StuartW2020
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Dan’s reply:
Dear all
Thanks for the responses to the article. Let me start with the point made by Bijou Drains about the inefficiencies, or ‘externalities,’ of the market. As they say, in the worst cases, this can mean a tragic, avoidable loss of life. I agree with you that in assessing the possibility of a socialist alternative to capitalism, it is a matter of weighing these market failures and the inequalities of capitalism against the scale and significance of any failures/ inefficiencies that might occur under socialist planning. A speculative argument can be made that the scale of any failures/ inefficiencies under socialism would be relatively modest compared with the scale of inequalities and market failures under capitalism. What we are talking about here, as you say, is an attempt to compare the extent of failures, inefficiencies under two different systems.
Reading through some of the further points, they reaffirm my view that, as we argue in the article, it is useful to distinguish between ‘supply’ and ‘demand’ side calculation (if we can be forgiven for using this arguably ‘bourgeois’ terminology (!).
The demand side, as we define it, concerns the process of deciding upon a target set of final goods and services/ outputs to be produced. I agree that such decisions require consideration of a range of qualitatively different criteria, and should not be left entirely to a single numerical indicator such as the monetary prices generated by markets. Of course, even under capitalism, states have a role in providing public goods (education, health, green spaces, etc) and decisions about them are not left entirely to the market. As we argue, political/ democratic processes and other kinds of institutions/ non-market processes have important capacities for addressing demand side calculation.
I should point out here as well that, such non-market processes of decision-making are also needed for the necessary task of setting constraints on the use of resources (e.g. pollution limits, limiting the use of non-renewable resources, etc). I would agree that such important decisions need to be made in-kind.
Again regarding demand side calculation, some of you have commented on Philipp Dapprich’s case for tokens. It’s a while since I read his article and I’m not going to express a view here on the arguments for and against this proposal, compared with the free access proposal of the SPGB.
Where I would wish to express a strong view here is on the supply side calculation problem as defined by the article, following Mises’ original definition of the problem. i.e. how to choose a set of production methods, once the above forms of calculation have been addressed – i.e. a target set of outputs is defined and factor constraints established.
Amongst the various posts, DJP gives a direct response to this calculation problem. This is to accept that the non-market production model put forward by the SPGB, based on calculation in kind, would suffer inefficiencies but such concerns are dwarfed by the scale of market failures and inefficiencies under capitalism. This view accepts the validity of the supply side calculation problem yet understandably places it in a wider context.
While DJP does honestly and directly respond to the supply side problem, I just question how widely convincing such a response can ever be. Those who are sceptical about the feasibility of socialism can reply along Austrian lines by emphasising the vast complexity of supply side resource allocation in modern economies. How, they can ask, would producers decide on which production methods to adopt, given the vast array of different factors of production, in the context of ever-changing supply and demand, etc etc….
In my view, proponents of non-market socialist planning can do better than DJP’s response to this supply side calculation argument (and better than that of the SPGB in general). I agree with the approach of Young Master Smeet which is to acknowledge the significance of Kantorovich’s work. Kantorovich sought to develop a computational approach, implicitly acknowledging the significance of the supply side problem as Mises defined it. As our article points out, computational technology and techniques have of course moved on since Kantorovich’s time beyond anything he could have dreamt of. As we comment in the article, machine learning/ AI techniques, combined with vast increases in computing power, have completely transformed the capacity for solving highly complex optimisation problems.
Ironically, both the Austrians and the SPGB seem to have one characteristic in common. Both are dismissive of the implications of these computational advances for the question of the feasibility of non-market, socialist planning. Our approach is to challenge both positions. We start from a recognition of the significance of the supply side problem defined by Mises. We then challenge the Austrian argument that the problem is necessarily insoluble on philosophical grounds. Our point is that the question of the solubility of the supply side problem is a contingent one. While perfect optimal planning seems impossible, adequate, adaptable forms of non-market planning may well be feasible. Our main argument in the article is that computational advances provide grounds for expecting that a system of supply side calculation for complex modern economies is feasible (though there is still much scope for developing working systems that would demonstrate this more fully).
Once the solubility of the supply side calculation problem is recognised and further demonstrated ( a point which I’d suggest requires significant further work – the problem is not a trivial one!), the debate can move on to questions about the demand side, which forum members here have, perhaps understandably, found to be much more interesting!
I realise that the above does not respond to Stuart’s post which raises important questions but I just thought I should focus on defending the main point of our article, at least for now….
Best wishes
Dan
Dan says he will respond next week when he finds time so I’m going to post a question for him here.
The managers or the democratically elected committee or whatever or whoever it is that is in charge of a productive unit in a planned economy must make decisions about how much of what to make, in what quantity, with what materials, and so on. If the goal is to hit targets or measures of some kind, whether set centrally or gathered from dispersed data, then we can expect them to do that, but with consequences that follow Goodhart’s law. The famous, oft-cited example is in the Soviet Union, where a demand from the centre that factories produce a greater tonnage of nails, say, would lead to the production of heavier but completely useless nails. We can expect all kinds of things from production for use, in the other words, except that the result will be useful things (when we’re talking about industrial-scale production anyway).
The manager or board of a productive unit in a market economy, or an entrepreneur seeking to do better than existing production units or to create something new, on the other hand, and tasked with increasing profit, must discover in some way just what it is customers want, and what they are prepared to pay for that thing or service they want in comparison with other things they want, and provide it at less cost than it takes to make, etc, and have very clear and strong incentives to do this or lose their shirt. This seems like a very straightforward and simple task to everyone apart from those who ever try it. But however hard or straightforward, the process is guided at every step of the way by market prices. Without them the task is not hard but impossible (at least if we care that we have a factory full to the brim with useless tartan paint while the fertiliser factory down the road goes without key raw materials).
