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The change on November 4, 2005 was me. (I don't have a Wikipedia account yet but this is my internet moniker ;))
I reorganized the debate section to move the discussion of decentralized socialism as a potential solution to its own section. This makes clearer the pre-existing fact that the rebuttal and reply subsections referred only to this issue.
I added a summary of the socialist argument based on the existence of centralized planning in actually existing capitalism. This is commonly heard, in my experience, because it's a fairly simple reply.
(Anti-socialist responses to that argument, and the 'philosophical objection' below it, would be welcome additions. I'm not going to provide them as, since I don't believe them, I'm not sure I could formulate them fairly. Please don't simply remove anything, though.)
I also made a few minor changes in wording to make sentences clearer, at least to me.
The change on 18:10, 22 Sep 2004 was me (Gregholmes). I forgot to log in first.
I may have seen the example that I added somewhere, but I can't remember where.
Furthermore, decentralist socialists would argue that there is no need for a common unit of accounting or, rather, that such a need only derives from the exigencies of economic exchange i.e. as a more efficient form of exchange than barter. In capitalism costs are measured in monetary terms. It is a tautology to argue that only a monetary-based system can measure costs in this fashion. On the other hand, if monetary accounting is supposed to "capture" costs in some other substantive sense one would then have to demonstrate a correlation between these two kinds of "costs". Since this would entail measuring costs directly and not in terms of money, if follows that the economic calculation argument is logically inapplicable.
"A continuing debate"? Who still questions it? Even Soviet communists accepted that Mises was right! User:Tacitus Prime (comment moved from now merged Talk:Economic Calculation Debate, sig added by [[User:Sam Spade|Sam Spade Arb Com election]] 12:00, 1 Dec 2004 (UTC))
I haven't read this wiki article before, but this subject is one on which I have spent ten years of work, and Caplan's quote as it's written bothers me because it's too easy to misinterpret:
1) Caplan's argument is reducible to this statement: "between price signals for planning and incentives for coordination, the greater problem is the one of incentives." The problem of incentives without prices manifests itself in a multitude of behaviors. That multitude of manifested behaviors renders a planned economy impossible. He has stated repeatedly that his criticism is one of subtle priority.
2) The dispute between the priority of prices and incentives is an artificial distinction. Just as one cannot have a principle of voluntary transfer without the institution of property, one cannot have the institution of prices without human incentives. And prices have no meaning without incentives. The two concepts are inseparable. Incentives require choice, and prices are required to choose between multiple alternatives. Just as voluntary transfer has no meaning without property. While incentives can exist without prices -- fear, want, belonging, security, barter and the like -- they are limited to simple goods that we can use or consume ourselves. In and industrial economy those goods are abstractions that we cannot grasp the use of with our senses (specialty metals, chemicals, tools). They require special knowledge that one must have an incentive to acquire. So without prices, planning in an industrial economy consisting of factors of production that can be put to multiple purposes in real time, cannot be organized into any rational plan by the multitude of people required to produce any single good. (See I Pencil/I Hamburger). ergo: while the human mind can conceive of an artificially constant organization of individuals, resources and means of production once it is already known, and once individuals possess the appropriate knowledge -- an industrial economy is impossible to FIGURE OUT and it is impossible to SUSTAIN without prices and the impact of those prices on incentives. Humans lack the information to make decisions, but decision making is only important given that they need to have incentives in order to perform the work. Mises doesn't so much overstate his case, as he is simply more concerned about the problem of money and calculation given the events of his time.
3) The problem for any economy functioning in an equilibrium (competing with other economies) is that competition forces constant recalculation of the use of factors of production, and the organizations that such factors of production are used by. The problem for any economy dependent upon natural resources (food) as a means of production (feeding people), and where production requires time (seasons), is that nature does not adhere to plans and is subject to black swan effects (natural disasters). And it may be impossible to 'replan' in real time without irreparable effects (starvation) because of the lack of prices and incentives.
4) We might also put Caplan's statement in context: GMU's Austrian Economists are in an identity clash with the Rothbardians from the Mises institute. The rothbardians have appropriated the terms 'libertarian' and 'austrian economics' by adopting Alinsky's marxist model of propagandizing. Because the Rothbardians have been so successful in doing so, this has caused the only university department in the USA that actively promotes Austrian theory, to defend its theory from ideological if not intellectual abuse, for market reasons. (I am not criticizing the rothbardians, just pointing out the motivations involved. All publicity is good publicity.) In effect Caplan is not commenting about Mises and his economics, he's commenting about the Rothbardians and their political movement.
