Ill second that and yes Iain I certainly have no problems with a cut and paste
job to get the ball rolling


Cheers

Robin

--- In ecaworkinggroup@yahoogroups.com, JAMES NORTH <jamesnorth279@...> wrote:
>
> Hi Iain,
>
> Libertarian communism sounds good to me.
>
> Jim
>
>
>
>
> ________________________________
> From: Iain McKay <iain.mckay@...>
> To: ecaworkinggroup@yahoogroups.com
> Sent: Monday, 20 December, 2010 14:46:27
> Subject: [ecaworkinggroup] The Wiki-page questions
>
>  
> Hello all
>
> I've cut some text from AFAQ as a start for this section:
>
> http://non-market-calculation.wikispaces.com/A+critique+of+its+assumptions
>
>
> It will need to be tweaked, and it is not complete. I guess that the section
on
> assumptions about the market will need sub-sections. I also think we will need
> to standardise terminology -- as its from AFAQ, it refers to anarchists. Are
> we going for libertarian communists to be inclusive?
>
> I'm inclined to simply cut-and-paste from AFAQ as a starting point. Does
anyone
> object to that?
>
> Iain
>

Hi Iain

Thanks for that interesting link. I noted your observations in the comments
section and endorse what you say. In particular this

"It is not just about solving equations, it is also to do with gathering the
information and knowledge which can create those equations in the first place.
There is good reason to think that a central body would not know where to begin
nor know what to do with this even if it could gather it"

I would only that I think an even more intractable problem would be the actual
implementation of the plan in strict accordance with the numerous targets
specified (and there would have to be "strict accordance" otherwise things would
rapidly go pear shaped)

Ill have a look at the wiki site and make a few contributions

Cheers

Feliz ano nuevo!


Robin

-------------------------------------------------

--- In ecaworkinggroup@yahoogroups.com, Iain McKay <iain.mckay@...> wrote:
>
> Hello all
>
> Happy New Year! Did not do anything on the wiki over the festive period,
> but its on my list of things to work on...
>
> I came across this link today which discusses Linear Programming:
>
>
http://robertvienneau.blogspot.com/2011/01/increase-in-feasibility-of-economic.h\
tml
>
>
> I may a comment on the issue of social planning -- still think that the whole
> "social plan" comments by Marx and Engels have lumbered the left with a
> utopian scheme as bad as Fourier or Saint-Simon. However, I think that
> linear programming techniques could be utilised (along with other tools) as
> part of a decentralised communist system.
>
> And talking of the wiki, how do people think of its progress? Have people been
> making changes to it? I ask because I don't particularly want to be the only
> person working on this project!
>
> Iain
>

--- In ecaworkinggroup@yahoogroups.com, Lorraine Lee <n8chz@...> wrote:
>
> --- En date de�: Jeu, 6.1.11, Iain McKay <iain.mckay@...> a �crit�:
> I came across this link today which discusses Linear Programming:
>
>
http://robertvienneau.blogspot.com/2011/01/increase-in-feasibility-of-economic.h\
tml
>
> The Vienneau blog is very interesting reading on how Neoclassicalism tends to
crowd out heterodox economic thought, using Notre Dame as an example.
>
>
> And talking of
>  the wiki, how do people think of its progress? Have people been
> making changes to it? I ask because I don't particularly want to be the only
> person working on this project!
>
> Iain
>
> I've contributed a little.� My reference to "Angel Economics" also touches on
the subject of linear modeling.� I assume that by calculation we mean
optimization.� That means not only algorithms for solving the systems (e.g.
Simplex) but languages for describing what optimality 'looks like,' or what
criteria it approximates, or maximizes or minimizes.� To that end I 'invented'
'maxhi schema.'� The generic term for such schemata appears to be 'preference
description languages.'� Perhaps PDL's warrant a page in the wiki.� I think of
it as a way to send instructions (or at least specifications) to the 'economy,'
and would think it preferable to sending it market 'signals,' whose strength is
directly determined by cold hard cash.
>


Hi Lorraine,

Im not quite sure what you mean by the above.  Could you possibly explain it in
layman's terms - such things as PDLs for example

Cheers

Robin

Hi all


Ive been having this debate with a guy called syndicat on the Revleft site
http://www.revleft.com/vb/modern-anarcho-communist-t149776/index.html?p=2020587#\
post2020587).  He seems to favour the retention of some kind of price system and
I think is somewhat partial to Parecon

Anyway I just wanted toi throw out a few ideas for discussion and to that end
have pasted below a few snippets from the debate.  I am particular interested in
developing this idea of a hierarchy of production goals and how this might
integrate with the process of resoruce allocation.

