Economic calculation problem - how serious is it?

[zompist]

I'm not against all capitalism either. I bear no ill will towards whatever markets survive the democratization of the economy, though having them be associated with the state sounds like a bad idea to me.

I want there to be an economic equilibrium between production based on monetary profit and popular acclamation.

I've said very clearly what in your posts was a distortion of what I was saying, and you just ignore that and want me to be saying something else.

FWIW I don't have a problem with the statements quoted above.

[keenir]

If it's irrelevant, I don't see how. I'm saying the dynamism of 20th century liberalism was caused partly by the introduction of inefficiency from new markets. As long as you have new sources of inefficiency, you can give every class enough of what it wants (with some additional motivation like the Red Scare). When capitalists struggle to find new inefficiency, class struggle heats up like it's doing now.

inefficiency is good? am i understanding you correctly on that point?

[Ares Land]

I've never seen it described as inefficiency. But Piketty is good on this. Besides, once you're done reading, you can use his books to squash large insects or small mammals.

Basically, post-WWII you could count on a 3% return of investment and 5% growth (sometimes as high as 9%). Of course this makes it easier to have it so everyone benefits a little, and with huge growth rate it's easier to share wealth.
An important point is that this was ideal only in retrospect. Working class wages were really low, work was hard, and it wasn't obvious at all that the situation would improve; in fact improving the situation required massive and violent strikes. At least in Europe; 1950s and 60s America looks more comfortable, though that may be nostalgia filtered through pop culture.

Anyway, yes, when it comes to GDP growth we're hitting diminishing returns and from an environmental perspective it's not clear we even want growth.

But people do vote for the far right for the price of eggs. Americans think Republicans are better for the economy. They voted for Trump because inflation had made goods too expensive.

What people say about their motives and their actual motives are two different things.

As to why it doesn't happen... Like I said, getting anything even vaguely left-wing done is a chore. I wish there was a shortcut, but the only one I'm aware of is revolution, which doesn't have a great track record.

No, it's very easy. You just have to do it like the Republicans did Project 2025.

Yeah, right. So what is your platform, how do you plan to get elected, how you plan to get a majority in Congress. Are you aware that every conceivable legal objection will be raised? How do you plan to overcome this? Are you aware you'll get every major media outlet against you? How do you overcome this?
Are you aware that you will inevitably fuck something up? What's your plan for when that happens? Are you aware that someone in your administration will be tied in a major scandal? Yes, it will happen. What will you do then?

See? It's anything but easy.

What, the Republicans are doing it, you say? But the Republicans don't have to do things. They're the default option! That's the whole point of conservativism. Also, with Trump, they've entirely renounced reality. They do not care one bit whether they actually are making America great again. All that matters to them is being able to say they did, and they'll say it no matter what. They're playing a different game altogether, the one they call 'heads you win, tails you lose'

Also, even by that criteria, they're failures. Trump has turned the culture war for a generation with that nonsense about grant applications, Elon Musk is tanking his own company with Dr. Strangelove antics, I think Trump has done more for Ukraine than any Western leader in the past four years. And we're barely one month into the presidency!

[zompist]

I've never seen it described as inefficiency. But Piketty is good on this. Besides, once you're done reading, you can use his books to squash large insects or small mammals.

Basically, post-WWII you could count on a 3% return of investment and 5% growth (sometimes as high as 9%). Of course this makes it easier to have it so everyone benefits a little, and with huge growth rate it's easier to share wealth.
An important point is that this was ideal only in retrospect. Working class wages were really low, work was hard, and it wasn't obvious at all that the situation would improve; in fact improving the situation required massive and violent strikes. At least in Europe; 1950s and 60s America looks more comfortable, though that may be nostalgia filtered through pop culture.

Anyway, yes, when it comes to GDP growth we're hitting diminishing returns and from an environmental perspective it's not clear we even want growth.

We may not get it even if we want it. Where pundits once worried about overpopulation, they're now worrying about population collapse. The rate needed to maintain population is of course 2 per woman. It's now 1.7 in the US, 1.6 in Brazil, 2.0 in India, 1.2 in China, and an eyebrow-raising 0.7 in South Korea.

When they hear these figures, left-wingers tend to shrug, while right-wingers start to fulminate about making women have babies. But they're no better than anyone else at raising fertility: the rate is 1.4 in Russia, 1.5 in Hungary-- both lower than France, 1.8. Unfortunately for them, the policies to actually make women want to have children are also the policies that right-wingers hate.