5) Below RafaelG points to an paper by Boettke supposedly refuting Caplan. Accusing of Caplan not understanding the arguments Mises was making about Socialism. This is somewhat of a comedy of errors, because in his attempted refutation, Boettke makes that mistake, and Caplan does not. Caplan is not arguing against Misesian era socialism, and the stipulation by socialists that the problem of scarcity would be solved by state ownership of property. He's from a younger generation. He is arguing against his generation's problems of social democracy (private ownership of property, public ownership of profits, which we call redistributive or progressive social democracy.) In this new context he's saying that incentives matter more than prices, and that there is too much being made of the price issue, rather than the behavioral issue. He's addressing current issues. In particular the Rothbardian over-emphasis on prices in relation to current socialistic arguments. So Caplan's critique stands to date. And if we were to ask Block, Herbner and Solerno, who wrote most of the papers on the subject, and all of which I have read repeatedly, they would say that the debate has closed. (I know. They've told me in person.) There is no meaningful difference between the price and incentive arguments. The importance of each has more to do with the emphasis needed to address each generation's attempts to protect private property, because the two instantiations of socialistic behavior (socialism and democratic socialism) attempt to appropriate different aspects of property: the means of production by socialists, and the results of production by democratic socialists. Socialism failed because of the inability to both plan and provide incentives. Democratic socialism to some degree continues to survive because it allows (rental?) ownership of property which allows economic calculation and does not appropriate so much of the proceeds that we fail to have the incentive to work. (in most cases.) In fact, in the literature to date (and there is a great deal of it) economists on the left attempt to figure out how much more can be taxed without negative aggregate effects on the economy. They estimate it is much higher.
I hope this was helpful. Curtd59 (talk) 12:45, 4 April 2012 (UTC)
Just for clarity:
I'm not an expert on this, and I don't know how best to incorporate my objections into the article, but I'm pretty sure they will help to make for a much more interesting article. --- Charles Stewart(talk) 19:39, 22 February 2006 (UTC)
"Actually there is a refutation of Caplan arguments: www.mises.org/journals/scholar/Boettke.pdf
And the Soviets did have economic calculation problems:
"If all the factories and workshops together with the whole of agricultural production are combined to form an immense cooperative enterprise, it is obvious that everything must be precisely calculated. We must know in advance how much labour to assign to the various branches of industry; what products are required and how much of each it is necessary to produce; how and where machines must be provided. These and similar details must be thought out beforehand, with approximate accuracy at least; and the work must be guided in conformity with our calculations” (Bukharin and Preobrazhensky 1966 [1919], 70)"--RafaelG 01:52, 5 July 2006 (UTC)
Robert Allen did a summary of his book [6]
Reviews:
Josephson's review is pretty critical, claiming there isn't much value to the kind of study Allen performed, but the other 3 generally seem to be impressed by Allen's analysis. --- Charles Stewart(talk) 20:48, 22 February 2006 (UTC)
Allen arrived at this "proof" of Soviet success by adding up the consumption of those who did better under Stalin, while omiting data on all those who starved. To quote Allen "output per head could only be increased by reducing the number of heads". Allen's work is laughed at by serious scholars, I have heard it... —Preceding unsigned comment added by 98.30.43.33 (talk) 11:20, 21 October 2010 (UTC)
"It could also be argued that the philosophical basis of the calculation problem has a flaw. Proponents argue that optimum economic settings are unknowable but also purport to know that the market can provide them." I've mentioned Pareto efficiency. Really I cannot think of any reasons that his piece can stand, but maybe someone can give a cite for details? Intangible 00:41, 5 July 2006 (UTC)
1)The extended explanation strikes me as incorrect - the problem isn't that the price of consumer goods is unknowable, or even that demand is unkowable, but that without a market in ccapital goods you cannot rationally choose between methods of production - least that's my reading of Mises. The destruction of the distinction between producer and consumer, and teh break of the link between production and consumption righst (through wages and profits) seems to be at the heart of this - I'll make changes later unless anyone drastically disagrees.--Red Deathy 07:44, 27 July 2006 (UTC) 2) The stuff about prices and price controls isn't relevent, Mises made clear that a market in consumer goods could exist (i.e. with prices and everything) but the problem would remain so long as there was no market in capital goods. he freuqently mentioned that demand for conumer goods could be known. but the problem would be choosing rational economic methods to produce them. Finally, although clearly opposed to LTV he maintained that marginalism/ltv debates were beside the argument, and the ECP held even if you applied labour time theory. 3) My next set of changes will be: i) Purge much of the debate section ; ii) Start citing reference to back claims up. Any help in cleaning up this very important article would be appreciated.--Red Deathy 08:07, 28 July 2006 (UTC)
Now, I am not stupid but this article doesn't seem to make sense. Is it the article or is it the theory? I have a basic grounding in economic principals and business studies but this just doesn't seem to fit. For example, it seems that part of the article argues that prices for goods couldn't be calculated due to there not being any way to calculate their production costs. This would be easily be countered by looking at things in terms of man-hour cost... Or am I just missing the point? -Localzuk (talk) 21:04, 2 September 2006 (UTC)