I would be interested in any thoughts you might have on the matter

Cheers

Robin
___________________________

[QUOTE=syndicat;2018949]apparently you have problems of reading comprehension.
as I pointed out, your proposed system has no way to pick up how much someone
prefers one alternative over another because they never have to choose one
rather than the other.
that's called a refutation.
your claim was simply implausible. the mere fact that someone picks something
from a store tells us very little about their preferences, if everything is free
and a person does not have to give up anything to get the thing they take. if
you understand English, you should know that "prefer" refers to a three-place
relation. A person X prefers A to B. But if a person can pick up both A and B
because both are free, how does the system read the preference? And if something
isn't on offer on the shelves, how does the system know if people might prefer
it to what is on offer?.[/QUOTE]
============================================================
Lets go over this again shall we because it seems we might be talking somewhat
at cross purposes.
You last question is easily answered and I have already done so. It is called a
consumer survey. Consumers are asked their views about a trial product. Do they
like it? Do they prefer it to the one that is available in the store? What
aspects of it could be improved on? And so on and so forth. Now I take it you
accept that all this is relatively unproblematic und will continue to assume so
unless I hear arguments from you to the contrary
Now to the question of preferences. Yes, of course, if a person takes A and B
from the store there is no way of knowing whether one is preferred over another.
But realistically its not going to happen like that is it? We are talking
statistically here - not Joe Bloggs confronting a can of baked beans and a can
of peas and having to decide on which. Statistically speaking when we are
talking about thousands upon thousands of units desptached by suppliers to
stores on a daily basis , it is most certainly possible to discern consumption
trends - patterns of consumer preferences, in other words - in terms of the
differential rates of stock depletion. You are surely not denying this, are
you?. Why do you think supermarkets closely monitor stock levels and abruptly
discontine certains line of stock? It is becuase they are not clearing at an
acceptable rate. To put it in simple terms consumers seem to exercising a
preference. They are discriminating between different products and deciding some
or not particularly to their liking
=========================================================
[QUOTE=syndicat;2018949]
this is silly. does this mean the whole society makes this decision? then you
have the problem that preferences vary from one individual to another. so you'd
end up with tyranny of the majority in the realm of consumer preferences.
.[/QUOTE
============================================================
First of all, because a consensus about the broad priorities of production has
been democratically reached this does not at all mean low priority needs will
not be met. It simply means they will be considered to be of a lower priority
when it comes to the allocation of a particular resource. Should the resource be
insufficient to meet all the multivarious demands placed on it what would then
tend to happen is 1) that the production of lower priority goods will delayed
until an adequate supply of the resource had been achieved OR 2) technological
substitution and the use of more abundant alternatives
Secondly, of course consumer preferences are going varey from person to person.
You are quite right to say that. But remember what is at issue here is not will
or will not be produced but rather what is socially regarded as being more
important to produce or less important to produce in the light of opportunity
costs . What possible objection can you have to this? What is the problem wioth
communities democratically deciding on its broad prioirities - or do you prefer
that this should be left to the size of person's wallet to determine. So some
club of rich yacht owners can bullldoze over plans to be build a school where
they would prefer to build a marina and have the money to impose this decision.
You cant have it both ways ; if you dont like what a wealthy elite can do with
their money then what other alternative is there than that decisions of this
nature are made by the community - democratically. Unless of course you prefer a
dictator to make these decisions but that is obviously not your position
In any case , it is quite misleading to characterise this as the tyranny of the
majority in the realm of consumer preferences. The consumer will continue to be
able to express their own preferences in respect of the selection of goods
available at the point of distribution. They can still pick and choose. Its just
that some of the things they might want to chose might not necessarily be
immediately avaialble, being low priority goods
Thirdly , the whole point of having some kind of notion of production priorities
is to serve as a guideline or rule of thumb for producers in respect oif the
allocation of scarce resources. It does not have to be perfect of comprehensive.
but it would be absurd NOT to have some kind of hierarchy of productuion goals.
What would be the alternative?. Are you seriously suggesting that resoruces
should just be allocated randomly or on a first come first served basis perhaps?
That would be neither rational nor efficient not just.
===========================================================
[QUOTE=syndicat;2018949]
that's just the beginning of the problem. say the community decides that housing
is right now the highest priority, electric power production is a second
priority, and so on. why doesn't this mean that all of the society's resources
whatever go into housing and nothing into anything else? your "hierarchy" bit
doesn't tell us anything about how the resources are to be distributed.[/QUOTE]
===================================================
Well, for a start, we will inherit from capitalism an apparatus of production
that is highly diverse and caters for the productiuon of a wide range of things.
The productiuon of ball bearings or microproccesors, fdor instance, are not, as
far as I know particularly pertinent to the process of building houses. Cement,
blocks, joists, aggregate, windows, and door frames on, the other hand, are.
What is not being proposed here is that factories involved in the production of
ball bearings or microprocessors convert to turning out aluminium window frames
or whatever. Such factories will continue producing - ball bearings and
microprocessors.
What I am trying to get here - perhaps rather clumsily - is that your whole
approach to this question is conditioned by the way in which we consider
resources under capialism is a monetised phenenomenon and therefore completely
and effortlessly substitituable. This is what allows you to to even ponder the
absurd idea that having a hierachy of production goals might mean that all of
the society's resources whatever go into housing and nothing into anything else.
No it wont because the actual physical structure of production as such could not
enable that to happen and constrains the extent to which we can just switch
resources willy nilly between different end uses. Besides which ,the production
of houses needs (or least these days it does) an electicity supply of some sort
and of course the end product -the house itself - will require electirical
fittings and be connected up to the a grid unless you have a solar panel or ind
turbine . So its not really a case of either/ or
While it is not quite true to say that the hierarchy bit doesn't tell us
anything about how the resources are to be distributed - it certainly does tell
something about which end use should receive preferential treatment in the
allocation of resources - what it doesnt really say is how much prefential
treatment one end use should receive over another. This is I think the point
that you are getting at and I agree this is not something I have definitively
answered. However, my feeling is that this something for which a definitive
answer cannot really be given a priori. I think its a question of judgement - in
this case the judgement of the producers themselves
Mistakes are inevitably going to be made- there is no such thing as a perfect
economy - but the main thing I want to impress on you is that whatever arguments
you may bring up against the notion of some kind of hiearachy of production
goals, whatever the shortcomings you can point to , you really cannot dispense
with some kind of hierarchy of this sort. Like it or not you have to prioritise
your end uses - otherwise you will just end up with chaos. I see such a
productiuon hierarchy as a rough guidweline which helps to nudge producers in
the direction of a making a more efficient allocation of resources by which I
mean efficient from the standpoint of meeting our human needs which are
themselves, some would argue (perhaps most famously Maslow), hierarchically
ordered.
========================================================
[QUOTE=syndicat;2019634]nope. consumer surveys don't work. that's because people
don't have to give up anything to get anything. nor are their suggestions any
thing more than that. what's needed is a way for people to actually dedicate a
part of their consumption entitlement to a proposed new product. this then gives
an accurate picture of how much they really want the proposed product. surveys
don't do this. they do not give consumers any power or indicate real
preferences.
============================================================
[/QUOTE]
Of course consumer surveys "work". Do you seriously imagine they would be
carried out at considerable expense if they didnt? They point is the provide
indicative information about new products that could be brought on stream in
response to consumer preferences (indeed explicit choices can be incorporated in
a consumer survey form itself). Of course, in themselves consumer surveys are
not usually about people having to give up something (though I guess they could
be adapted to do that so people could indicate not only what they positively
want but what they would be prepared to give up as well). But the point is that
the opportunity costs make themselves felt within the actual production process
itself as mediated by the existence of a hierarchy of production goals. If we
chose certain things this will be on the understanding that we may have to give
up certain other things. Is that going to be a terrible problem? I dont think
