Economics Discussion Thread

[Donut section]

News just in forced labor camps are ok!

Stalin, Stalin's got the nerve of steel / Mess with him and you will know the feel

(non-sequitur comment gets non-sequitur response, but this also requires a disclaimer: joking aside, I absolutely do not support Stalin... in case anyone was wondering. Stalinism was a horrible thing.)

And yet Stalinism isn't the logical outcome of socialism or something?

[Constantinopolis]

Stalin, Stalin's got the nerve of steel / Mess with him and you will know the feel

(non-sequitur comment gets non-sequitur response, but this also requires a disclaimer: joking aside, I absolutely do not support Stalin... in case anyone was wondering. Stalinism was a horrible thing.)

And yet Stalinism isn't the logical outcome of socialism or something?

Stalinism isn't even the logical outcome of Stalinism, as you know, because it ended within 3 years after Stalin died and then the USSR went on to exist for over 30 more years.

[Donut section]

And yet Stalinism isn't the logical outcome of socialism or something?

Stalinism isn't even the logical outcome of Stalinism, as you know, because it ended within 3 years after Stalin died and then the USSR went on to exist for over 30 more years.

So there's no link between a psycho taking control and just killing folks and a socialist revolution?
Because every major socialist revolution I know Russia, china and North Korea it happened.

[Constantinopolis]

Stalinism isn't even the logical outcome of Stalinism, as you know, because it ended within 3 years after Stalin died and then the USSR went on to exist for over 30 more years.

So there's no link between a psycho taking control and just killing folks and a socialist revolution?
Because every major socialist revolution I know Russia, china and North Korea it happened.

Well there's a link between violent revolution and violence happening, yes.

But that's hardly limited to socialist revolutions. When someone takes power somewhere through armed struggle, people usually get killed.

The question, then, is whether it is possible to move from capitalism to socialism without armed struggle. I am not sure.

[Donut section]

So there's no link between a psycho taking control and just killing folks and a socialist revolution?
Because every major socialist revolution I know Russia, china and North Korea it happened.

Well there's a link between violent revolution and violence happening, yes.

But that's hardly limited to socialist revolutions. When someone takes power somewhere through armed struggle, people usually get killed.

The question, then, is whether it is possible to move from capitalism to socialism without armed struggle. I am not sure.

It's not. Nobody wants an objectively worse system. It needs violence to quail reasonable people into submission and keep them there. Hence the Stalins.

[Constantinopolis]

Well there's a link between violent revolution and violence happening, yes.

But that's hardly limited to socialist revolutions. When someone takes power somewhere through armed struggle, people usually get killed.

The question, then, is whether it is possible to move from capitalism to socialism without armed struggle. I am not sure.

It's not. Nobody wants an objectively worse system. It needs violence to quail reasonable people into submission and keep them there. Hence the Stalins.

Objectively worse than what?

In Russia, the socialist system replaced an ambiguous provisional government, which itself had replaced the Tsar. All during a catastrophic world war, which Russia was losing, and German troops were continually gaining ground.
In China, the country had been at war for decades - first a civil war, then war with Japan, then a civil war again - and the Communist victory was the thing that ended the war-without-end.
In North Korea, the country had been under Imperial Japanese occupation for over 30 years before Kim took over.

Even if you think socialism is objectively worse than capitalism, history doesn't usually provide countries with such neat choices. In the real world, you don't get to choose between socialism and capitalism. You get to choose between socialism and foreign occupation, or between socialism and a continued civil war. So the idea that violence is necessary to "quail reasonable people into submission" doesn't actually hold water, because in many cases, the realistic alternative to socialism isn't something that reasonable people would actually want. Most violent revolutions, including socialist ones, tend to happen under desperate and extreme circumstances. Because revolutions kill people, and everyone knows that, so you generally only get a revolution when there is already violence going on and most people feel their lives are at risk anyway - so, what the hell, might as well go for revolution.

But even when the threat of foreign occupation or civil war doesn't loom over people's heads... Tell me, if given the choice between the Soviet Union and present-day Russia, what do you think most Russians would choose? A lot of polls say they would choose the USSR.