Localzuk, I think you are in fact missing the point. I'm going to respond to what you have said with my "junior economist's hat" on and see if it generates ideas for how to better present the material. You say that the problem of not being able to calculate production costs can be handled by looking at man-hour costs. However, this doesn't solve it. For one thing, man-hours are heterogenous. You may have an expert blacksmith who has various skills, a carpenter who has various skills, etc, and then lots of people only good at grunt work. If a task takes one hour of the expert carpenter, or a half-hour of each of the grunts, which option should be used? And then man hours aren't the only input. There's also the land. If one task takes more man-hours but less land, is it better? Or is it better to use more land and fewer man-hours? And then time: if it takes more man hours but gets it done sooner, is that preferable? To determine the best use, you have to have an exchange ratio by which to compare all of these, and that in turn requires a market in which such preferences can become concretely revealed. Does that answer what you were asking? MrVoluntarist 21:38, 5 September 2006 (UTC)
I have read this article several times and I am pretty adept at getting new ideal quickly, I cant getfrom this article. it is very confusing to me.----
In line with oterh criticism sectiosn of articles, I've stripped this one of twoing and froing, the article per se sets out the case for ECA, let the criticisms stand for themselves. This is a preliminary to strengthening the wording of the remainign criticisms sections. One bit at a time.--Red Deathy 13:44, 27 March 2007 (UTC)
p.s. My purge of external luinks, there were far to many, and I've only left primarilly primary soruces setting the case, and one oppositional link, if that's OK. This article as it is is crap and needs substantial work still.--Red Deathy 14:41, 27 March 2007 (UTC)
More generally, this is a well-known problem with many arguments from thinkers of both sides. I suggest that we remove all unsourced material in order to avoid original research. As can be seen in the link above, there is much misrepresentation in this article.Ultramarine 16:24, 27 March 2007 (UTC)
Ultramarine, I didn't just remove opposing views, I removed redundancy, and left in criticism - the bloc quote from trotsky is undue weight, if nothing else, and poor style. I removed most links because they were secondary discussions, leaving either primary sources, one discussion of a notable thinker in the field and a critical site. I reject your implication that I was editing unneutrally, I was trying to make the article more readable, and wish you'd consider each change on a case by case basis.--Red Deathy 16:49, 27 March 2007 (UTC)
That's excellent - I'm even happier without criticis sections - it gives POV warriors an easy target (and debate sections are even easier). Fantastic, thanks muchly.--Red Deathy 07:14, 2 April 2007 (UTC)
I've removed the restored debate section because it harmed the new layout we've all worked so hard on, and because it was unsourced and unencyclopaedic. If editors wish to add a section on 'decentralised socialism' they should source it and make it conform to the new layout of the artickle, IMNSHO.--Red Deathy 07:06, 8 May 2007 (UTC)
In removing the section on decentralised socialism you have actually removed THE pivotal and decisive counter-argument to the economic calculation argument reducing it to a debate between free market advocates and central planners. This is pointless and undermines the credibility of this whole entry . Attempts to reinstate the section on decentralised socialism have been edited out. If it the absence of references this can be easily remedied e.g. the article in Common Voice on the ECA, unravelling of a myth —Preceding unsigned comment added by 80.39.205.223 (talk) 23:50, 6 January 2008 (UTC)
No it is not irrelevant! If you assume central planning then ipso facto you remove the idea of a self regulating system of stock control which is a key idea in the counterargument to Mises´theory. This is a point that is constantly overlooked by Mises supporters. It is very convenient for them to assume that socialism is a centrally planned economy because they do not then have to contend with the highly damaging criticism emanating from a non-market decentralised socialist perspective —Preceding unsigned comment added by 83.32.147.32 (talk) 17:12, 14 January 2008 (UTC)
I am aware of the hayekian argument against central planning on the grounds of informational complexity but that is not relevant to the point i raised. The point is that central planning precludes the mechanism of self regulating system of stock contrl and, along with that, the law of the minimum which directly addresses - and refutes - Mises' argument against communism on grounds of the economic calculation argument. You can only effectively refute that argument if you assume a communist economy will be an essentially self regulating one and not a centrally planned one. —Preceding unsigned comment added by 80.125.177.239 (talk) 21:36, 26 January 2008 (UTC)
Hope I'm not rocking the boat adding the new section (which IMNSHO is blanced) but I think it's a useful addition.
BTW, anyone reckon we should try for featured article?--Red Deathy 09:48, 22 June 2007 (UTC)
Red Deathy reverted my edit to the "Markets not efficient" section. I had made two changes. First, the topic sentence was incoherent (due to improper grammar) so I tried to correct it. Second, I added information from someone (i.e. Ludwig von Mises) with a previously unrepresented--though significant--viewpoint.
I believe that the first portion of my edit corrected the poor grammar in the topic sentence. However, the way I rewrote the sentence did not express the "markets aren't efficient" argument well. I fully agree with Red Deathy that "the argument isn't relative."