so.
==============================================================
[QUOTE=syndicat;2019634]
you're just repeating yourself. repetition isn't an argument. as i said, what we
need is not a "hierarchy" but the ability of people to make hard choices and
assign part of their consumption entitlement to the production of something.
that way they get to make the decision about what is important.[/QUOTE]
==============================================================
You are not thinking clearly here . Any hard choice entails in itself a
"hierarchy" of values. We choose one thing over another because we value the
former over the latter. However you look at it, some kind of hierarchy of
production goals or end uses - however imperfect or incomplete - is needed.
Otherwise the alternative is to operate on a completely random basis as far as
preferences are concerned (i.e. we have no preferences) or on a first-come first
served basis. I ask you again - which of these latter two do you prefer if you
reject the need for a hierarchy of production goals?
=====================================================
[QUOTE=syndicat;2020012]as i've pointed out before, you're wrong about this. a
"hierarchy" doesn't say anything. that's because it's obvious that just because
building new health clinics is considered a higher priority this year than
expanding kidney bean production that doesn't mean we're not going to grow any
kidney beans. so, that tells us nothing because what we need to know is *how
much* more important are the health clinics? But that means, how much in the way
of resources do we propose to put into it? But then you need a numeric scale on
which to measure costs...and that's a price system..
Also, one person's preferences are different than anothers. But you talk as if
there is only one "hierarchy". So, you must be assuming this "hierarchy" is
decided by a single body of some sort. So if there is any accountability at all,
it must be to the entire social collectivity.
that means tyranny of the majority as far as production of products is
concerned.[/QUOTE]
=======================================================
I dont think you have been taking on board what Ive been saying and it is really
beginning to show. For example, you say because building new health clinics is
considered a higher priority this year than expanding kidney bean production
that doesn't mean we're not going to grow any kidney beans. Well, that's exactly
what I have been trying to tell you and for some time now!
It is not relevant for the purposes of this schema to determine "how much" more
important health clinics are than kidney bean production. Simply that they are
more important. There is, in other words an ordinal scale in which priorities
are ranked. You say a hierarchy "doesnt say anthing". Thats silly. Of course it
does. I think even you will admit that it tells us that health clinincs are
regarded as ranking more highly along this scale than kidney bean production.
What you dont yet understand is the significance of this simple point in terms
of the schema Ive outlined
But first lets dispose of the claim that you need a numeric - or what I think is
called a cardinal - scale in order to measure "how much" more important health
clinics are than kidney bean production and that, for that you need a price
system. Actually there are all sorts of reasons why a price system is quite
inept at doing what you claim it does. For a start, it is a very poor mechanism
for capturing information about opportunity costs. The price system hides more
information than it reveals. Have a look at the link I gave you which eleborates
on this:
http://non-market-calculation.wikispaces.com/
And of course there is the point that what is judged to be "important" e.g.
health care clinics is ultimately a subjective valuation so this begs the
burning question of precisely how the subjective evaluations of millions of
people are translated into objective price signals that, according to you, place
an accurate value on how much more important hospital clinics are than kidney
bean production.
Two quick points specifically about that. Firstly, immediately we see a
contradiction between this claim of yours and your other claim that "one
person's preferences are different than anothers". Indeed they are but you are
attacking my schema precisely becuase you contend that I am ignoring this point.
Yet your price system must equally ignore this point! When you go to a store you
dont generally tend to find a product having a range of prices attached to it
for you to chose from according to your own "subjective valuation", do you now?.
No, what you tend to find is that there is one single price which is presented
on a take it or leave it basis
Secondly you overlook what prices are. Ultimately, of course, they are the
monetary expression of labour values though the price of particular commodities
will rarely if ever coincide with their value content. Supply and demand
considereations cause prices for individual commodities to diverge from or
fluctatuate around, value. This means they are dependent not simply on the
desire for a given commidity but the effective demand we can exercise in order
to obtain said commodity. i.e. how much money we have in our wallet. Now since
there are enormous differences between people in terms of how much money they
possess with which to express their effective demand, it follows logically that
this fact alone means we are not talking about a level playing field as far as
the subjective preferences of individuals are concerned. Or, to put it
differently, prices are not an accurate indicator of people's subjective
preferences which are massively distorted by the unequal distribution of income
Coming back to the the question of a hierachy of production goials in a
non-market socialist economy I asked you specifically how do you propose to
allocate resoruces if you reject the need for a hierarchy of end uses. So far
you've not answered this point. There are only two other available options as I
far as I can see:
1) that you allocate resoruces on a purely random basis
2) that you allocate resources on a first come first serve basis
Which of these do you prefer? State your preference and then we can look into
the matter
For my part I fully accept the need for a hierarchy of production goals i.e.
some ordinal ranking of priorities. To me that makes complete sense. What you
dont yet seem to understand is how this ranking system impacts upon the
allocation of resources in my schema.
It is not intended to determnine how much "more important" a health clinic is
than kidney bean production. This is a subjective matter and I seriously
question any claim that this is something that can be quantified. The claim that
this accomplished by a price mechanism is utterly bogus for the reasons given.
When you are talking about subjectivity you are talking about empirical
individuals who you admit have preferences that vary from one to another. You
cannot meaningfully quantify these preferences. Yes you can take a vote on their
preferences and this is essentially what an ordinal scale does but yoiu cannot
sensibly measure how much one preference is preferred to another in this
aggregate sense.
A ranking of prorities is simply a guide, a kind of mental map, available to
producers in a non market socialist economy to allocate a particular input in a
specific situation where there are a number of demands for this input for which
the overall supply of this particular input is inadequate. In other words, we
are talking about an occasional situation not a chronic situation where a
production unit has to sift through these various demands on this input when the
supply is inadequate to meet all of them. For the most part , ideally speaking ,
this situation would not arise because the normal tendency would be for
production units to create a buffer stock to allow for unexpected increases in
demand. Sometimes though such a buffer stocks may be inadequate.
It is in this last situation that the idea of a hierarchy of production goals
comes into play. The input is allocated firstly to the end use judged to have
the highest priority and then downwards so that low priority end uses might
receive little or nothing of this input. This might mean a slowing down or even
a halt to the production of low priority goods although though more likely what
will happen is a process of technological substitition - the low priority end
use resorts to some other more abundant input
Note something else here. If, say, health clinics were adjudged to be the top
priority within the ranking scheme it does not follow that all of societies
resources will be poured into building health clinics leaving nothing over for
other purposes - that there would be no constraints at all on the consumption of
inputs by top priority end uses simply becuase they are top priority end uses.
Building a health clinic requires a certain number of inputs. For simplicity's
sake lets call them inputs X, Y and Z. If the manufacturers of X are faced with
the sitaution where the competing demands for X exceed the supply of X, they
cant just say lets just forget about all the other demands and hand over the
entire supply of X to bulding health clinics. Why? The reason is simple. Its
because, with every project and every product , you will find there is something
which is called a technical ratio of inputs to outputs. The bundle of inputs
come in a particular configuration. So to produce 1 health clinic you may need
10 units of X, 5 units of Y and 7 bunits of Z. If youve got 5 units of Y and 7
units of Z but are having difficulty with the supply of X you cannot just willy
nilly hand over all of X to the building of health clinics. Lets say the
suppliers of X are faced with a total demand for X of 20 units but have only 15
available. They cannot just hand over all 15 units to building clinics. Why?
Becuase the demand for X is governed by the technical ratio of inpouts and by
the availability of these other inputs involved in building a health clinic .
Handing over 15 units means 5 of those units will be unused. There will be no
point in having 15 units when only 10 is needed. What this means basically is
that end use of building a health clinic will get all 10 units it requires with
the remaining 5 units being distributed among lower priority end uses
accordingly.
Try to understand what I am saying here becuase it goes a very long to answering
your point about "how much" . I am arguing that there are certain technical
constraints to do with the diversified structure of production itself that will
help to resolve this issue

