Economic calculation problem - how serious is it?

[Ares Land]

Even then, I don't agree, and as you can see, some people in this thread have the minority view you describe.

I don't agree with him either but my point is, the book exposes conservative misgivings rather than libertarian lunacy (which I believe came later on.)

[Torco]

Why should we take seriously the theoretical ramblings of people whose declared method is "praxeology"? remember that their method is open anti-empiricist and anti-scientific: they just decide a priori that people are perfectly rational utility maximizers and then build their entire edifice of why-we-must-give-all-power-to-the-rich on that basis. I don't think it's serious at all. plus, empirically, planning works. the chinese and vietnamese economies are to a nontrivial degree planned (which is different from demonetized).

and even if the ECP was true: what does it even mean to be "efficient" ? does it include paying as little as possible to workers so that people who aren't workers can get as much stuff as physically possible? it's perfectly possible that the ECP is correct [though i don't think it fits the data, it's not like it's conceptually impossible either] for a given meaning of efficiency while at the same time *working* [working here meaning something like being stable in time, i.e. not collapsing, and also distributing tasks and products in such a way that people work and get some reasonable chunk of the social product, enough to keep alive and keep producing and be fed, clothed, housed, reasonably healthy etcetera].

whenever austrian economists speak of efficiency, i get the feeling they're talking about Good instead, but they're not the same thing.

[Ares Land]

Why should we take seriously the theoretical ramblings of people whose declared method is "praxeology"?

That is, indeed, a very fair point.

the chinese and vietnamese economies are to a nontrivial degree planned (which is different from demonetized).

Personally, the Chinese model is about the opposite of what I do want.

and even if the ECP was true: what does it even mean to be "efficient" ?

I think whether economic planning is a valuable or not is a very relevant question to socialists, or to the left in general.
I mean, suppose we tax the rich, get UBI or a reasonable equivalent, free education and welfare, decent trade unions, would that be enough and will people work the rest out by themselves? Or would it be valuable to aim for Project Cybersyn?
I believe in option A myself, but, hey, maybe I'm wrong.

All of that being of course very remote perspective. Right now not having Elon Musk in charge is about the only realistic objective, but hey, a guy can dream.

[Raphael]

I mean, suppose we tax the rich, get UBI or a reasonable equivalent, free education and welfare, decent trade unions, would that be enough and will people work the rest out by themselves? Or would it be valuable to aim for Project Cybersyn?

Repeating myself here, the problem with the first model is that it leaves a lot of rich people in place who both 1) have a strong motive to hate the economic and socioeconomic policies under which they live and 2) have the money to turn their hate into effective political action. That seems to have been what eventually destroyed the first model the first time we tried it.

However, that doesn't necessarily mean that we have to aim for Project Cybersyn, because, repeating myself again, centralized ownership doesn't have to mean centralized management. We tried centralized ownership and centralized management; it didn't work. We tried, and are currently trying, decentralized ownership; it doesn't work well for most people, either. But I don't know if we ever tried the combination of centralized ownership and decentralized management.

[zompist]

I mean, suppose we tax the rich, get UBI or a reasonable equivalent, free education and welfare, decent trade unions, would that be enough and will people work the rest out by themselves? Or would it be valuable to aim for Project Cybersyn?

Repeating myself here, the problem with the first model is that it leaves a lot of rich people in place who both 1) have a strong motive to hate the economic and socioeconomic policies under which they live and 2) have the money to turn their hate into effective political action. That seems to have been what eventually destroyed the first model the first time we tried it.

I think that's kind of what happened, but not really.

In the 1800s, and today, the big corporations are run by owners— the superrich, the tycoon class. But that class destroyed itself in the Depression. For two generations companies were owned by a larger class of people and run by managers. High tax rates kept new superrich from emerging. (Not by direct taxation, but by discouraging huge salaries.)

So, plutocracy redeveloped after a 50-year gap. There are several factors, the biggest being lowering tax rates and Reagan's anti-union actions. Politically, the biggest issue was property taxes. But that wouldn't have taken off if middle-class people weren't so dang prosperous. This is not a welcome lesson, but people get more conservative, less generous, and more worried about their position as they get nice jobs and houses. Factory workers in 1917 Russia organized a revolution. Factory workers in 1972 America voted for Nixon.