But I do not understand why the second portion of my edit was reverted. As it is now, the article describes a minority position (i.e. markets aren't efficient) without explicitly giving the other view. According to WP:NPOV#Balance, "When reputable sources contradict one another, the core of the NPOV policy is to let competing approaches exist on the same page." The article cites those who claim socialism cannot be efficient, those who claim socialism can be efficient, and those who claim capitalism cannot be efficient. However, the article never explicitly cites anyone saying that capitalism can be efficient. I tried to correct that. Where did I err? --SirEditALot 03:30, 7 August 2007 (UTC)
BTW, von Mises, and others, responded to the market socialists and mathematical socialists. Should we include summaries of their responses in the article? The article currently states that "In principle, also socialist managers of state enterprises can use a price system, as an accounting system, in order to minimize costs and convey information to other managers." Even if we don't want to add von Mises' counter arguments, this sentence should be reworded because it uses the encyclopedic voice to state that market socialism is works "in principle"--something that is no doubt very controversial. --SirEditALot 03:51, 7 August 2007 (UTC)
Managed to find a web café. Just wanted to add a couple of points. The function of the Nove quote is solely to indicate that some critics believe that Mises' argument assumes/rests on the idea that markets are rational and efficient, the substantive point is Robinson's. To be frank I don't think that implicit/explicit is of much importance on this particular point, though maybe a different secondary source to establish the same bridging effect (i.e. that Mises' argument contains the notion that markets are efficient).--Red Deathy 08:55, 8 August 2007 (UTC)
Although Mises is the preeminent figure in the Socialist Calculation Debate, and the publication of Economic Calculation in the Socialist Commonwealth is in many ways a logical starting point for any article on the SCD (aka the Economic Calculation Problem, or ECP hereafter,) a thorough exegis of the events that led to Mises formulating the ECP might be edifying. I suggest elaborating on the connection between general equilibrium analysis and the ECP:
Following the work of neoclassical economists like Alfred Marshall and Leon Walras, economics at the end of the nineteenth century became more formalized and acquired a mathematical rigor that was formerly associated only with the physical sciences. Extrapolating from a model that focused on welfare effects in static equilibrium, a growing number of neoclassical economists after Walras maintained that socialism was both desirable and technically feasible. Walras's work on general equilibrium theory was extended by his student Vilfredo Pareto, who applied his concept of the Pareto Optimum to the socialist economy.
Pareto established to the satisfaction of many economists that it was possible to maximize welfare under socialism in Les Systemes Socialists (1902-1903). Pareto's student Enrico Barrone elaborated on the welfare implications of the Pareto Optimum under socialism in The Ministry of Production in the Collectivist State (1908), concluding that if the socialist ministry of production set prices equal to cost of production and costs of production were minimized, then resources would be allocated optimally and welfare would be maximized. The ministry of production would produce at a perfectly competitive price and quantity and receive revenue equal to the producer surplus that would be achieved by selling at a monopoly price and quantity. Thus, by using general equilibrium analysis and the tools of welfare economics, Barrone was able to reach a consensus among neoclassical economists that rational allocation under socialism was feasible. This conclusion did not go unchallenged.
Austrian economist Ludwig von Mises asserted the logical incoherence of collectivist planning in Economic Calculation in the Socialist Commonwealth (1920). etc., etc....
Prime Director 22:19, 8 September 2007 (UTC)
Shouldn' there be something on Lenin's New Economic Policy (1921)? After all it was the first soviet reaction to a real-life economic calculation problem.. and it goes to the heart of the question of whether calculation is possible in the absence of private property in capital goods.. —Preceding unsigned comment added by 91.199.122.25 (talk) 08:38, 31 August 2010 (UTC)
Is Project Cybersyn relevant to this article? It was a country-wide network implemented by the Allende government to coordinate economic information, so it seems to be an attempt to address this problem. Damburger 06:44, 15 September 2007 (UTC)
I think Cybersyn is definitely relevant James Haughton (talk) 23:55, 12 March 2008 (UTC)
Just a quick note on the reversion I just made.
Thankyou for being so polite :)
1) On the subject of market socialism, I thought that was the main outcome? Austrian's come up with the idea, socialists wander off, eventually return with market socialism (Poland etc). I thought it warranted far more than a single line. In retrospect, I think the Lange Model deserves at least a mention.
2) While the point of the amount of information has been touched upon, it was never explicitly mentioned. It is definitely not mentioned that in a market economy people can act on information that they do not explicitly realise is important, unlike in a command economy.
3) By most I meant I presumed that most did- Paul Samuelson seemed to think so, and he agreed with the majority of literature I’ve read, along with my instructor (and a Keynesian instructor at that). Should I re-insert specifying him?
4) "However, economics is the science of scarce resources: in a situation of abundance, it is unnecessary." I thought this was basic economic stuff- it's on page one of all the economics textbooks I've read. Alain Anderton, Economics, Fourth edition and Economics, 16th edition, Samuelson, Nordhaus are the two examples that spring to mind.
You also said this repeated the preceding point- I'm sorry, but I can't find where this point was raised prior to my interjection.
5) You're probably right about the noun status of market socialism, proper or otherwise.