I thought I'd draw your attention to this post about David Graeber on the
Neuroanthropology blogsite:

http://blogs.plos.org/neuroanthropology/2011/10/15/david-graeber-anthropologist-\
anarchist-financial-analyst/?mid=5067

At the end he provides links to a debate that Graeber had with some Austrians
online. I haven't looked at them yet, but they should be interesting.

The blog about Graeber itself is well worth reading.

YfS Jim

I agree that it is about time.

Has anyone noticed that, now workers are beginning to express dissatisfaction
with capitalism in a bigger way, the von Mises disciples have started to creep
out from under their stones?

Unfortunately, I haven't got much time to devote to it, but I'm hoping that
those with the theorerical knowledge will be able to.

YfS Jim

Hi all

Ive been reading some stuff by Boettke lately  - in particular his article
"Economic calculation The Austrian contribution to political economy".  Austrian
economics is, one gathers, distinctive in its rejection of static equilibrium
models and its emphasis on the market on as a dynamic discovery and "self
correcting" process

I find this expression "self correcting" a little odd. See what you think  about
this while Im still in my "stream of consciousness" mode of thinking  (meaning
there is nothing hard and fast about the conclusions I am stating here - they
are just provisional and off the top of my head)

Anyway here's the passage that got me thinking:

"In short, without private property in the means of production, rational
economic calculation is not possible. Under an institutional regime which
attempts to abolish private ownership in the means of production, advanced
industrial production is reduced to so many steps in the dark as decision-makers
are denied the necessary compass. As Mises put in Socialism, economic
calculation "provides a guide amid the bewildering throng of economic
possibilities. It enables us to extend judgements of value which apply directly
only to consumption goods � or at best to production goods of the lowest order �
to all goods of higher orders. Without it, all production by lengthy and
roundabout processes would be so many steps in the dark � And then we have a
socialist community which must cross the whole ocean of possible and imaginable
economic permutations without the compass of economic calculation" (1922, pp.
101, 105).
In the world in which we live, economic decision-makers are confronted with an
array of technologically feasible production projects, what economic calculation
provides is a means to select from among these projects to assure that resources
are employed in an economic manner5. Waste, as a result, will be minimized as
decision errors are continually detected and corrected by the aid of profit and
loss accounting. Only through this process of error detection and correction
within the market can it be said that entrepreneurial hunches are tied to the
underlying reality of consumer tastes, resource endowment, and technological
possibilities. Every entrepreneurial act is a wishful conjecture about a future
which is different from today, but wishing so cannot make it so by itself6.
Entrepreneurial wishes yield profits only when technological possibilities are
arranged in a manner which best satisfies consumer preferences in the most
economic fashion. Consumer preferences change, and the stock of technological
knowledge changes, and the entrepreneur (perhaps a new one) is trying to bring
their new wishful conjectures into life to realize profits. If their conjecture
is wrong, or poorly executed, then the ensuing losses will redirect their
efforts. "Every single step of entrepreneurial activities," Mises wrote, "is
subject to scrutiny by monetary calculation. The premeditation of planned action
becomes commercial precalculation of expected costs and expected proceeds. The
retrospective establishment of the outcome of past action becomes accounting
profits and losses" (Mises 1949, p. 229)."




There is something a little odd about all this. In socialism we would be reduced
to "groping  around in the dark" apparently without the "compass of economic
calculation" yet in capitalism entrepenurial activity is based on guess work and
hunches.  Hmmm.  On the face of it there doesnt seem to be much difference
there.  Never mind that Mises is talking a load of tosh about a socialist
society  being unable to engage in economic calculation - it certainly could by
discriminating between factors in terms of their relative availability using
calculation in kind and a self regulating system of stock control - an approach
which I dont believe ever occured to Mises at any point in his longa nd
illustrious career.  What interests me here however is simply this question of
the market as an allegedly "self correcting" mechanism

In what sense could it be this? OK , entrepeneous who make bad hunches and
incorrectly guess future prices go to the wall and are eliminated from the
capitalist jungle - like that celebrity show where the celebrities get to booted
out of an actual jungle.  But how does this amount to a corrective process.
Forgive me if I am being a bit thick here but, to me a corrective process would
be something that or reduces or eliminates error or the source of error. It
would seem to imply a progressive process of improvement, a kind of learning
curve that entrepenrous emabark upon, resulting in ever more accurate guesses
being made in the future . Not that an entrepeneur who has been made bankrupt as
a result of her poor guesswork is in much of a postion to learn from her errors
inthe sense of beingable to do better next time.  For most who do go banktrupt
there is no next time


Yet thats precisely the thing thats bugging me about all this.  Surely it is
central to the Austrian view of the market that it will never be amenable to
conscious control and that unpredictability is built into the very nature of
markets themselves.  Its a different kind of knowlege than , say, scientific
knowlege, that we are talking here and I believe Hayek himself made this self
same point.  Scientific knowlege is something that can accumulated thus enabling
us to deepen our understanding of the phenomenon under investigation.  The data
that the market is dealing with on the other hand is by its very nature
dispersed and in a state of constant flux and so not amenable to accumulation in
this snese .  We cannot get to know it better in this sense so the question of
correcting our past errors of judgements simply does not arise.