And in the US, we had the Southern Strategy, which peeled off racist whites from the Democratic Party, ending 50 years when it almost always had strong Congressional majorities.

The problem with your theory is that it's not the same rich people. New rich people can emerge– as well as new grievances that make centrists listen to them. So it wouldn't have helped to, say, guillotine the remaining rich people in 1933. Note how fast tycoons re-emerged in post-Soviet Russia.

[Raphael]

In the 1800s, and today, the big corporations are run by owners— the superrich, the tycoon class. But that class destroyed itself in the Depression. For two generations companies were owned by a larger class of people and run by managers. High tax rates kept new superrich from emerging. (Not by direct taxation, but by discouraging huge salaries.)

So, plutocracy redeveloped after a 50-year gap. There are several factors, the biggest being lowering tax rates and Reagan's anti-union actions. Politically, the biggest issue was property taxes. But that wouldn't have taken off if middle-class people weren't so dang prosperous. This is not a welcome lesson, but people get more conservative, less generous, and more worried about their position as they get nice jobs and houses. Factory workers in 1917 Russia organized a revolution. Factory workers in 1972 America voted for Nixon.

And in the US, we had the Southern Strategy, which peeled off racist whites from the Democratic Party, ending 50 years when it almost always had strong Congressional majorities.

That's all true enough, but if I remember my Rick Perlstein correctly, throughout the years when all this happened, rich-right-wingers in the USA had their own well-financed political networks, which eventually emerged triumphant.

The problem with your theory is that it's not the same rich people. New rich people can emerge– as well as new grievances that make centrists listen to them. So it wouldn't have helped to, say, guillotine the remaining rich people in 1933. Note how fast tycoons re-emerged in post-Soviet Russia.

Oh, I'm not in favor of guillotining the rich, but confiscating most of their property, as well as most of the property of new rich people who might emerge, sounds like a good idea to me.

[keenir]

Oh, I'm not in favor of guillotining the rich, but confiscating most of their property, as well as most of the property of new rich people who might emerge, sounds like a good idea to me.

hmm...maybe borrow a page from Classical Athens?..."if you can afford this boat, you have to pay taxes this year - or you can find someone richer than you, and get them to pay the taxes this year."

*shrugs*

[Raphael]

Oh, I'm not in favor of guillotining the rich, but confiscating most of their property, as well as most of the property of new rich people who might emerge, sounds like a good idea to me.

hmm...maybe borrow a page from Classical Athens?..."if you can afford this boat, you have to pay taxes this year - or you can find someone richer than you, and get them to pay the taxes this year."

*shrugs*

I'd be more in favor of a simple hard cap on individual wealth, far above what most people can imagine, but far below what the super-rich have, regularly adjusted for inflation. Everything above that would be confiscated, no ifs and no buts.

[Travis B.]

Oh, I'm not in favor of guillotining the rich, but confiscating most of their property, as well as most of the property of new rich people who might emerge, sounds like a good idea to me.

hmm...maybe borrow a page from Classical Athens?..."if you can afford this boat, you have to pay taxes this year - or you can find someone richer than you, and get them to pay the taxes this year."

*shrugs*

I'd be more in favor of a simple hard cap on individual wealth, far above what most people can imagine, but far below what the super-rich have, regularly adjusted for inflation. Everything above that would be confiscated, no ifs and no buts.

A practical way to implement that would be air-tight extremely progressive income and wealth taxes, such that beyond a certain point all income and wealth would be taxed away. The key thing is air-tight -- there must be no exceptions or loopholes.

[keenir]

Oh, I'm not in favor of guillotining the rich, but confiscating most of their property, as well as most of the property of new rich people who might emerge, sounds like a good idea to me.

hmm...maybe borrow a page from Classical Athens?..."if you can afford this boat, you have to pay taxes this year - or you can find someone richer than you, and get them to pay the taxes this year."

*shrugs*

I'd be more in favor of a simple hard cap on individual wealth, far above what most people can imagine, but far below what the super-rich have, regularly adjusted for inflation. Everything above that would be confiscated, no ifs and no buts.

that makes sense;

I was going to ask how we keep people from hiding their money to avoid it being confiscated...and then it hit me: maybe thats why Athens had the clause "unless you can find and turn in someone richer than you".