Finally, I think the layout could be improved. —Preceding unsigned comment added by Larklight (talk • contribs) 15:14, 7 April 2008 (UTC)
There are a number of serious problems with this whole page. The most glaring omission is the lack of any discussion of entrepreneurship. The role of entrepreneurs was explicit and central to the 1922 book by von Mises. The authors of this page cite the 1920 article by von Mises. One cannot speak authoritatively about the calculation debate without first going through the 1922 book carefully and completely (as I have). The role of entrepreneurs is stressed by modern Austrians as well (Kirzner, Lavoie, Boettke, MacKenzie, Salerno…).
A second major omission is the lack of any discussion of socialist bureaucracy. Part of the 1922 book examines deficiencies that Mises saw with bureaucracies, at least as far as managing commerce is concerned (i.e. Mises was OK with public administration of police and courts, but not “consumer industries”). Mises followed up his 1922 discussion of socialist bureaucracy with a 1944 book entitled “Bureaucracy”. The lack of any discussion of this component of the von Mises argument leaves a massive hole in this entry.
The next major problem is its wholly inadequate discussion of the Lange-Taylor model. The Lange-Taylor trial and error proposal for market socialism definitely does not try to incorporate markets into socialism. The Lange-Taylor proposal aims at simulating markets though trial and error. Trial and error aims at generating the results of markets without actually having markets. Red Deathy is wrong in his assertion that Lange thought “that Socialism would require markets”. Lange thought that socialism allowed for the simulation of some markets. Seeing as I wrote my dissertation on Lange, read and reread everything of his, and have published my work, I think there is some chance that I might know more about Lange than anyone who is posting here (unless Jan Toporowski is posting here). Furthermore, the work of Lerner, Dickinson, Durbin, and Dobb gets no play in this entry.
Next, the remarks from Joan Robinson apply to this debate, but are not a part of this debate. Robinson was into the Cambridge Capital Controversy, not the Calculation Debate. To discuss JR, while only mentioning Lange and ignoring Lerner and the others is absurd. The next major omission concerns recent modifications of market socialism by Roemer, Bardhan, Shweikart, Burczak, and Junker. These are the five leading scholars on this side of the issue in recent years. Leaving them out renders this entry absurd. Joe Stiglitz gets no mention either, and he did write a book (albeit a lousy one) on this subject.
Yet another omission concerns the specific role of financial markets in the calculation issue. Austrians, like Lachmann, MacKenzie, and Schumpeter have made the importance of financial markets to the calculation issue clear. This article does not mention any of this literature. Finally, as far as the parts of the calc debate that are mentioned is concerned, the reading on Hayek and Mises in this entry is so thin that it can’t be taken seriously. Yes, Mises wrote something about hectoliters and such, but this does not really explain the calculation problem. Furthermore, the references to how the problem can be solved in a non-growth economy or with optimization equations indicates that the authors of this page need to read a few thousand pages on this subject. The economic calculation problem does not exist under static conditions implied by non growth or by a set of simultaneous equations. There is no calculation problem to solve in these conditions.
The general problem with this article is that its authors/editors have only a superficial understanding of a tiny fragment of the calculation problem. Some of you might think that you are learned experts on this issue, but this is not even close to being true. ES —Preceding unsigned comment added by 74.33.207.127 (talk) 00:33, 11 April 2008 (UTC)
Yes, I agree, broad outlines and sufficient references. The computational complexity issue does not cover the bureaucracy issue, as discussed by Mises, Lange, and Dickinson. This entry should include brief explanations of the bureacracy, social dividends, trial and error, and financial market issues. Perhaps I could write up a few things when I have some free time. ES
I added in the five basic conditions for the performance of economic calculation in captialism- accroding to Mises and Hayek. I did not add anything as to why socialism lacks the necessary means to match economic calculation in capitalism, not yet. The section I added is long, compared to what is here already. But I am not sure how to condense things further. This is a condensation of thousands of pages of detail (albeit much of this detail was unecessary). I need to add to the bibio too, I refernence things that are likely not there. Too late for more tonight...
As for basic reading, Mises' book Bureaucracy (1944) is pretty darn good- short and detailed. Bureaucracy is a much easier read than Humen Action or Socialism. The Road to Serfdom and The Constitution of Liberty are of no use on this subject. Stay away from The Fatal Conceit too. Hayek did not really write the Fatal Conceit, he merely wrote some notes that were "edited" into a book. Also, the bit about Hayek admitting that socialism could work in theory is dead wrong. Hayek admitted only that socialism could work as a thought experiment, in terms of General Equilibrium theory. Mises made the same exact concession in 1922. Joe Salerno is simply wrong about Hayek on this issue, and I doubt that he will defend this position much longer. ES
I added in a short bit about why Mises thought socialist calculation impossible, and a biblio. I also took the liberty of deleting the stuff about how "Hayek was more moderate" by admitting that socialism could work in theory, but faced practical problems. This is a myth propagated by Joe Salerno and other Rothbardians. If any of you want to bring back the proposition that Hayek backed off from Mises' impossibility claim, I would suggest finding evidence of this in what Hayek actuallty wrote. —Preceding unsigned comment added by 74.33.218.143 (talk) 13:40, 30 April 2008 (UTC)
He argues that, due to the pressure from free trade of potential competition, monopolies still have to behave in a competitive manner, and cannot charge higher prices.[1]
I took that out because Robinson's point isn't that monopolies set excessive prices, but that they do not set market prices in the conventional sense - yes, they have to set competitive prices (because there is a competitive market in capital) but their prices are not derived, according to Robinson, from tradtional supply/demand models but more resemble the administered prices seen in Soviet state capitalism. If true, this breaks the link between markets and rational allocation (it would also, I'd have thought, have words to say about computational complexity).