Which means that it is quite misleading to talk of the market as a dynamic and
self correcting process.  It doesnt strictly "correct"; it merely penalises
those who guess wrongly .  And it affords absolutely no way of ensuring that
they will not continue to go wrong, again and again - or in the case of those
who in hindsight guess right, the certainly of continuing to guess right

Anyway, what do you guys think. I would welcome any comments

Cheers

Robin

Hi all

On the links page there are a few juicy-looking articles by Dan Greenwood  I
came across.  I tried opening one of these but was denied access - except of 
course at a rather hefty price.  Very appropriate, I guess, for an article on
economic calculation.

Well,  Im a skint proletarian and dont have that sort of dosh to put together,
frankly.  Im sure its no reflection on Dan but rather on the money-making
machines that universities seem to have become these days.

Does anyone know of some alternative method by which i can cheat the market,
relying solely on calculation in kind, in order to gain access to said articles?
Is Dan a member of this group and if so is there another format in which he can
make his stuff available to this group?

Cheers

Robin

Hi Robin,

The bottom five or six have a pdf that you can click on after clicking on the
link. And one of the others I think.

As for the others, mostly the more recent ones, I don't know. Perhaps Dan, who
is around here somewhere, might be able to help.

YfS Jim

--- In ecaworkinggroup@yahoogroups.com, "robbo203" <robbo203@...> wrote:
>
> Hi all
>
> On the links page there are a few juicy-looking articles by Dan Greenwood  I
came across.  I tried opening one of these but was denied access - except of 
course at a rather hefty price.  Very appropriate, I guess, for an article on
economic calculation.
>
> Well,  Im a skint proletarian and dont have that sort of dosh to put together,
frankly.  Im sure its no reflection on Dan but rather on the money-making
machines that universities seem to have become these days.
>
> Does anyone know of some alternative method by which i can cheat the market,
relying solely on calculation in kind, in order to gain access to said articles?
Is Dan a member of this group and if so is there another format in which he can
make his stuff available to this group?
>
> Cheers
>
> Robin
>

Hi Jim

I dont doubt that individual firms can learn from the mistakes of other firms
and prosper with the benefit of hindsight. But my point is somewhat different -
is the market itself  "self correcting"  at the systemic level? Extrapolating
from the behaviour of the individual firm (gifted though it may be with superior
entrepenurial ability to make better guesses than its rivals) to the totality of
firms operating in the market is to the commit a fallacy of composition.


Individuals firms may improve their ability to guess and therefore to reduce
(relative to other firms)  the intrinsic uncertainty they face to an extent but
it does not follow that the market itself thereby becomes less prone to risk and
uncertainty.  The point that I am getting at, I guess, is that this may well be
a zero sum game we are talking about here. The improved ability of some firms to
interpet present and recent prices and thus to predict future prices  must be at
the expense of other firms with whom they are in competiton with.  It doesnt
really make much sense to say that all advance forward as it were in the same
direction and achieve the same measure of success  - this would make nonsense of
the very term "self correcting"!.  What would there be to correct if no firm
stood out as being in need to correction?  Its the differences between
enterprises in respect of their entrepeneurial performance that allows the
successful to succeed and the failures to fail and so makes for the possibility
of "self correction"

To put it another way, you cant have success without failure in the same sense
that you cannot have winners without losers - they imply each other. And this is
the point-  is it not? -  about the claim that the market is self correcting. It
needs failure in order to self correct itself if you see what I mean.

But that does not mean that, the failures having failed, the market has no
further need for failure and hecne self correction.  This is why I am questioing
the aptness of the expression that the market is a self correcting mechanism. 
It does not really correct itself.  Indeed it ncannot without ceasing to be a
competitve market.

Individuals firms may be expelled from business by being bankrupted but the
expulsion of these particular firms does not mean that that the degree of
bankruptcies ios likely to diminish in the futture because it is more
commerically adept firms that have survivied.    All that bankruptcies do is to
reshuffle the deck of cards in the poker gamne of capitalist business and makes
others who might well have been doing modestly well hitherto now at greater risk
of losing.  There is no incremental systemic diminution in the intensity of 
risk  and the extent of uncertainly overall; only a redistribution of the same
as previous players or economic actors leave the field to those remaining and as
newcomers enter the game.



I dont know if I have explained myself clearly but I hope you can see what I am
trying to get at. Which is to suggest that to talk of the market being self
correctomg is somewhat misleading since it can never correct itself in that
sense and must always alllow for the possibility of failure in order to function
as a competitve market at all.

Cheers

Robin

Hi all

Someone on one of the lists Im on has brought this quote from Marx to my
attention .  Its from Capital vol 111.  I think its relevant to the economic
calculation argument  in view of the importance attached to the concept of
central planning in a socialist society by people like Mises & co. Central
planning is one big red herring in my view to distract from the flaws in the ECA
itself but thats another argument

Anyway here's the quote



"Furthermore, the mass of profit increases in spite of its slower rate with the
growth of the invested capital. However, this requires a simultaneous
concentration of capital, since the conditions of production then demand
employment of capital on a larger scale. It also requires its centralisation,
i.e. , the swallowing up of the small capitalists by the big and their
deprivation of capital. It is again but an instance of separating � raised to
the second power � the conditions of production from the producers to whose
number these small capitalists still belong, since their own labour continues to
play a role in their case. The labour of a capitalist stands altogether in
inverse proportion to the size of his capital, i.e. , to the degree in which he
is a capitalist. It is this same severance of the conditions of production, on
the one hand, from the producers, on the other, that forms the conception of
capital. It begins with primitive accumulation, appears as a permanent process
in the accumulation and concentration of capital, and expresses itself finally
as centralisation of existing capitals in a few hands and a deprivation of many
of their capital (to which expropriation is now changed). This process would
soon bring about the collapse of capitalist production if it were not for
counteracting tendencies, which have a continuous decentralising effect
alongside the centripetal one."