What does that mean for societies? Maybe not much for advanced countries, which can grow by immigration (the US grew last year: 2.8 million immigrants, 0.5 million births, in excess of deaths). Of course, that requires people willing to migrate, and the country being willing to receive them. Japan's population has been declining for about 10 years, which has not yet produced any serious change to immigration policy.

The thing is, demographic growth is kind of a cheat code for national growth, because it increases the market and land values. More people mean more possible specialization, which is why you can find a good comics shop or Ethiopian restaurant or web developer in a big city but not in rural villages, and specialization increases overall wealth.

Still, I wouldn't panic, because there's also productivity growth, and there's plenty of that to find. Everybody gains when, say, we find out how to make solar panels or computers twice as efficient. The planet can only support 8 billion humans because of the hard work scientists put in finding better crops and better ways of growing them. We undoubtedly need a lot more basic research to make all that sustainable as well. We're not yet reduced to making up fake gains like NFTs to sell each other.

[Ares Land]

When they hear these figures, left-wingers tend to shrug, while right-wingers start to fulminate about making women have babies. But they're no better than anyone else at raising fertility: the rate is 1.4 in Russia, 1.5 in Hungary-- both lower than France, 1.8. Unfortunately for them, the policies to actually make women want to have children are also the policies that right-wingers hate.

I'm inclined to shrug myself
Right-wingers are always panicking about demographics, no matter what happens. I suspect some unhealthy obsessions. I confess I'm more than a little creeped out by Musk's obsession with the subject. (Don't look it up! It's an unending tunnel of creep.)

In France they even fret about the relatively high fertility rate, because they suspect the wrong kind of people are having babies.

All in all, I think the population diminishing a little isn't necessarily bad. A somewhat decreasing load on the ecosystems is probably worth a somewhat more sluggish economy.

Still, I wouldn't panic, because there's also productivity growth, and there's plenty of that to find. Everybody gains when, say, we find out how to make solar panels or computers twice as efficient. The planet can only support 8 billion humans because of the hard work scientists put in finding better crops and better ways of growing them. We undoubtedly need a lot more basic research to make all that sustainable as well. We're not yet reduced to making up fake gains like NFTs to sell each other.

I'm not certain growth is necessary myself in developed countries. While I generally defend social democracy, I think their cardinal sin is planning their budgets according to unrealistic expectations.
I believe rich Western countries could be just as happy with half the GDP. More importantly, we could definitely have twice the GDP and be twice the misery.
Not that we shouldn't be aiming for productivity gains, or better, less destructive technology. But these aims themselves should be our targets, not GDP growth. If the GDP grows, it grows. If it doesn't, no big deal.

[Raphael]

All in all, I think the population diminishing a little isn't necessarily bad. A somewhat decreasing load on the ecosystems is probably worth a somewhat more sluggish economy.

Agreed.

It's not like I disagree with your idea of getting rid of oligarchs and not getting any again

But to offer an optimistic counterpoint, social-democracy is a lot more resilient than that, and it's not that easy to get rid of socially progressive measures.
Western Europe has free education, public healthcare and more generally an adequate welfare system. Even Thatcher couldn't get rid of the NHS. I don't really see a government managing to seriously damage these.
It's worth noting that Americans are similarly attached to Social Security, and despite Musk musing on the subject, I'm not sure they'll really dare touch it.

I really don't think the social democrat model has failed or that it's been destroyed.

The trouble with social democracy is that implementing reforms is horribly slow.
Part of it is the democratic process, which can't be helped, unless you're willing to go for violent revolution. Part of it is indeed due to rich people -- I've heart that called 'the money wall.' You can attack the money wall... the problem is attacking it is also slow.

The upside is that conservatives don't get to implement everything either, and what social democratic measures you can implement are here to stay.

Now there are two huge caveats to the above:

1. This mostly applies to Western countries, who are stable and sovereign. In other words, France, Germany or the US don't have to fear a Pinochet starting a coup with foreign backup. So this is a privileged perspective.
2. All of this is theoretical right now: as I mentioned a few times already, we have enough of a far right that most of public debate revolves around various forms of bigotry.

Fair points, though I'm still not sure that social democracy is viable in the long term - it might take a long time to destroy it, but right-wingers are often good at playing the long game.

[rotting bones]

I've said very clearly what in your posts was a distortion of what I was saying, and you just ignore that and want me to be saying something else.

FWIW I don't have a problem with the statements quoted above.

Awesome, that's a point of agreement.