[rotting bones]

Why should we take seriously the theoretical ramblings of people whose declared method is "praxeology"?

That is, indeed, a very fair point.

I agree with the structure of Austrian school praxeology as a conditional argument. I don't buy its semantic component at all. An analogy:

If you decide to play by the rules that a bulbous piece is a bishop and bishops capture along diagonals, then given that your piece is along a diagonal from your opponent's bulbous piece, it is open to be captured. At the same time, the idea that bulbous pieces are bishops across all space and time is obviously crap.

Similarly, if a society does decide to play by capitalist rules, then it's true that, beyond certain empirical limits, lowering profits (edit: e.g. by redistribution) will reduce the number of jobs. This in no way endorses the idea that capitalist rules transcend space and time.

(Edit: Capitalist rules run into empirical limits every 7-10 years, crashing the economy.)

All of that being of course very remote perspective. Right now not having Elon Musk in charge is about the only realistic objective, but hey, a guy can dream.

You can count on Trump to do that himself.

If the poor don't get what they actually want, they will put 3 Elon Musks in every department to outrage "reasonable" sensibilities.

Speaking of which, this is disappointing performance from the conservatives so far. Come on donnie boy, a large handed man would have killed me already.

Or would it be valuable to aim for Project Cybersyn?

Project Cybersyn wasn't what anyone thinks it was in today's left or right. Since it was designed by cyberneticians, it was an extremely minimalistic top-down intervention in the economy, nothing close to an attempt at total planning. Even that was beyond the capabilities of computers at the time. Times have changed since then. Now that planned economies are actually possible, and exist in some ways to benefit financiers, all the "intellectuals" have lost faith in the possibility.

I think common sense 21st century estimations of what is or isn't achievable are utter lunacy. For example, the achievable picture of social democracy is an unstable equilibrium. Similarly, the achievable goal of getting Musk out of office is a negative goal, which when not subordinated under a positive vision, doesn't play well with the electorate. In fact, "reason" is a petit bourgeois scourge on scientific theorization.

In fact, if leftists aren't 100% perfect in everything they say and do, intellectuals start having "misgivings" about whether oppression might not be desirable after all. This is not sustainable.

If the 21st century has taught me anything, it's that humans should have less faith in their own sanity. And even less faith in the sanity of God or the ancestors or whatever than they already did.

[rotting bones]

Repeating myself here, the problem with the first model is that it leaves a lot of rich people in place who both 1) have a strong motive to hate the economic and socioeconomic policies under which they live and 2) have the money to turn their hate into effective political action. That seems to have been what eventually destroyed the first model the first time we tried it.

...

The problem with your theory is that it's not the same rich people. New rich people can emerge– as well as new grievances that make centrists listen to them. So it wouldn't have helped to, say, guillotine the remaining rich people in 1933. Note how fast tycoons re-emerged in post-Soviet Russia.

Inequality emerging from the structural features of capitalism and capitalists oppressing workers are both part of the same strand of socialist theory. Not sure I'm seeing the contradiction.

[zompist]

Repeating myself here, the problem with the first model is that it leaves a lot of rich people in place who both 1) have a strong motive to hate the economic and socioeconomic policies under which they live and 2) have the money to turn their hate into effective political action. That seems to have been what eventually destroyed the first model the first time we tried it.

...

The problem with your theory is that it's not the same rich people. New rich people can emerge– as well as new grievances that make centrists listen to them. So it wouldn't have helped to, say, guillotine the remaining rich people in 1933. Note how fast tycoons re-emerged in post-Soviet Russia.

Inequality emerging from the structural features of capitalism and capitalists oppressing workers are both part of the same strand of socialist theory. Not sure I'm seeing the contradiction.

I have no idea what you're disagreeing with here.

[keenir]

Repeating myself here, the problem with the first model is that it leaves a lot of rich people in place who both 1) have a strong motive to hate the economic and socioeconomic policies under which they live and 2) have the money to turn their hate into effective political action. That seems to have been what eventually destroyed the first model the first time we tried it.

The problem with your theory is that it's not the same rich people. New rich people can emerge– as well as new grievances that make centrists listen to them. So it wouldn't have helped to, say, guillotine the remaining rich people in 1933. Note how fast tycoons re-emerged in post-Soviet Russia.