Cheers

Robin

Robin,

I am struggling to get my head around this quote.  I only read vols one and two,
so I never read this in context.  I think I understand it but I'll need to read
it several more times to be sure.  Red herring or not it looks to be of some
importance.  It doesn't seem to be about central planning but about
concentration of capital.  This could be achieved in any case by flexi co-ops
that concentrate their capital for social purpose within capitalism.  If
socialism is substituted for capitalism then capital will be in goods not in
money, and everything will be simpler.  Anyone interested in creating larger
industry would simply discuss it with others of like mind then put their
proposal to the wider public for the yay or nay.  If yay they then ask those
available to contribute what they can to the scheme.  Various working groups are
set up and the work begun.  No money needed.  With a massive "army" of workers
to choose from practically no scheme would be too large.  If it is needed then
we have to find the means.  Not the money but the direct means.  Whatever is
done now should also be possible without money.  Whether desirable or not is
another matter.

Cheers,

Bob
***

--- In ecaworkinggroup@yahoogroups.com, "robbo203" <robbo203@...> wrote:
>
> Hi all
>
> Someone on one of the lists Im on has brought this quote from Marx to my
attention .  Its from Capital vol 111.  I think its relevant to the economic
calculation argument  in view of the importance attached to the concept of
central planning in a socialist society by people like Mises & co. Central
planning is one big red herring in my view to distract from the flaws in the ECA
itself but thats another argument
>
> Anyway here's the quote
>
>
>
> "Furthermore, the mass of profit increases in spite of its slower rate with
the growth of the invested capital. However, this requires a simultaneous
concentration of capital, since the conditions of production then demand
employment of capital on a larger scale. It also requires its centralisation,
i.e. , the swallowing up of the small capitalists by the big and their
deprivation of capital. It is again but an instance of separating � raised to
the second power � the conditions of production from the producers to whose
number these small capitalists still belong, since their own labour continues to
play a role in their case. The labour of a capitalist stands altogether in
inverse proportion to the size of his capital, i.e. , to the degree in which he
is a capitalist. It is this same severance of the conditions of production, on
the one hand, from the producers, on the other, that forms the conception of
capital. It begins with primitive accumulation, appears as a permanent process
in the accumulation and concentration of capital, and expresses itself finally
as centralisation of existing capitals in a few hands and a deprivation of many
of their capital (to which expropriation is now changed). This process would
soon bring about the collapse of capitalist production if it were not for
counteracting tendencies, which have a continuous decentralising effect
alongside the centripetal one."
>
>
> Cheers
>
> Robin
>

The market is self correcting but very wasteful.  In a co-operative world all
those involved in a particular branch of industry would share their knowledge
and then each manufactory would produce to the same design all over the world,
if appropriate.  Hence you would not get a Betamax versus VHS situation.  These
different designs would be tested and compared prior to making them available to
the public.

Cheers,

Bob
***

--- In ecaworkinggroup@yahoogroups.com, JAMES NORTH <jamesnorth279@...> wrote:
>
> Hi Robin,
>
> I know what you mean.
>
> It seems that the term *self* correcting is misleading.
>
> It is true that the market corrects through failure. Bankruptcies, drop-outs,
> changes of plan etc. But does it correct itself?
>
> The only way I can see self-correcting being an appropriate term is if you
look
> at it holistically. That is that individuals and firms are intrinsically part
of
> the market rather than the market being something external to them. They are
> players in the market and their actions not only affect the market or are
> affected by it, but are part of the whole dynamic.
>
> YfS Jim
>
>
>
> ________________________________
> From: robbo203 <robbo203@...>
> To: ecaworkinggroup@yahoogroups.com
> Sent: Sunday, 6 November, 2011 23:16:57
> Subject: [ecaworkinggroup] Re: Is the market self correcting?
>
>  
> Hi Jim
>
> I dont doubt that individual firms can learn from the mistakes of other firms
> and prosper with the benefit of hindsight. But my point is somewhat different
-
> is the market itself "self correcting" at the systemic level? Extrapolating
from
> the behaviour of the individual firm (gifted though it may be with superior
> entrepenurial ability to make better guesses than its rivals) to the totality
of
> firms operating in the market is to the commit a fallacy of composition.
>
> Individuals firms may improve their ability to guess and therefore to reduce
> (relative to other firms) the intrinsic uncertainty they face to an extent but
> it does not follow that the market itself thereby becomes less prone to risk
and
> uncertainty. The point that I am getting at, I guess, is that this may well be
a
> zero sum game we are talking about here. The improved ability of some firms to
> interpet present and recent prices and thus to predict future prices must be
at
> the expense of other firms with whom they are in competiton with. It doesnt
> really make much sense to say that all advance forward as it were in the same
> direction and achieve the same measure of success - this would make nonsense
of
> the very term "self correcting"!. What would there be to correct if no firm
> stood out as being in need to correction? Its the differences between
> enterprises in respect of their entrepeneurial performance that allows the
> successful to succeed and the failures to fail and so makes for the
possibility
> of "self correction"
>
> To put it another way, you cant have success without failure in the same sense
> that you cannot have winners without losers - they imply each other. And this
is
> the point- is it not? - about the claim that the market is self correcting. It
> needs failure in order to self correct itself if you see what I mean.
>
>
> But that does not mean that, the failures having failed, the market has no
> further need for failure and hecne self correction. This is why I am
questioing
> the aptness of the expression that the market is a self correcting mechanism.
It
> does not really correct itself. Indeed it ncannot without ceasing to be a
> competitve market.
>
> Individuals firms may be expelled from business by being bankrupted but the
> expulsion of these particular firms does not mean that that the degree of
> bankruptcies ios likely to diminish in the futture because it is more
> commerically adept firms that have survivied. All that bankruptcies do is to
> reshuffle the deck of cards in the poker gamne of capitalist business and
makes
> others who might well have been doing modestly well hitherto now at greater
risk
> of losing. There is no incremental systemic diminution in the intensity of
risk
> and the extent of uncertainly overall; only a redistribution of the same as
> previous players or economic actors leave the field to those remaining and as
> newcomers enter the game.
>
> I dont know if I have explained myself clearly but I hope you can see what I
am
> trying to get at. Which is to suggest that to talk of the market being self
> correctomg is somewhat misleading since it can never correct itself in that
> sense and must always alllow for the possibility of failure in order to
function
> as a competitve market at all.
>
> Cheers
>
> Robin
>

We need a really well written piece that utterly destroys the ECA in as few
words as possible.  I don't even understand the ECA properly.  Who here has
studied it and can at least describe it better than Wikipedia?