To be more specific, I didn't think you wanted a system that's 100% identical to the past. I thought you wanted corporations to be co-ops for democratic decision making. However, production would still be organized on the basis of monetary profit. At least, that's what I gleaned from your posts in the Capitalism thread and your agreement with Travis B. on market socialism. Travis B. wanted co-ops like you. He was even more explicit than you that in addition, people would support policies akin to Rooseveltian liberalism. This would be a capitalist economy in the technical sense.

[rotting bones]

inefficiency is good? am i understanding you correctly on that point?

Regardless of whether it's good or bad, it's necessary to make capitalism work. Markets pay people to make inefficient systems efficient. If markets can't find inefficient systems to make efficient, they languish in the best case scenario. In the worst case scenario, they pay thugs to brutalize efficient systems until they are inefficient again.

[rotting bones]

Anyway, yes, when it comes to GDP growth we're hitting diminishing returns and from an environmental perspective it's not clear we even want growth.

I want systems like markets that are predicated on infinite growth to suffer without it becoming harder for the poor to obtain essential goods. The poor don't care about the environment, the species or the future.

What people say about their motives and their actual motives are two different things.

This is a well known process: All over the world, the right tells people: Look, right-wingers are rich. Vote for us. We will make you rich. Once in power, they crash the economy, activating the psychological effects of terror management theory. Then they turn around and say: We are under attack. The leftists are stealing the culture that gave your ancestors a comfortable life going back to Adam and Eve in the court of Manu and the Yellow Emperor. We are soldiers fighting on your side!

This strategy works on humans, unevolved chimps that we are. We need someone to write a new 1984 to warn people about this from the time they're kids.

Yeah, right. So what is your platform, how do you plan to get elected, how you plan to get a majority in Congress. Are you aware that every conceivable legal objection will be raised? How do you plan to overcome this? Are you aware you'll get every major media outlet against you? How do you overcome this?
Are you aware that you will inevitably fuck something up? What's your plan for when that happens? Are you aware that someone in your administration will be tied in a major scandal? Yes, it will happen. What will you do then?

See? It's anything but easy.

Platform: Stronger rights guarantees. Jobs by popular vote.

Strategy: Liberal democracies tend to alternate between two parties. Put a presidential candidate who wants the policy in charge of one of the parties. Once elected, have them issue endless executive orders promoting the policies. When people give you dumb arguments against it, answer, "Your concerns are of no concern to me, good sir," and storm off in a huff. When challenged in the courts, drag out the legal battle for decades. By the time the courts reach a decision, the policy will have been normalized. Even if the courts overturn the orders, they could come back through the legislative branch.

It's the easiest thing in the world. The issue is that politicians don't want the problem to be fixed. The wanting is the bottleneck, not the doing. It's the heroic and sagely self-restraint of our politicians that prevents anything good from happening.

What, the Republicans are doing it, you say? But the Republicans don't have to do things. They're the default option! That's the whole point of conservativism. Also, with Trump, they've entirely renounced reality. They do not care one bit whether they actually are making America great again. All that matters to them is being able to say they did, and they'll say it no matter what. They're playing a different game altogether, the one they call 'heads you win, tails you lose'

They did a lot to make Project 2025 happen. The judicial branch protected the President from being attacked for official acts in advance. Trump issued executive orders against precedent when he got into office. He's counting on majorities in the legislative to back him up. You'll see the fight they are putting up on every level if you glance at American media. Try Secular Talk. Elon Musk even propagandized for the AfD in Germany. The American far right is a ferment of incessant activity; possibly too much: https://www.youtube.com/channel/UC8DA4o ... ijfedjSZCQ

Conservatives say they are the default, but that's a lie. Everything they do is fake traditionalism. These days, their ideas are newer than anything the mainstream left is willing to try, even if they are dumber than a bag of rocks. For example, banning transgenderism is the opposite of a return to Traditional CivilizationTM. Many people feel that it is, but that's only because humans are lunatics. Early modern Rome, the cradle of Western CivilizationTM, had castrati, Naples had femmenielli, India had hijra, Turkey and China were famous for the eunuchs at court, etc.

The fact is, capitalists want poor families with lots of kids because they can get a better deal on worker compensation in a society with a massive reserve army of labor. They want us to have kids so they can get rich.

Also, even by that criteria, they're failures. Trump has turned the culture war for a generation with that nonsense about grant applications, Elon Musk is tanking his own company with Dr. Strangelove antics, I think Trump has done more for Ukraine than any Western leader in the past four years. And we're barely one month into the presidency!

