I haven't gotten past the first few pages yet, but I'd like to point this out: Towards a New Socialism fleshed out a pretty convincing planning/pricing model back in the early 1990's to resolve...
I haven't gotten past the first few pages yet, but I'd like to point this out:
Market pricing has long been lauded for its ability to enable complex forms of social coordination with little or no central planning. From the 1920s, in what would later be known as the Socialist Calculation Debate, Mises and Hayek had famously argued against their left-wing adversaries that it was the absence of the price system that doomed socialist central planning.
Towards a New Socialism fleshed out a pretty convincing planning/pricing model back in the early 1990's to resolve this issue.
The 1000ft overview is that with the increases in computing power (as of 1990) we've hit a tipping point where it should be viable to use Labor Tokens as the replacement for money (think state-issued ticket, not a transferable currency). By connecting Input-Output tables for every single industry (data we certainly have now thanks to ERP systems), we can calculate Labor cost that was needed to make any given product, all the way down to the pens/paper used to record notes. This is even more true today, almost 30 years later, where we have desktop computers capable of doing this processing, and even more powerful server and distributing computing power. This data would serve as the foundation for central planning. Taxes would be factored into the issuance of Labor tokens, such that important services that don't directly produce goods, such as education, would still be funded and paid.
The real tie to this quote however, is that for distribution of consumer goods, the prices are set according to market demand, not strictly to the Labor Token costs. Thus, high-demand items will have prices raised and more resources allocated later to increase supply. Low demand item prices will be lowered, sometimes sub-cost, and their resources reduced or eliminated entirely (in the event of a defunct good).
Yes, we have a lot more computing power than when the calculation problem was first discussed. However, as we've seen with the big tech companies and social media, having lots of computing power...
Yes, we have a lot more computing power than when the calculation problem was first discussed. However, as we've seen with the big tech companies and social media, having lots of computing power doesn't necessarily result in good decisions, and opaque algorithms result in distrust.
I'm doubtful that "calculation" is the right way to frame it. Whenever you make a decision about whether to buy one thing versus another, you are exercising power. So this isn't just a calculation, it's a power game.
That isn't to say the way people decide things now is all that great, but I think we should be as wary about changes to the "buying algorithm" as we are about changes to the "voting algorithm." Controlling the algorithm is powerful too.
I don't like most advertising, but in a way, the fact that powerful companies need to advertise to the masses is proof of the power that they (we) collectively have, similarly to the way that political advertising shows that politicians do care what voters think. I would get worried about a system where they don't think they need to advertise anymore because it means we've lost power.
After reading the article more and seeing how it diverges more into the algorithms, I have to say I largely agree with your points given how the article framed the issue. I don't think algorithms...
having lots of computing power doesn't necessarily result in good decisions, and opaque algorithms result in distrust.
After reading the article more and seeing how it diverges more into the algorithms, I have to say I largely agree with your points given how the article framed the issue. I don't think algorithms as described are really necessary for planning itself. To do calculations as I described, you mostly just need wages paid, hours worked, invoices and sales information. All of which are now conveniently packaged up electronically for the vast majority of medium and larger companies. Before 1990, all of this data aggregation was impossible because it did not exist electronically, and we didn't have globally spanning computing networks to process it. Once you have that data, central planning decisions can be made (by humans!) based upon the market demand for goods produced.
Planners would no longer be busy setting input prices or output quotas, as earlier generations of socialist economists might have advocated
The system I saw described in Toward A New Socialism was a proposal of the opposite: Planners set input quotas, ala a budget (You are allocated X labor) and the output prices are determined by market demands. The planning is then done by trying to normalize prices, by decreasing budgets for the following cycle to lower production and increasing budgets to stimulate it.
Algorithms themselves don't really need to play a role, certainly not as much as the consolidation of the aggregate data and summing/dividing as needed. If they did; they should certainly be publicly visible, reproducible, and auditable to prevent the issues you describe.
Not quite. Again, this was a broad simplification. If you would like the additional details, read the book. It covers the importance of democracy, and how our capitalism system is quite lacking in...
Not quite. Again, this was a broad simplification. If you would like the additional details, read the book. It covers the importance of democracy, and how our capitalism system is quite lacking in it.
Here is an excerpt which highlights some of the differences between our current market economics and socialist market economics:
Market prices are used as a cost indicator in capitalist countries, but they have a certain arbitrary character. An artist dies in poverty. A few decades later his pictures change hands for millions. A sudden panic hits the stock markets. In a matter of hours hundreds of billions are wiped off stock prices. Farmers destroy crops because the prices are too low. Walk through the poor areas of a British or American city and you will see the pinched faces and stunted figures of people for whom food is too expensive.
Market prices are the plaything of supply and demand. Demand does not depend upon human need but upon ability and willingness to pay. This means that the distribution of wealth, whims and fashion all affect demand. Supply is subject to a more mundane constraint: the resources that go into making things.
A new Van Gogh painting requires the man himself. Where is he? The supply of original Van Goghs cannot increase. Their prices, the objects of subjective fancy, have no limit beyond the folly and vanity of the rich.
The supply of tomatoes depends upon labour, land, sun, water, greenhouses,oil, etc. Their costs of production are given by the state of agricultural technology and by the costs of the required inputs. Their supply is subject to objective constraints, which sets a limit to their prices.