Inequality emerging from the structural features of capitalism and capitalists oppressing workers are both part of the same strand of socialist theory. Not sure I'm seeing the contradiction.

I can see how the second statement {i italicized it} can be part of - and even emerge from - the first statement {i bolded it}...but it leaves me wondering if 2nd=1st (that is, that capitalists oppressing workers is the same thing as inequality emerging from the structural features*), or if 2nd=/=1st (that inequality & capitalists oppressing workers is not the only thing that emerges from the structural features of capitalism)


* = what are the structural features, if inequality emerges from them? if inequality was the structural feature - or one of them - then we couldn't say that it was emerging from the structural features...right?

[rotting bones]

I can see how the second statement {i italicized it} can be part of - and even emerge from - the first statement {i bolded it}...but it leaves me wondering if 2nd=1st (that is, that capitalists oppressing workers is the same thing as inequality emerging from the structural features*), or if 2nd=/=1st (that inequality & capitalists oppressing workers is not the only thing that emerges from the structural features of capitalism)


* = what are the structural features, if inequality emerges from them? if inequality was the structural feature - or one of them - then we couldn't say that it was emerging from the structural features...right?

Oversimplifying:

A business is successful when it brings in more money than it spends. Since paying employees is a part of its expenditure, a successful business must pay its employees less than what the business makes.

Traditional justification: This is a good thing because then the business can use more capital to finance the next production cycle.

Inequality: The people who decide how much capital goes back into the business vs. how much employees get paid abuse their position to pay themselves at disproportionately high rates. As a result, this class can use their greater buying power to distort society in a way that benefits themselves. For example, if housing providers sell to the highest bidder, housing prices will rocket to sky high values as the ultra-wealthy buy up all the housing and let them out for rent.

Oppression: Politicians will also be supported by the ultra-wealthy, making it impossible to rectify the situation. For example, attempts to raise wages will be stymied.

Liberal responses:

1. Liberals have tried various strategies aimed at making the monetary system less of a zero sum game. This usually involves the government printing money and using it to bail out failing banks. If these banks see profitable lending opportunities, they can use the government printed money as leverage to increase liquidity in corners of the economy that banks judge will turn out to be profitable in the future.

2. Left-leaning liberals have also argued for direct redistribution. Redistributing the income of wealthy individuals is a good idea if it can be implemented under a capitalist economic system. However, if these individuals see less of a reward for themselves, they will have less motivation to create jobs for others. (Edit: And if you let them accumulate wealth slowly, they will become ultra-wealthy anyway at a slower rate, etc.)

[rotting bones]

...

The problem with your theory is that it's not the same rich people. New rich people can emerge– as well as new grievances that make centrists listen to them. So it wouldn't have helped to, say, guillotine the remaining rich people in 1933. Note how fast tycoons re-emerged in post-Soviet Russia.

Inequality emerging from the structural features of capitalism and capitalists oppressing workers are both part of the same strand of socialist theory. Not sure I'm seeing the contradiction.

I have no idea what you're disagreeing with here.

I'm asking how "it's not the same rich people" contradicts "it leaves a lot of rich people in place who both 1) have a strong motive to hate the economic and socioeconomic policies under which they live and 2) have the money to turn their hate into effective political action" (i.e. capitalists oppressing workers).

Maybe Raphael's argument was posted in a context I'm not following?

[zompist]

I'm asking how "it's not the same rich people" contradicts "it leaves a lot of rich people in place who both 1) have a strong motive to hate the economic and socioeconomic policies under which they live and 2) have the money to turn their hate into effective political action" (i.e. capitalists oppressing workers).

Maybe Raphael's argument was posted in a context I'm not following?

I took Raphael as implying that Roosevelt made a mistake in letting the rich of his day keep the money they had left. He seemed to suggest that those same rich people started a plot to undermine Rooseveltian liberalism.

Now, that's possible, but I don't think it's what really happened. I gave some reasons above, including the direct actions taken by Reagan to remove the structures that supported Rooseveltian liberalism, and the increasing conservatism of high-paid factory workers. I'd also note that Mises & Hayek, huge influences on US conservatism, were not from the US.

Or to put it even more abstractly: creating a social system that will work as planned for more than half a century is a very hard problem. The founders may have the necessary fire in their belly, but their great-grandkids, not so much. About the best we can do is identify the failure points from the last attempt and reinforce the structure there.