Cheers,

Bob
***

(Hey! :) I posted this already on the WSM forum and I have a feeling  there is
overlap between that forum and this group, but I'm still going to post this
here, too, on the chance that it will get responses from new people. Thanks!)

Hello everyone! :) This is my first post here� and I'm starting off with a huge
question.

I recently read the article by Robin Cox called The "Economic Calculation"
controversy: unravelling of a myth (http://www.cvoice.org/cv3cox.htm). Overall I
found the article convincing, and it laid to rest various scepticisms I'd had
about a moneyless (and free access) system, but there were still a couple things
that remained problematic for me. (They are explained below.)

[b]I would prefer to live in a moneyless system, but as long as these problems
remain unsolved I don't think such a system is viable.[/b]  :cry: That does NOT
mean I think we need markets or wages or even a single unit for accounting. Each
good can have multiple prices according to the labor time, environmental harms,
and non/semi-renewable resource usage associated with that product. We could
have non-circulating credits for labor time and also for various environmental
harms we want to limit (like greenhouse gas credits) and also for non- or
semi-renewable resources (biodiversity impact credits). These credits can be
distributed according to need (about equally but with more for those with
greater need). This would not be buying/selling or exchange, the credits would
just be subtracted from each person's account (I guess electronically).

The benefit of this is that it places limits on our consumption and thus require
that we prioritize what to consume, which would then automatically signal
information about what our consumption/production priorities are, without
needing to have various meetings to communicate our priorities.

In any case, like I said I would prefer a moneyless system so I'm posting this
not to try to shoot down your ideas but because I'm hoping you know how to solve
this problem.

[b]The Problems Explained...[/b]

Critics, and also supportive sceptics, of a moneyless and free access system
have said that in such a system we won't be able to decide how to allocate
resources necessary for production (raw materials, such as steel, and
intermediate goods, such as microchips).

For example, if producing a month's supply of thing X for our community takes
200 units of chlorine, and producing a month's supply of thing Y requires 100
units of chlorine, but we only have 200 units of chlorine per month available
(due to our democratic decision to limit harsh chemicals), how will we decide
what to produce? Should we produce half a month's supply of X so we can produce
an entire month's supply of Y? Should we not produce any Y so we can produce the
entire month's supply of X? Or some other combination?

The solution usually given is that we will make these decisions through meetings
where we will discuss, debate, and decide our consumption priorities, using
something roughly like Maslow's hierarchy of needs. Basic survival needs like
food, shelter, and medicine will take top of the list priority. Trivial luxuries
will be at the bottom of the list.

I agree with this solution in principal but I don't think it solves the problem
adequately � for a few reasons:

[b]1. Cases involving goods of equal priority.[/b] Continuing with the example
where the available supply of chlorine falls short of the demand for it, If
thing X is of very high priority and thing Y is of very low priority, then we
can produce the full amount of thing X and reduce the production of thing Y. But
what if both are of the same priority? What if they both rank at level 15 (out
of a possible 30 priority levels)? We will need to have a meeting to decide
which is of the two is of slightly higher priority. If we decide X is of higher
priority we can't just stick X in level 14 because we already decided it was
less important than goods in that level. And we can't stick Y in level 16 for
the opposite reason. So we have to create a new priority level, which means we
now have 31 priority levels. But eventually the same problem will come up again
with another two goods and we will need to have another meeting and will then
have 32 priority levels. This process can go on indefinitely, every time two
goods of equal priority come into conflict.

[b]2. Even when goods are not of equal priority we still don't know to what
extent to reduce production of each good. [/b]Knowing that X is of a higher
priority than Y tells us that we rather reduce production of Y than of X. But it
doesn't tell us to what extent we are willing to sacrifice Y to get X. Are we
willing to have no Y whatsoever so we can have a full supply of X? Or would we
rather have a half supply of Y which still leaves us with a three-quarters
supply of X? There are many other possible options. Which to choose? You might
say that these decisions would be made at meetings, but with all the
fluctuations of supply and demand that might occur from day to day for all the
myriad of goods and their inputs, this would require more meetings than most
would be willing to tolerate.

[b]3. A good in a low priority category should not necessarily, in each case, be
sacrificed to produce a good in a high priority category.[/b] For example, the
need for food is obviously in a tie with various other needs for being of the
utmost priority. But not all food deserves to be on such a high level � i.e.
potato chips. And even a food staple, such as bread, is not in itself absolutely
essential, as long as alternatives are available. If there is no bread I can
have potatoes, corn tortillas, rice. Now let's imagine a scenario where we have
a demand for both bread and beer, but not enough wheat to fully meet the demand
for both. In fact, to totally meet the demand for bread we will have to fall
short of our beer demand by 70%. If we were using a priority ranking system,
staple food is in the highest priority category and beer is probably at least
halfway down, so indeed we would produce only 30% of our desired amount of beer
but plenty of bread. But wouldn't it make more sense to reduce the production of
bread somewhat so that more beer could be made? After all, there are other food
options besides bread. (There are also other alcohol options besides beer, so
perhaps this wasn't the best example, but if you use your imagination you can
think of other examples where it doesn't make sense to drastically reduce a low
priority good to meet production for a "high priority" good. I'll give another
example: not enough rubber to meet the demand for both raincoats and dildos.
Protection from the rain is more important than a masturbation tool, but there
is also the option of the umbrella which needs no rubber. And maybe half the
people who want raincoats already have one that works fine, but it looks shabby
so they want a new one. In that case the need is not for protection from the
rain (a high priority) but fashion (a priority which is not necessarily of more
or even equal importance to masturbation). Again, you might say common sense
will solve this issue, but whose common sense? For the decision to be
democratic, we will require meetings for our collective common sense to be put
to use. But with such issues coming up frequently, it would require frequent
meetings.

[b]4. Different people have different desires/priorities.[/b] For most people
thing Y might be at a level 20 priority (out of, say, 30 priority levels) and
thing X at a level 5. But for some people it might be the exact reverse. Such
people would not be happy with the decision to produce lots of X and very little
Y. Of course as in any democratic decision not everyone will be happy with the
outcome. But we should at least hope that what little of Y is produced goes to
those who most desire it. In a free/open access system, how can this be assured?
Unless we think of some way to make it otherwise, what will happen is that
people will get things on a first come first serve basis. If I do not have to
limit my consumption, that means I don't need to prioritize what I consume,
either, and therefore I might consume Y even though it's at a level 20 priority
for me. My neighbour for who Y is at a level 5 priority happens to get to the
distribution outlet later than me and by then there is no more Y left. I suppose
we could reserve scarce goods for those who most wanted them, but how would this
be determined?