These are personal failures. Fighting Project 2025 nonsense is what American politics is going to be about going forward. Despite all the devastation, Trump's approval is barely lower than his disapproval. The cult is sticking by him. NASA engineers are hiding their identities because they are afraid of being attacked by MAGA in the streets.

I think leftists dropped the ball on messaging recently. People want edginess in their politics. They enjoy it, it humanizes politicians, and no amount of preaching from the pulpit is going to change that fact. Both "whig" and "tory" originated from insults.

[keenir]

inefficiency is good? am i understanding you correctly on that point?

Regardless of whether it's good or bad, it's necessary to make capitalism work. Markets pay people to make inefficient systems efficient.

so, basically..."You there, serf, go laze about and don't finish your daily chores. I crave getting paid by people who crave inefficiency!"

If markets can't find inefficient systems to make efficient, they languish in the best case scenario. In the worst case scenario, they pay thugs to brutalize efficient systems until they are inefficient again.

That makes no sense.

I've never seen it described as inefficiency. But Piketty is good on this. Besides, once you're done reading, you can use his books to squash large insects or small mammals.

Basically, post-WWII you could count on a 3% return of investment and 5% growth (sometimes as high as 9%). Of course this makes it easier to have it so everyone benefits a little, and with huge growth rate it's easier to share wealth.

ah, so what Rotting Bones calls inefficiency, is actually what some of us would call surplus, gains, bonus, and profit? Now that statement above makes sense; thank you.

[rotting bones]

so, basically..."You there, serf, go laze about and don't finish your daily chores. I crave getting paid by people who crave inefficiency!"

Demand only arises in an inefficient system. If your marble blocks are sitting at the bottom of a mine shaft, you can create jobs to have the poor pull them up to the Acropolis. If the marble blocks are neatly arranged into a temple for the Olympians, this particular job doesn't exist in the economy. Bad news if you are a landless worker with sinewy arms.

Capitalists always try to create demand in order to spur growth in the economy. If you search my posts with the word "demand", I might have expanded on this in the past. I also spoke about what happens when demand drops indirectly when answering questions about redistribution in the previous US Politics thread.

Edit:

Even if you have enough production to feed everyone, it's an illusion. If you distribute that food to the masses, then that production will no longer be there.

...

If food is not scarce, capitalists won't invest in agriculture because it won't turn a profit. This is not because capitalists are evil. This is the bedrock of what the capitalist system is built to accomplish: turning a profit. After the famine happens, there will be investment in agriculture again.

[Ares Land]

Fair points, though I'm still not sure that social democracy is viable in the long term - it might take a long time to destroy it, but right-wingers are often good at playing the long game.

I don't think it's viable in the long term either

The problem is trying to reach a better situation. And I think we have to approach this both within the democratic system , somewhat scientifically and with the least amount of damage.
Tackling the 'science' part -- I don't think we really know what the optimal economic system. We just don't have enough data, and of course we don't know much about what things'll be like in the next 50 years, what the technology would be like, what the climate will be like or even what people's aspirations will be like.
I think that suggests multiple approaches -- different ideas should be tried -- and a certain amount of caution. You have to proceed by increments.
Democracy is a feature, not a bug, of course. An unpleasant consequence, though, is that you have to do, at best, with a 51% five years out of ten.

All in all, I think socialism should be envisioned as a tedious process rather than an ideal solution.

The obvious alternative is violent revolution. It may come to that, but I'd rather it didn't.

[rotting bones]

I think that suggests multiple approaches -- different ideas should be tried -- and a certain amount of caution. You have to proceed by increments.

We don't have this kind of time. While you are experimenting, humans will wipe out all life.

All in all, I think socialism should be envisioned as a tedious process rather than an ideal solution.

The obvious alternative is violent revolution. It may come to that, but I'd rather it didn't.

It's neither tedious nor a revolution. You just have to do it.

[Ares Land]

The issue is that politicians don't want the problem to be fixed. The wanting is the bottleneck, not the doing. It's the heroic and sagely self-restraint of our politicians that prevents anything good from happening.

That's very largely true. The one additional issue is that not enough people want socialism in the first place. Suppose you find your ideal candidate. Let's call him "Bernie Sanders." Would he win the primary?

Strategy: Liberal democracies tend to alternate between two parties. Put a presidential candidate who wants the policy in charge of one of the parties. Once elected, have them issue endless executive orders promoting the policies. When people give you dumb arguments against it, answer, "Your concerns are of no concern to me, good sir," and storm off in a huff. When challenged in the courts, drag out the legal battle for decades. By the time the courts reach a decision, the policy will have been normalized. Even if the courts overturn the orders, they could come back through the legislative branch.

