He’s talking about a well known “issue” in Marxist economics called Economic Calculation Problem. Mises assholes love this one. The issue is it has been solved… by capitalism. We have planned economics through vertical integration of suppliers of major chains, like Walmart. There is even a book about it called The People’s Republic of Walmart that explores how companies like Walmart and Amazon solved this issue. If it were a problem, vertical integration of suppliers would not work and yet it does and their own economists praise it’s success. Yet somehow when the same exact thing is done under socialist systems it is claimed to be something that goes against all rules of the “market”.
These people love to claim that communist countries were wasteful and inefficient, and that their logistics led to gluts and shortages. Guess what, they were, but it was a limitation of the current state of computing and operations science. With current forecasting, warehousing and container logistics a country like the USSR could be much better off than doing bulk or truckful logistics, like we stopped doing roughly 40 years ago.
After the revolution, distribution centers and ports wouldn’t suddenly stop working. The incentive structures would radically change, but the operations, not so much.
All this is Viable Systems Theory which is just a capitalist business adaptation of cybernetics. Capitalists murdered communist cybernetic projects that would have been a worker owned version of Amazon by the 80s. They then stole the research and adapted it into a capitalist business management philosophy.
It should be suspicious that not one single firm within the market is organized the same way the market is. If markets and the price motive are the best way to decide how to allocate resources, why don’t any of the agents actually making the decisions within the capitalist economy use markets within themselves to make those decisions? Sears famously tried this and the company immediately cannibalized itself.
One of the biggest examples was Sears under Eddie Lampert whose internally-competitive business units, among a couple other factors, basically destroyed the company.
Someone else mentioned it in this thread, but they cover it in the book “People’s Republic of Walmart” but I suppose you could find books or articles about the Sears example specifically. I’m not really aware of any other big corporate names trying it.
Project Cybersyn showed how this would be solved 50 years ago.
The EC problem is about rational actors that just endless consume things according to shit like supply and demand when in reality you could make food free and it doesn’t mean a single person, let alone an entire society will start shoving entire food trucks into their garage just in case they’ll need 1 ton of potatoes this week. People only tend to consume what they need, once scarcity is not an issue nobody is going to hoard enough to make a large scale difference. Human demand is in fact very simple, people will not demand 1 billion different brands of tomato sauce, specialy if they could make their own etc… There is so many things that prove the EC is just nonsense.
The even bigger problem is even how much is wasted and thrown away under capitalism. They justify not making things free because people might hoard yet the entire economic system is about literaly throwing food away or letting it rot to maintain price.
That and combined with advertising which manipulates human psychology to consume stuff that is clearly not economically beneficial to anyone.
Among other issues the problem with the USSR was they did not achieve this level of complete abundance though in any case the EC is just ideologically bankrupt shit, how they can argue the African poverty doesn’t disprove the free market efficiency but random shortages in socialist countries disproves Marxism.
let alone an entire society will start shoving entire food trucks into their garage
This can be a problem in specific conditions. For example in 1980 Poland suffered mass strikes (of course funded and helped by CIA via the church) which caused shortages in economy not based on overproduction. Prices were low so people started hoarding necessities which further increased the shortages.
He’s talking about a well known “issue” in Marxist economics called Economic Calculation Problem. Mises assholes love this one. The issue is it has been solved… by capitalism. We have planned economics through vertical integration of suppliers of major chains, like Walmart. There is even a book about it called The People’s Republic of Walmart that explores how companies like Walmart and Amazon solved this issue. If it were a problem, vertical integration of suppliers would not work and yet it does and their own economists praise it’s success. Yet somehow when the same exact thing is done under socialist systems it is claimed to be something that goes against all rules of the “market”.
having vivid flashbacks to my time at university learning about strategic business management (it’s a 5 year plan)
These people love to claim that communist countries were wasteful and inefficient, and that their logistics led to gluts and shortages. Guess what, they were, but it was a limitation of the current state of computing and operations science. With current forecasting, warehousing and container logistics a country like the USSR could be much better off than doing bulk or truckful logistics, like we stopped doing roughly 40 years ago.
After the revolution, distribution centers and ports wouldn’t suddenly stop working. The incentive structures would radically change, but the operations, not so much.
All this is Viable Systems Theory which is just a capitalist business adaptation of cybernetics. Capitalists murdered communist cybernetic projects that would have been a worker owned version of Amazon by the 80s. They then stole the research and adapted it into a capitalist business management philosophy.
The person who came up with it, Stafford Beer, was the lead cybernetician for Project Cybersyn a few years earlier.
Wow
It should be suspicious that not one single firm within the market is organized the same way the market is. If markets and the price motive are the best way to decide how to allocate resources, why don’t any of the agents actually making the decisions within the capitalist economy use markets within themselves to make those decisions? Sears famously tried this and the company immediately cannibalized itself.
Ok that sounds very interesting. Are there any good books or articles about it?
One of the biggest examples was Sears under Eddie Lampert whose internally-competitive business units, among a couple other factors, basically destroyed the company.
Someone else mentioned it in this thread, but they cover it in the book “People’s Republic of Walmart” but I suppose you could find books or articles about the Sears example specifically. I’m not really aware of any other big corporate names trying it.
https://www.bloomberg.com/news/articles/2013-07-11/at-sears-eddie-lamperts-warring-divisions-model-adds-to-the-troubles
https://www.salon.com/2013/07/18/ayn_rand_killed_sears_partner/
Thanks!
Project Cybersyn showed how this would be solved 50 years ago.
The EC problem is about rational actors that just endless consume things according to shit like supply and demand when in reality you could make food free and it doesn’t mean a single person, let alone an entire society will start shoving entire food trucks into their garage just in case they’ll need 1 ton of potatoes this week. People only tend to consume what they need, once scarcity is not an issue nobody is going to hoard enough to make a large scale difference. Human demand is in fact very simple, people will not demand 1 billion different brands of tomato sauce, specialy if they could make their own etc… There is so many things that prove the EC is just nonsense.
The even bigger problem is even how much is wasted and thrown away under capitalism. They justify not making things free because people might hoard yet the entire economic system is about literaly throwing food away or letting it rot to maintain price.
That and combined with advertising which manipulates human psychology to consume stuff that is clearly not economically beneficial to anyone.
Among other issues the problem with the USSR was they did not achieve this level of complete abundance though in any case the EC is just ideologically bankrupt shit, how they can argue the African poverty doesn’t disprove the free market efficiency but random shortages in socialist countries disproves Marxism.
Reminds me of the joke:
In Soviet Russia they have bread lines for their free daily bread. They have these in America, too, they just have to pay for the free daily bread.
This can be a problem in specific conditions. For example in 1980 Poland suffered mass strikes (of course funded and helped by CIA via the church) which caused shortages in economy not based on overproduction. Prices were low so people started hoarding necessities which further increased the shortages.