data is hard. Gathering all the information you need is impossible. If you want to learn more, then do a Google search using the terms “Economics Perfect Information”.
As to destroying the planet, yes things are getting warmer, but the free market and the profit motive is also producing technologies that will help cool the planet.
