Alan Ryan said:
I don't think I've "unwittingly" described anything. I have tried, perhaps not as competently as might be desirable, to show that the economic calculation which is performed spontaneously by the market is impossible in a socialist economy because there is no way in which central planners can obtain the vital information ("produce this - not that") that is required in a coherent economy. If demand is taken out of the equation, the signaling mechanism which transmits information about rise and fall in prices cannot function and a centralised planning system must fail as a consequence.
Have you been reading up on the Soviet economy? you seem to contuinually refer to the problems of centralized planning, even though I've consistently agreed that such impersonal planning will always be doomed to failure (as proven by almost every Stalinist nation during the 20th century). With localized planning, changes in production can be made much more quickly, and so demand can be used to determine the required supply. Tendencies can certainly be easily noticed in the sales of any particular good. Realize also that a socialist economy is still a market economy. It is not, however, a 'free market' economy. It is a
planned market economy. You also seem to give the market these 'magic' qualities which I referred to earlier. No market can 'spontaneously' adjust to demand of goods. In capitalism, however, demand will inevitably be optimistically viewed, as the drive for profit is the most prvalent drive in capitalism. Or, if you like, as I said, demand will be looked at with a bias. With competition among capitalists, it becomes almost impossible to view sales objectively. With hopes of gaining a profit, surpluses in capitalims become inevitable, as well as deficits, and so with these comes the inevitability of eventual economic recession in capitalism, in which workers are often hurt the most. Regarding prices, as I explain, prices are determined simply by the qualitative value of the labor of any particular good (as decided by the consuming public).
Alan Ryan said:
I have of course been assuming a macro-economic perspective - the salient characteristics of which you say don't apply to a localised micro economy. At this level of activity, you allege that prices could be determined by the labor theory of value and that (initially) only quantitative labor is involved in that value. But this idea neglects any consideration of scarcity and must reduce the qualitative difference of labor to quantitative differences. So what you mean by claiming that all labor will be done under similar standards is not clear. What's more, the labor theory of value provides no prediction of price levels unless one already knows the surplus value accruing to the supplier of each commodity.
Assuming that a "community economy" has confiscated at least the means of production and that there is a multiplicity of these micro economies subsumed within a macro economy, how would the small scale be integrated within the large scale ? Think of the vast complexity of the US economy; how would the localised planning systems you have in mind fit into the big picture ? You must remember that a huge number of apparently necessary commodities are produced only because large scale economies of production make them available at an affordable price in a national/continental market.
There is simply no way to 'reduce' the qualitative differences of labor to quantitative, since qualitative differences are not determined by the laborer (and thus his quantitative labor) at all. Qualitative value is only determined by consumers (which can certainly be misleading). I am unclear as to what you mean by 'scarcity'. Do you mean scarcity in the production process of materials? Is this problem not eliminated, or atleast drastically reduced, with a nationalized economy, which, without extreme competition prevalent in capitalism, be able to freely move materials where they are needed? When I say that all labor is done under similar standards, I mean that with a nationalized economy, regulation of factories will exist, and so the conditions of labor will be similar, meaning that quantitative value can be used for pricing. Today, a car produced in Mexico may take longer to build than a car produced in the US, we have no standard (because of the free market). With a regulated economy, standards neccesarily exist. I am unclear also as to your referral to 'surplus value' within socialism. Surplus value is only seen in capitalism, since that is the value the capitalist assumes that should go to laborers (laborers always produce more value than they receive). In socialism, we should see surplus value disappear.
There are few items that
must be produced by such large scale economies, and so must production, and thus planning, can be assumed by the local planning systems. But those that cannot will neccesarily be done by the federal or regional government (hopefully the latter, since we want planning to be extremely limited at the federal level). The way all this localized planning would fit into the 'big picture' is through a slimmed bureacracy (some socialists say a bureacracy would not be needed in socialism, but I see one as neccesary...but then again I often find myself disagreeing with socialists). That is, the bureacracy would only consist of four levels: the local workplace which would work closely with the next level, the local government; and then the regional government, which would essentially oversee this production, only interfering if a problem is noticed that has not been accounted for, and also for distributing raw materials to local workplaces as evenly as possible. The regional governments will be aided in such distribution by the federal government, which will oversee the work of the regional governments. The regional and federal governments also must assume such larger scale economies of production that you mention. These will, as stated, be limited.
AlanRyan said:
A planned system doesn't operate this way: consumer choice is, as it were, "second-guessed" by the planners. In a market society every individual mind is accorded a role in determining the quantities of monetary calculation. In their consumer roles, all people make monetary bids for the existing stocks of final goods according to their subjective valuations, leading to the emergence of objective monetary exchange ratios which relate the values of all consumer goods to one another. However, once private property in the nonhuman means of production is abolished, as it is under socialism, the process of subjective valuation must grind to a halt. In the absence of competitive bidding for productive resources by entrepreneurs, there is no possibility of assigning economic meaning to the amalgam of productive potential embodied in each of the myriad of natural resources and capital goods now in the hands of the socialist planners
You do yourself much trouble by so separating the consuming public from economic planners. The consuming public, most of whom are laborers, will have a large role in economic planning. I have in other discussions with capitalists described a system of workers in any workplace electing a spokesman from their workplace, who in turns works closely with an 'economist' (who acts as a bridge between these local workplaces and the local government) to determine production changes. This will involves almost all of the consuming public (I think all of them, just I will not be so all encompassing). Consumers have a large role in planning, and planners are also consumers.
AlanRyan said:
For the reasons I've given, the "economic calculation" I'm referring to is only possible in a market economy.
Here's the flaw that some see in the logical basis of the calculation problem: if the optimum settings for an economic activity are a mystery that planners cannot penetrate, how can it be known that the market can provide them ?
Why would the 'optimum settings' for economic activity be a mystery which the planners cannot penetrate? With minor 'tinkering' of production based on sales (which represent demand), this optimum setting will be reached (although it will likely disappear shortly, and that is why this 'tinkering' must happen often). Also, remember that a socialist economy is a market economy.