Just to return, also to the tit for tat thing, balance should emerge across the page, I just think a rebuttal after each para looks bad, to assert in the formulation of the ECP that it is generally held that markets are allocatively efficient would balance Nove's and Robinson's criticisms. I'll leave it there for now, but ask that a better place be found for Samuelson..--Red Deathy (talk) 07:08, 17 April 2008 (UTC)
References
OK, I restored (possibly temporarily) the recently deleted external links. My main rational being that this is despite its mainstream acceptance, a pretty fringe subject (i.e. a great many people take the acceptance of the argument as read, and so tend not to discuss/dispute it), so linking to some grey pages is appropriate, particularly to get the flavour of the controversy aspet. Authors link Cox and the LA are appropriate, even if not neutral academic sources.--Red Deathy (talk) 08:20, 10 November 2008 (UTC)
This section should really be used to only detail the counter-arguments provided to the Economic calculation problem. It's confusing and inefficient to mix arguments in a tit-for-tat manner. Please remove the statements in the section that reflect pro-ECP arguments. They don't belong there. Or, at least clean it up so that a reasonable person could come by the article, read it, and not be confused as to where the camps stand. You can't just use the wikipedia page to argue. That's not what it's there for. —Preceding unsigned comment added by 207.237.246.239 (talk) 23:11, 27 January 2009 (UTC)
"Efficiency of Markets" contains more counter-criticism (apologetics) than criticism. A victim of "on the other hand"-ism. —Preceding unsigned comment added by 71.241.218.107 (talk) 08:00, 1 June 2009 (UTC)
I jumped from a section in the Marxism article to a link titled "Economic Calculation Debate" which apparently took place in the 1920's. However, i was redirected to this article "Economic Calculation Problem", while they are probably extremely related articles, it seems the redirect should be moved, and a new article should be created, or perhaps a new section within this one to describe the physical debate, if there was one. Not being an expert, it would seem its either inconsistent, or poorly explained. All I found was a mention that Mises proposed the problem in 1920's. I don't see any information about a debate (as a debate needs two people), just that Mises proposed the problem. I would propose a new article, and title it "The Socialist Calculation Debate", and possibly outline the arguments made at that time. Thekappen (talk) 04:28, 29 November 2009 (UTC)
Into two articles, one on the "Economic calculation problem" (the efficient allocation of goods in a society) and one on the actual "Socialist Calculation Debate" (a bunch of people writing papers and arguing with each other)?radek (talk) 00:27, 23 June 2010 (UTC)
Whoops, I meant to put this discussion at the WikiProject Economics page. CRETOG8(t/c) 18:18, 1 October 2010 (UTC)
The argument that an efficient command economy under socialism is impossible because there would be no way to reliably price capital goods was not invented by Mises, as this article currently claims. You can find the argument made very clearly in Max Weber's Economy and Society (Part One, Ch. II, Sec. 12; the current Wikipedia biography of Weber provides a quote). That book wasn't published until 1922, but it was based on lectures that Weber gave in 1909-14. Weber himself died in 1920, the same year that Mises published his paper on the economic calculation problem. It's remarkable that Mises's paper doesn't cite Weber, since Mises was very well aware of Weber's work and we know from this interview with Gottfried Haberler that Weber was one of the main topics of discussion during Mises's private seminars in Vienna, in the years immediately after World War I. - Eb.hoop (talk) 19:32, 13 February 2011 (UTC)
Maskin's (2008) Nobel lecture, AER volume 98 (3) describes the debates between Lange/Lerner and Hayek/von Mises as the inspiration for mechanism design theory, starting with the work of Leonid Hurwicz. It seems this page could be improved by bringing in a more modern point of view that reflects how mechanism design has shed light on the economic calculation problem. Rinconsoleao (talk) 12:21, 4 January 2012 (UTC)
Shouldn't this really be under Socialist calculation debate (now a redirect, though the article lede pretty much admits that that is how it's known in the sources) since that's how this is known in the literature? A more general problem is that this is written from a very Austrian POV (Mises and Hayek refuted Lerner and Lange and all that) rather than presenting a balanced overview. As it happens I actually do think that Hayek and Mises did do a good job of refuting the "market socialism" argument, but this article is so skewed towards their view it's a bit embarrassing. In terms of a general clean up of that NPOV issue, I don't even know where to start.Volunteer Marek
Or to put it another way, the Socialist calculation debate was a debate between two sides. This article is named after - and focuses on - the arguments put forth by one of the sides. That's not balanced.Volunteer Marek 02:42, 21 January 2013 (UTC)
I would like added in this article examples of how the Soviet Union had economic calculation.