We can never hope to have an rational measure of the present costs of a painting by Leonardo, but a socialist economy should have available to it some measure of the objective costs of different products. We could in principle measure costs in terms of any widely used resource. In an industrial economy,we might reasonably price goods in terms of the energy that went into their production. If society faced overriding constraints upon the amount of energy that it could use, perhaps for environmental reasons, then this might be a good way to price things. We advocate using labour time as the basic unit of account because we think that society is about people, and for the moment at least, how people spend their lives remains more important than any one natural resource.We will come back to the environmental arguments against relying too much upon this one measure in chapter 5.
I bolded a few points that are especially relevant now. Keep in mind this was written in 1991, well before some of our most catastrophic economic crises. Also before the climate crisis entered the public eye.
Isn’t the issue with this that new industries will not be able to be created unless they are state-sanctioned? Or, if you wanted to, say, be a painter, you’d have to persuade the state to...
Taxes would be factored into the issuance of Labor tokens, such that important services that don't directly produce goods, such as education, would still be funded and paid.
Isn’t the issue with this that new industries will not be able to be created unless they are state-sanctioned? Or, if you wanted to, say, be a painter, you’d have to persuade the state to compensate you for your work?
Regarding new industries, there's entire segments dedicated to it. The planning is broken down into macroeconomic and strategic planning. Macroeconomic is concerned with existing production,...
Regarding new industries, there's entire segments dedicated to it. The planning is broken down into macroeconomic and strategic planning. Macroeconomic is concerned with existing production, Strategic is concerned with improvement (education, R&D, etc).
One of the core concepts in the book is to reduce work required to produce the material goods society needs. By and large, painters are not one of those. That is not to say they are not important to society, but that there should be more painters by giving people more leisure time.
I haven't gotten past the first few pages yet, but I'd like to point this out:
Towards a New Socialism fleshed out a pretty convincing planning/pricing model back in the early 1990's to resolve this issue.
The 1000ft overview is that with the increases in computing power (as of 1990) we've hit a tipping point where it should be viable to use Labor Tokens as the replacement for money (think state-issued ticket, not a transferable currency). By connecting Input-Output tables for every single industry (data we certainly have now thanks to ERP systems), we can calculate Labor cost that was needed to make any given product, all the way down to the pens/paper used to record notes. This is even more true today, almost 30 years later, where we have desktop computers capable of doing this processing, and even more powerful server and distributing computing power. This data would serve as the foundation for central planning. Taxes would be factored into the issuance of Labor tokens, such that important services that don't directly produce goods, such as education, would still be funded and paid.
The real tie to this quote however, is that for distribution of consumer goods, the prices are set according to market demand, not strictly to the Labor Token costs. Thus, high-demand items will have prices raised and more resources allocated later to increase supply. Low demand item prices will be lowered, sometimes sub-cost, and their resources reduced or eliminated entirely (in the event of a defunct good).
Yes, we have a lot more computing power than when the calculation problem was first discussed. However, as we've seen with the big tech companies and social media, having lots of computing power doesn't necessarily result in good decisions, and opaque algorithms result in distrust.
I'm doubtful that "calculation" is the right way to frame it. Whenever you make a decision about whether to buy one thing versus another, you are exercising power. So this isn't just a calculation, it's a power game.
That isn't to say the way people decide things now is all that great, but I think we should be as wary about changes to the "buying algorithm" as we are about changes to the "voting algorithm." Controlling the algorithm is powerful too.
I don't like most advertising, but in a way, the fact that powerful companies need to advertise to the masses is proof of the power that they (we) collectively have, similarly to the way that political advertising shows that politicians do care what voters think. I would get worried about a system where they don't think they need to advertise anymore because it means we've lost power.
After reading the article more and seeing how it diverges more into the algorithms, I have to say I largely agree with your points given how the article framed the issue. I don't think algorithms as described are really necessary for planning itself. To do calculations as I described, you mostly just need wages paid, hours worked, invoices and sales information. All of which are now conveniently packaged up electronically for the vast majority of medium and larger companies. Before 1990, all of this data aggregation was impossible because it did not exist electronically, and we didn't have globally spanning computing networks to process it. Once you have that data, central planning decisions can be made (by humans!) based upon the market demand for goods produced.
The system I saw described in Toward A New Socialism was a proposal of the opposite: Planners set input quotas, ala a budget (You are allocated X labor) and the output prices are determined by market demands. The planning is then done by trying to normalize prices, by decreasing budgets for the following cycle to lower production and increasing budgets to stimulate it.
Algorithms themselves don't really need to play a role, certainly not as much as the consolidation of the aggregate data and summing/dividing as needed. If they did; they should certainly be publicly visible, reproducible, and auditable to prevent the issues you describe.
Not quite. Again, this was a broad simplification. If you would like the additional details, read the book. It covers the importance of democracy, and how our capitalism system is quite lacking in it.
Here is an excerpt which highlights some of the differences between our current market economics and socialist market economics:
I bolded a few points that are especially relevant now. Keep in mind this was written in 1991, well before some of our most catastrophic economic crises. Also before the climate crisis entered the public eye.
Edit: Cleaned up formatting from copy/paste
We already do though. Tons of assorted data being compiled and sent to various other entities, including the government.
Isn’t the issue with this that new industries will not be able to be created unless they are state-sanctioned? Or, if you wanted to, say, be a painter, you’d have to persuade the state to compensate you for your work?
Regarding new industries, there's entire segments dedicated to it. The planning is broken down into macroeconomic and strategic planning. Macroeconomic is concerned with existing production, Strategic is concerned with improvement (education, R&D, etc).
One of the core concepts in the book is to reduce work required to produce the material goods society needs. By and large, painters are not one of those. That is not to say they are not important to society, but that there should be more painters by giving people more leisure time.