Now the purpose of bringing this up isn't to conclude that a moneyless system of
free/open access is impossible. It's to ask if you can think of any solution(s).
I imagine the solution may be an extension of the solution which is usually
given, mentioned above, that we will know how to allocate scarce resources
because we will set our consumption priorities through a democratic process.
Although such a simple answer is insufficient, I believe it can be the basis or
nucleus of an adequate answer. Then again, maybe the solution is to be found in
something else entirely (but something that, of course, does not resort to
either authority or wages).

Thank you everyone I hope we can figure this out! :D

--- In ecaworkinggroup@yahoogroups.com, "ladybugbug1984" <ladybugbug1984@...>
wrote:
>



Hi Ladybug

As I am a little pushed for time, what i thought I might do is post here my
response to your lastest contribution the over on the SPGB forum.  People here
who maybe be a little puzzled over the reference to J A Hobson can make sense of
it by going to thatfroum where the matter was being discussed - 
http://www.worldsocialism.org/spgb/forum/general-discussion/id-moneyless-system-\
see-couple-flaws-need-fixing

Here is my response:

___________________________________________________________________

It is easier to get at what Hobson is saying about the equimarginal principle if
you look at his example  of the painter.  A painter does not chose the
proportions of different colours used in the painting  according to the
"marginal utility" of each colour.  He or she does not say:  "I like the colour
red more than green and will therefore continue using the colour red until the
last brushstroke I apply yields the same amount of satisfaction or utility as
the last brushstroke using the the colour green".  Yet this is precisely what
Alfred Marshall's famous equimarginal principle implies - that comparisons are
made at the margin so that the numbers of different items in your shopping
basket, for example,  are adjusted in a way that ensures the last unit of each
item yields the same utility as every other item.  According to Marshall, by
doing this we are able to maximise the total utility we obtain across the entire
range of items in our shopping basket - by ensuring that the marginal unit of
each item is the same for every other item.  In other words,  we would arrive at
the most efficient allocation of our  budget  by conforming to this equimarginal
principle and this can be demonstrated in a simple graph



Hobson's counterargument is that this is a totally bogus way of looking at
things.  The painter in his analogy does not apply different colours by
comparing the marginal utility of each colour.  Rather, allocation is made from
the "centre" as he put it - that is, from a holistic perspective that looks at
the painting as a unity .  Try imagine what the painting would look like if the
painter had a marked preference for the colour red.  Most of the painting would
be cololured in red so that in the case of landscape painting, say, you might
end up with most of the trees being painted in red rather than green!  It only
appears that the painting has allocated different  colours according to the
equimarginal principle  but this is quite misleading , argued Hobson; it is what
is called a  "post hoc, ergo propter hoc" (meaning, "after the fact, therefore
before the fact")  fallacy.  What applies to his painting analogy applies to
life in general - we allocate our time and effort according to our core values -
from the centre and not at the margin



Another early critic of marginalisim - Nicolas Georgescu-Roegen - looked at the
matter from a somewhat different perspective. He argued that  the equimaginal
principle was only really applicable to goods that met the same basic need -
such as the need for food.  Once you start attempting to apply it to consumer
goods that satisfy different kinds of needs the principle breaks down
completely.  This is because of what he called the principle of irreducibility
of needs.  However , for mainstream neoclassical economics it was simply assumed
that everything could be boiled down to, or rendered commensurable in terms of ,
the abstract notion of utility. Thus , the utility of eating a bowl of rice
pudding was in principle no different from the utility of riding a horse of
playing a game of golf  - the only  difference lying with the amount of utility
each of these activities offered the individual



There are numerous other criticisms that can be leveled against the whole corpus
of marginalist theory.  The key concept of diminishing marginal utility , for
example, is highly questionable.  There are many  counterexamples where the
exact opposite is the case such as where there is a tipping point involved. 
Taking a course of antibiotic pills is an example.  If you stop halfway through
the course the "utility" of the last pill would be significantly less than the
last pill  if you took all the pills prescribed.  In fact the bacteria might
well develop resistance and so you would incur a disutilty by not completing the
course prescribed.  There are other kinds of examples that defy the law of
diminishing marginal utility such as Giffen goods, Status goods and Inferior
goods.  I wont go on about this except to draw your attention to them



On your final point , yes.  by " people on the ground" I mean basically the
people  working in the factories or whatever - the people at the coal face so to
speak -  who have to make practical day to day decisions.  In the face of
multiple demands that exceed the supplies of the available product that is made
in the factory  itself. They would have to make on the spot decisions about how
to allocate this product among these different demands.  This is what i am
getting at.  My point is that for the most part, such things can be left to the
basic intuition of the individuals concerned .  You can certainly finetune the
decisionmaking process by introducing into the equation other considerations
such as frequency of demand amongst the different end uses to which this product
would be allocated  as well as whether or not  the or how often the requirements
of particular end use had been met in the past

I don't see any real insurmountable problem with this approach, Bearing in mind
we are talking about a society in which a common set of values will prevail 
which will tend to be reflected in a fairly consistent pattern of decision
making vis a vis resource allocation. Also bear in mind that the
producer-consumer distinction would no longer apply, that individuals would not
necessarily just work in one particular place of work  and that there would be
no special vested interest in commandeering a particular input for one
particular purpose at the expense of another



Above all , and finally,  bear in mind that this whole notion of a hierarchy of
production goals  only comes into play when there is a discernable  discrepancy 
between the multiple demands for a particular good, on the one hand, and the
available supply of said good on the other. The built in tendency of a socialist
production system will always be towards the elimination of such bottlenecks
since the existence of buffer stocks is a key indicator  in the management of a
self regulating system of stock control.  Moreover,  whenever a bottleneck might
arise this does not prevent those lower priority end uses from being  addressed.
This is because it  may well be possible in such cases to resort to
technological substitution - substituting a scarce input that is mainly diverted
to higher priority end uses for a  more abundant input  that is made available
through the self regulating system of stock control.

Hope this helps



Cheers



Robin