[keenir]

* = what are the structural features, if inequality emerges from them? if inequality was the structural feature - or one of them - then we couldn't say that it was emerging from the structural features...right?

Oversimplifying:

A business is successful when it brings in more money than it spends. Since paying employees is a part of its expenditure, a successful business must pay its employees less than what the business makes.

Traditional justification:
Inequality:
Oppression:

Thank you very much for clarifying & explaining them for me and anyone else who was curious about it.

2. Left-leaning liberals have also argued for direct redistribution. Redistributing the income of wealthy individuals is a good idea if it can be implemented under a capitalist economic system. However, if these individuals see less of a reward for themselves, they will have less motivation to create jobs for others. (Edit: And if you let them accumulate wealth slowly, they will become ultra-wealthy anyway at a slower rate, etc.)

Hmm...what did you think of the Classical Athenian solution? (that of saying "if you can afford X, you pay your taxes - or you bring in someone richer than you, and you have them pay the taxes")

so far as I can see (yes, big qualifier there *g* ), that would encourage the wealthy to be more against other wealthy, than against the poorer people. but would it work nowadays?

[zompist]

Hmm...what did you think of the Classical Athenian solution? (that of saying "if you can afford X, you pay your taxes - or you bring in someone richer than you, and you have them pay the taxes")

so far as I can see (yes, big qualifier there *g* ), that would encourage the wealthy to be more against other wealthy, than against the poorer people. but would it work nowadays?

So far as I can understand, the idea was that you could refuse to pay only on the grounds that someone richer wasn't paying.

But you seem to be envisioning some form of vigilantism. This would be kind of hilarious, but in any conworlding exercise you have to think about second-order effects. If the rich could be kidnapped and held for legal ransom, of course they would make themselves scarce and turn their estates into armed fortresses. More than they already are, I mean.

[Raphael]

I took Raphael as implying that Roosevelt made a mistake in letting the rich of his day keep the money they had left. He seemed to suggest that those same rich people started a plot to undermine Rooseveltian liberalism.

Yes, that's more or less what I was saying. Except that I wouldn't call it a "mistake"; more like an inevitable consequence of, first, the general political conditions of the time and place, and second, the fact that Roosevelt himself, no matter what right-wingers might have said about him, was neither a socialist nor a communist.

Now, that's possible, but I don't think it's what really happened. I gave some reasons above, including the direct actions taken by Reagan to remove the structures that supported Rooseveltian liberalism, and the increasing conservatism of high-paid factory workers. I'd also note that Mises & Hayek, huge influences on US conservatism, were not from the US.

OK, all fine and nice, but who paid for all that? For Reagan's rise? For spreading right-wing messages to increasingly conservative high-paid factory workers? For publicising the ideas of von Mises and Hayek? For, to get back to one of your earlier posts, organizing the Southern Strategy? As far as I can tell, even during the height of the 20th Century Western welfare states, there were still a lot of rich people around, and I'm sure that their money made all the developments you talk about easier.

As for Hayek and von Mises being European, well, I wasn't talking only about the US, but about the 20th Century Western welfare states in general.

Getting back to the US, a lot of my impressions about that time come, as I mentioned, from reading Rick Perlstein, especially Before the Storm. If you don't have the book, IMO the free ebook samples are already quite informative. Amazon's is at https://www.amazon.com/Before-Storm-Gol ... 856&sr=8-1. If you don't want to give Amazon web traffic, you can try a German online store's version at https://www.thalia.de/shop/home/artikel ... 1031766187; in that case, you'll have to click on the word "Leseprobe" or the open book button to the lower right of the cover to read the free sample.

The Preface and especially Chapter 1 might give you an idea of what I'm getting at. While the book is generally non-fiction, the first part of Chapter 1 is a kind of fiction; it describes a composite character who seems to be intended as a kind of archetype of the kind of people who provided much of the financing for, originally, the Taft/McCarthy wing of the Republican Party, then the Goldwater wing, then the Reagan wing.

Or to put it even more abstractly: creating a social system that will work as planned for more than half a century is a very hard problem. The founders may have the necessary fire in their belly, but their great-grandkids, not so much. About the best we can do is identify the failure points from the last attempt and reinforce the structure there.

That is, of course, completely true.