My question, at last, is this: how does replacing the manager or the committee or the central planning board with a calculator, even a very whizzy and complicated calculator, even a calculator that does a very good impression of being able to have a chat with you, change any of this?
If your paper answers this question, apologies. I did read it but in a hurry. I will give it closer attention when time permits, hopefully next week!
Thanks Dan, look forward to your reply
Have just got round to reading Dan’s article, and I find it hard to fathom how a fair-minded socialist reader could fail to find material of interest. There’s no accounting for taste I suppose. Or is there?
Left Unity is still going, but I should imagine it’s much smaller than it was at its peak. It kind of lost its point when Jeremy Corbyn was elected leader of the Labour Party, and many left then I believe. But I don’t pay much attention.
My underlying point is that for youse socialist ideas provide a source of Absolute Truth that you organise your life around. I don’t accept socialist ideas and am these days more liberal/conservative, but I don’t see in liberal or conservative or indeed any ideas a source of Absolute Truth, only relative truth, always subject to revision and ifs and buts and maybes. (Some of the pro-capitalists and conservatives I write about are making the equal and opposite mistake, true. The structure is the same, the specific content can always be changed.) The trouble with organising your life around socialism as a source of Absolute Truth is that in truth it is not a source of it at all, and it’s not up to the job. Ideology is the raft you are using to get you across the ocean of life, so it makes you edgy and angry when people start rocking it and undoing the ropes that hold it all together. The question of what kind of rafts might do a better job of getting us across the stormy seas of life I leave as an exercise for the reader.
Anyway, I’ll leave it there as I’d hate to outstay my welcome (if indeed one was ever offered!). If I ever get the opportunity to write a sympathetic but critical analysis of the SPGB’s position for any publication – something I might be happy to do, but I’m not sure what the angle could possibly be for the one I write for – I shall be sure to let you know.
Happy 120th birthday for June!
What I’m saying is, if I saw Robbo and Adam and Older Master Smeet in black shirts, linking arms and goose-stepping down the street on a fascist demonstration, I wouldn’t run after them and try to force an “Introducing the SPGB” leaflet on them. I’d probably just think, hmm, how interesting, I wonder whatever happened to them?
You all seem to be strangely unaware of two pretty obvious facts. First, I was once a member of your party, and have heard it – and enthusiastically embraced it – all before. No one seems at all curious about that fact. Second, I am a journalist writing for a particular audience, using language that I expect they would understand and making arguments that I hope they find informative, interesting and diverting. I am not writing a propaganda pamphlet addressing socialists, nor am I, as I have said, as ideologically attached to the opinions I write about as you are to yours. In some of my pieces, I give equal weight to two or more completely contradictory arguments. You might sometimes guess my own opinion or commitment from the attempted synthesis of the two, but not always. In fact, I learnt how to write for a certain audience whose views I may or may not share without overemphasising my own possibly heretical take while writing for the Socialist Standard. You may have heard of it. Anyway, as ever, thank you for your interest!
I’m closing up digital shop now for Christmas, or for the holiday period as I guess you’d prefer me to call it, so I shall say farewell again. It was nice to hear from you all. You might be interested to hear that these Dan and I are in a reading group with another ex-socialist who has gone funny, Dave Flynn, and another friend of ours. We are reading the classics of liberalism and political economy, perhaps working up to Capital. Some things, you see, never change! With best wishes to you all and hoping you all have a happy and prosperous, er, holiday period, Stuart
The magazine is no longer owned by Bill Bonner, not that it matters. And if you think you can make “big bucks” in journalism, then I suggest you try it. Perhaps tell us how it went from your pad in Monaco.
“Perhaps Stuart in his next “Moneyweek” article might care to address this model of a socialist society that socialists like us advocate rather than some bogus model that few if anyone actually advocates”
One final thing is that what I say in the few articles I have written about this subject are completely uncontroversial to almost everyone, including most economists and socialists. The burden of proof is very much on you and the tens of people who agree with you. Perhaps write a book about it? I’ll review it when it comes out.
“he shifts the goalposts to say that this required tyranny to achieve”
That is closer to what I think than I have had the opportunity to say in my articles. Socialism is I’m sure in fact possible, but be careful what you wish for.
https://www.acton.org/religion-liberty/volume-33-number-2/3-things-you-need-make-socialism-work
“Since you are so unexpectedly gracing this forum with your presence, perhaps you would reply to point (2)”
I couldn’t see an actual question to respond to ZJW, but you and Robin seem to be confused how someone who once held to one set of ideas now holds to another. Surely that is not so surprising? The universe is infinite and our minds are limited and partial so all ideas are going to be wrong in some sense. Knowing that, we can listen to people we disagree with and learn something, rather than assuming that they must be bad-faith actors will evil intentions.
“people like Stuart droning on about the Hayekian “knowledge problem””
I think I’ve written about it twice, maybe three times, in my whole life. Robin, on the other hand, really has been droning on about it for, what, five decades?! Fair enough, it’s an interesting subject, but the mistake you are making is in thinking that I am as ideologically committed to the opinions I write about as you are to yours.
“I wonder what the market price is to write an article in Moneyweek, this might explain the deficits in their work.”
Mouths stuffed with gold? Hah! If only! But if you hate this review, you should avert your gaze from the Christmas issue, out Thursday. As ever, thanks for your interest and best wishes to you all