What actually happens is that “world prices,” i.e., capitalist world prices, are used in all intra-[Soviet] bloc trade. They are translated into rubles . . . and entered into bilateral clearing accounts. To the question, “What would you do if there were no capitalist world?” came only the answer “We’ll cross that bridge when we come to it.” In the case of electricity the bridge is already under their feet; there has been great difficulty in pricing it since there is no world market. (Wiles, “Changing Economic Thought in Poland,” pp. 202–03)
http://mises.org/rothbard/mes/chap12d.asp
chapter 12 Footnote 72 of "Man Economy and state" by Murray Rothbard
I think this is extremely important. The Austrian view, of course, is that the Nazis and Soviets were as successful as they were because they could copy prices from the capitalistic world.
Also there should be some and references to the article "Socialism: Still Impossible After All These Years" which talks about the Soviets themselves admitting the problem of economic calculation and the problems they had in creating a moneyless society also from the article "Economic Calculation in the Socialist Commonwealth" where Mises talks about how Lenin wanted to spread statistics to the masses because of the problem of economic calculation. The article has a section on theory and criticisms but should have a whole section on concrete examples.
From "Economic calculation in the socialist commonwealth" page 31 he is quoting Lenin. Mises says that Lenin gives a most unsatisfactory answer to how economic calculation is to be carried on. This is an important quote to add to a new section because it reveals the Soviet need for economic calculation
http://mises.org/pdf/econcalc.pdf
bring statistics to the masses, make it popular, so that the active population will gradually learn by themselves to understand and realize how much and what kind of work must be done, how much and what kind of recreation should be taken, so that the comparison of the economy’s industrial results in the case of individual communes becomes the object of general interest and education.29
Also from "Socialism: Still Impossible After All These Years" by Peter J. Boettke and Peter T. Leeson
http://mises.org/journals/scholar/Boettke.pdf
Quoted from page 17:
Why this tremendous failure? If we are to take the quotations from Lenin, Bukharin and others from above seriously, the issue of calculation, not incentives, stood at the center of socialism’s ability to perform. Thus as the historian of War Communism, Lancelot Lawton pointed out, War Communism’s failure stemmed from its “disregard of economic calculation” (1932 I, 107). The “attempts of the Bolsheviks to establish moneyless accounting ended with no accounting at all.” Thus in striving “to make all men wealthy, the Soviet state had made it impossible for any man to be otherwise than poor” (1932 I, 111). This reason for War Communism’s failure was reiterated by the Russian economist Boris Brutzkus as well. Writing near the end of the War Communist period in 1920, he put it this way: the attempt to substitute a central plan for the spontaneous process of market evaluation led to the “atrophy of economic calculation” in the Soviet Union. The failure of War Communism resulted from the fact that it “no longer possesses the sensitive barometer provided by the market prices” (1982, 37). And in the aftermath of the failure of War Communism, Nikolai Bukharin himself stated that Mises was “one of the most learned critics of communism” and that the economic catastrophe that was evident in 1921 did resemble the picture “predicted” by Mises. (1925, 188)15 — Preceding unsigned comment added by Gravyten577 (talk • contribs) 02:36, 14 April 2013 (UTC)
— Preceding unsigned comment added by Gravyten577 (talk • contribs) 02:14, 14 April 2013 (UTC)
SPECIFICO talk 02:33, 14 April 2013 (UTC)
K thanks I will look into it. Would you say that it is false that the Soviets relied on the capitalistic countries for prices. Rothbard gave a quote from someone supposedly viewing what was really going on and when this person asked what would they do if there was no capitalistic world the response was “We’ll cross that bridge when we come to it.”
Of course this could be pro capitalistic propaganda.
In the book "Human Action" on his chapter on the impossibility of economic calculation under socialism section 2 Mises claims that if it weren't for the ability to refer to foreign prices the Nazi and Soviet regimes would become "planless". Even if one disputes the truthfulness of this statement this is what the Austrian economists believe so should be added in a section in this wiki article.
http://mises.org/humanaction/chap26sec2.asp
An apparent verification of these errors was seen in the experience of the socialist governments of Soviet Russia and Nazi Germany. People do not realize that these were not isolated socialist systems. They were operation in an environment in which the price system still worked. They could resort to economic calculation on the ground of the prices established abroad. Without the aid of these prices their actions would have been aimless and planless. Only because they were [p. 703] able to refer to these foreign prices were they able to calculate, to keep books, and to prepare their much talked about plans. — Preceding unsigned comment added by Gravyten577 (talk • contribs) 03:03, 14 April 2013 (UTC)
— Preceding unsigned comment added by Gravyten577 (talk • contribs) 02:43, 14 April 2013 (UTC)
Your right the problem isn't about the debate but the actual problem. Nikolai Bukharin was a Soviet economist and apparently agreed with Mises about the problems of economic calculation
If I understood correctly, the article states that if a Turing Machine can simulate any other Turnig Machines, central planing should be in no disadvantge to a descentralized one. I see many problems with this:
- It assumes humans are turing machines, which is highly debatable to say the least. We're yet to see a Turing Machine having or expressing desires, for instance, an important factor in economics.
