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…
The big corporations already command a wide variety of industries. And different kinds of industries coordinate with each other, even if they are different corporation. Think just-in-time delivery of raw materials to manufacture a final product.
We also do have access to virtually unlimited amounts of data. Sure, some of it is not exactly useful, but much of it is. And we also have the technology to harness it.
A planned economy also wouldn’t have to be more efficient in the same way. The point wouldn’t be to achieve infinite growth, but to reach societal goals. Build X amount of housing. Make sure that enough food is available everywhere. Coordinate relevant industries in the fight against cancer. For most things, you wouldn’t need to coordinate the entirety of the economy, at least not directly. Just the relevant parts in the relevant region. And if conditions change, you adapt the plan. A good plan is flexible.
A free market is not really different from a plan, in that sense. The two problems I see with free markets are that the aim is always, to some degree, growth and profit, and the competition. Having a choice, at least for consumer goods, is great. Not everyone likes the same apples or clothes. And the USSR had some bad experience with entirely removing branding, and therewith accountability, from things like bread. But with the need to outcompete each other, the alternatives waste so many resources on branding and marketing rather than making their products better. Those resources could be employed much more productively.
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.
anarchosyndicalism ftw
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…
The big corporations already command a wide variety of industries. And different kinds of industries coordinate with each other, even if they are different corporation. Think just-in-time delivery of raw materials to manufacture a final product.
We also do have access to virtually unlimited amounts of data. Sure, some of it is not exactly useful, but much of it is. And we also have the technology to harness it.
A planned economy also wouldn’t have to be more efficient in the same way. The point wouldn’t be to achieve infinite growth, but to reach societal goals. Build X amount of housing. Make sure that enough food is available everywhere. Coordinate relevant industries in the fight against cancer. For most things, you wouldn’t need to coordinate the entirety of the economy, at least not directly. Just the relevant parts in the relevant region. And if conditions change, you adapt the plan. A good plan is flexible.
A free market is not really different from a plan, in that sense. The two problems I see with free markets are that the aim is always, to some degree, growth and profit, and the competition. Having a choice, at least for consumer goods, is great. Not everyone likes the same apples or clothes. And the USSR had some bad experience with entirely removing branding, and therewith accountability, from things like bread. But with the need to outcompete each other, the alternatives waste so many resources on branding and marketing rather than making their products better. Those resources could be employed much more productively.