That's a bit idealistic. What tends to happen is, your policy takes five years to be implemented, ten years before you get any good results. Two years in you get a recession (maybe you missed something but mostly because recession happens.) Four or five years later you're voted out. The opposition overturns most of what you did.
Which doesn't mean it's a bad strategy. There's always something that sticks.

[Ares Land]

We don't have this kind of time. While you are experimenting, humans will wipe out all life.

I didn't really want to bring up the Soviets, but how about the Soviets?

It's neither tedious nor a revolution. You just have to do it.

You seem convinced you can easily win elections, get things done easily and then keep re-elected. Even the first part is difficult.

[keenir]

I think that suggests multiple approaches -- different ideas should be tried -- and a certain amount of caution. You have to proceed by increments.

We don't have this kind of time. While you are experimenting, humans will wipe out all life.

Humans have been trying that for 300,000 years; still failing. Its taken this long just to qualify as a Mass Extinction Event.

[keenir]

so, basically..."You there, serf, go laze about and don't finish your daily chores. I crave getting paid by people who crave inefficiency!"

Demand only arises in an inefficient system. If your marble blocks are sitting at the bottom of a mine shaft, you can create jobs to have the poor pull them up to the Acropolis. If the marble blocks are neatly arranged into a temple for the Olympians, this particular job doesn't exist in the economy.

so, a task/job ceases to exist, once it was done once? you're underestimating the percieved need to add expansions/extensions onto the Acropolis/temple, build new temples, etc.

or to just have plenty of extra marble on hand so its easier to access for other projects.

so yeah, I don't see how "yay, we finished our assigned task!" is inefficient.

Bad news if you are a landless worker with sinewy arms.

If you have sinewy arms, you probably aren't being employed anywhere near the marble at any location; you might be charged with feeding the workers, though.

Even if you have enough production to feed everyone, it's an illusion. If you distribute that food to the masses, then that production will no longer be there.

Of course not - it will be among the masses, most likely getting eaten.

So its not really an illusion...unless "production" is a deliberately shifted goalpost.

[rotting bones]

That's very largely true. The one additional issue is that not enough people want socialism in the first place. Suppose you find your ideal candidate. Let's call him "Bernie Sanders." Would he win the primary?

Corporate power has an influence in Democratic primaries out of proportion to its support among the population. The deliberately strategized to destroy populist interests and dissolve their own grassroots organizing. That's why the Democratic Party is being punished right now.

People want a good economy. If Americans think Republicans are good at the economy against the facts, there's something wrong with your messaging.

I suggest focusing the message on justice, jobs and jokes. I suggest jokes about bros who have taken Econ 101.

That's a bit idealistic. What tends to happen is, your policy takes five years to be implemented, ten years before you get any good results. Two years in you get a recession (maybe you missed something but mostly because recession happens.) Four or five years later you're voted out. The opposition overturns most of what you did.
Which doesn't mean it's a bad strategy. There's always something that sticks.

Just keep doing it again and again without learning any lessons whatsoever. Trump lost and returned from the dead.

I didn't really what to bring up the Soviets, but how about the Soviets?

I'm not exaggerating. The climate is in a perilous state.

The Soviets created an authoritarian system for which they were reprimanded at the time. They just didn't listen. If you think there's something wrong with my theoretical foundations, that's a real problem unlike a general admonition to take things slowly. For me, the two most important books are: Economic theory Political theory

You seem convinced you can easily win elections, get things done easily and then keep re-elected. Even the first part is difficult.

In medieval times, states lasted an average of 7 years. Modern states last longer by replacing revolt with a gentlemanly transition of power to the other party. If Trump's second victory tells us anything, it's that very hard to prevent the alternation of power until the government becomes an actual dictatorship. Trump did everything he could to lose the election. Unfortunately, it's physically impossible not to win.

[rotting bones]

Humans have been trying that for 300,000 years; still failing. Its taken this long just to qualify as a Mass Extinction Event.

We are missing all the targets suggested by climate science. The trajectory is not looking good.

[keenir]

Humans have been trying that for 300,000 years; still failing. Its taken this long just to qualify as a Mass Extinction Event.

We are missing all the targets suggested by climate science. The trajectory is not looking good.

Still not going to wipe out all life. Not even going to hit 90%