- It assumes central planners will have the same amount of information than the group of descentralized consumers - it's akin to say that it's completely possible to know beforehand if a new prodcut would be sucessful. Actually, it's much more bold than that since we're not talking about a single product, but the whole economic production.
- It blatanly ignores that while one Turing Machine can, indeed, simulate all others Turing Machines, it will take time in doing so. By the time the central planners finished evaluating every person from its population, even if we assume they have an intimate knowledge of every citizen wishes and needs, these wished and needs, along other external economic variables (technology available, climate, foreing trade opportunities, etc) will have changed too, rendering the previous analysis outdated.
I could write more, but I believe this is sufficient to show that, while it seems cool to use a Turing Machine analogy, it simply doesn't hold. — Preceding unsigned comment added by 179.209.62.165 (talk) 03:26, 27 July 2014 (UTC)
This blog has reviews of Mises and says that his theories don't apply to a mutualist or Ricardian type economy of workers owned companies in a market economy because there are still price singles involved. It seems relevant
http://socialdemocracy21stcentury.blogspot.com/2012/10/mises-on-rational-economic-planning.html — Preceding unsigned comment added by Ultan42 (talk • contribs) 21:06, 31 July 2014 (UTC)
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Cockshott and Cottrell's approach described in Towards a New Socialism is old, as well as the criticism it received. I took the liberty of including an essay by Cosma Shalizi on why the economic calculation problem is insurmountable published in 2012, as well as mentioning the upcoming book by Leigh Phillips on why corporations like Amazon and Walmart are existing examples of large scale centrally planned economies as a placeholder, once the book is released hopefully it'll generate discourse that can be included — Preceding unsigned comment added by 136.153.22.2 (talk • contribs) 04:33, 10 August 2018 (UTC)
This fragment doesn't represent a relevant opinion in the issue. Left-anarchists and another ones have a very fringe position about economic calculation problem that nobody cares in the main scholar discussion (who in Economics talks about Proudhon, Kropotkin or Malatesta? - Malatesta indeed was just a writer of manifestos not an scholar in anyway). Also, it is so no-pertinent that it doesn't talk really about economic calculation problem (prices and entrepreneurship) but about "centralization" problems in organizations that is not the same issue.
"However, it is important to note that central planning has been criticized by socialists who advocated decentralized mechanisms of economic coordination, including mutualist Pierre-Joseph Proudhon and anarcho-communists Peter Kropotkin and Errico Malatesta before the Austrian school critique. Central planning was later criticized by socialist economists such as Janos Kornai and Alec Nove. Robin Cox has argued that the economic calculation argument can only be successfully rebutted on the assumption that a moneyless socialist economy was to a large extent spontaneously ordered via a self-regulating system of stock control which would enable decision-makers to allocate production goods on the basis of their relative scarcity using calculation in kind. This was only feasible in an economy where most decisions were decentralised.[3]"
--Krapulat (talk) 13:37, 24 January 2019 (UTC)
I have move this:
"Central planning was later criticized by socialist economists such as Janos Kornai and Alec Nove. Robin Cox has argued that the economic calculation argument can only be successfully rebutted on the assumption that a moneyless socialist economy was to a large extent spontaneously ordered via a self-regulating system of stock control which would enable decision-makers to allocate production goods on the basis of their relative scarcity using calculation in kind. This was only feasible in an economy where most decisions were decentralised.[3]"
To the part of the article that is hide, about "central planning". And is hide because other editors have realize that economic calculation (prices) is not the same that central planning problems. Both could have issues in common but in Economics is not the same. --Krapulat (talk) 13:52, 24 January 2019 (UTC)
Here's an economic calculation problem solved within RBE which unfortunately hasn't been addressed here at all:
https://www.youtube.com/watch?v=77wGCsVe2Ik - Douglas Mallette - Science, Engineering and Technology for Human Concern
https://www.youtube.com/watch?gl=SN&page=1&hl=fr&v=IVUz6uUi9AU - Resource Based Economy vs. Libertarianism
https://www.youtube.com/watch?v=hxjwBZjADiM - Freedomain Radio Debates The Venus Project/Zeitgeist Moving Forward
https://www.youtube.com/watch?v=K9FDIne7M9o - Economic Calculation in a Natural Law / RBE
Also books TZM Defined and The New Human Rights Movement: Reinventing the Economy to End Oppression (2017) provide comprehensive data on how RBE works. Cheers! — Preceding unsigned comment added by Badmaan (talk • contribs) 00:06, 20 February 2019 (UTC)
I just saw User:Adakiko's revert of Paul Cockshott's reply to Cosma Shalizi. Since we prefer peer reviewed academic sources, should not also Shalizi's post be removed? It too just cites a blog post. Personally I think the debate is interesting, but two blog posts are perhaps not up to snuff.. KetchupSalt (talk) 10:27, 21 March 2022 (UTC)