So much for "objectively worse". Objectively worse than some ideal capitalism, maybe. But not objectively worse than the realistic alternative.

You see, real-world socialism doesn't need to be better than some perfect, ideal capitalism. It only needs to be better than the kind of capitalism that most people can realistically expect to get in their country. Swedish capitalism may be objectively better than Soviet socialism, but why should Russians care, when there is no realistic way they would ever get the Swedish model in their country?

[36 Camera Perspective]

@Constantinopolis

I read earlier in this thread that you don't believe the misallocation of resources under central planning was necessarily a structural issue. How, then, would you respond to Mises' socialist calculation argument?

[The Federation of Kendor]

Can someone teach me more about the economy systems? Also, what is mixed economic system officially called?

[Antarctic Commonwealth of Equality]

Can someone teach me more about the economy systems? Also, what is mixed economic system officially called?

I guess the most "mixed" economy would be market socialism if you want something between socialism and capitalism.

Many communists would say it is just capitalism with worker cooperatives though.

Most people would say that social democracy is a mix of socialism and capitalism. However social democracy is just capitalism with a strong welfare system.

[The Federation of Kendor]

Can someone teach me more about the economy systems? Also, what is mixed economic system officially called?

I guess the most "mixed" economy would be market socialism if you want something between socialism and capitalism.

Many communists would say it is just capitalism with worker cooperatives though.

Most people would say that social democracy is a mix of socialism and capitalism. However social democracy is just capitalism with a strong welfare system.

The ideal economic system i'm thinking of is a combination of capitalism and socialism, with free enterprise and state owned business of all sizes, from a person selling something to a corporation. However, they both must be regulated to prevent the evils of capitalism. We must also educate the people to be kinder, as well as using some of the tax money, especially from rich people, to benefit the less fortunate

[Constantinopolis]

@Constantinopolis

I read earlier in this thread that you don't believe the misallocation of resources under central planning was necessarily a structural issue. How, then, would you respond to Mises' socialist calculation argument?

Ah, I wrote a paper on this once! Let me see if I can summarize my points.

First, Mises' argument relies on a non-falsifiable assertion that there is some kind of information that is revealed by market prices but which central planners cannot learn. He doesn't actually provide any evidence that this is the case. He simply asserts it. And in fact, since the information is question is by definition something that is only revealed by market prices and cannot be learned any other way, his argument isn't merely without evidence, it is actually non-falsifiable. It is by definition impossible to prove that such information exists, because if we could find it, then central planners could find it too. We pretty much just have to take Mises' word for it that there is something that market prices reveal that cannot be learned any other way.

Second, there is the fact that Mises was arguing from the perspective of an extremely idealized vision of capitalism, where all markets are free and competitive and no prices are distorted in any way. It is necessary to make this assumption in order to argue that capitalism is definitely superior to socialism in allocating resources. Without this assumption, in the real world, both capitalism and socialism have various inefficiencies, and one isn't systematically more efficient than the other. Between real capitalism and real socialism, either one could be more efficient, depending on circumstances.

Third, Mises' claim that socialist planners would have no idea how to allocate resources in the absence of prices is laughable. You don't need detailed information or calculation to dismiss totally outrageous and insane allocations (e.g. "let's devote all our resources to a combination of duck farms and contemporary theater!"). Basic common sense is enough to restrict potential allocations from infinity down to at least a bounded set of some kind. And then other methods can reduce the number of options further. Socialist planners would always have at least some idea of how to allocate resources, even if Mises was right about everything. Which leads back to the second point above: Let's grant that socialism would be inefficient to some extent; that doesn't necessarily mean it has to be more inefficient than really-existing capitalism.

Fourth, to the extent that the argument becomes one about the complexity of socialist calculation - which is not actually what Mises was saying, but is what many people imagine when they hear the words "socialist calculation" - modern computers render this argument obsolete. Already by the late 1980s, computers had advanced enough to make the "input-output matrix" method of socialist calculation actually feasible. Considering the sort of capabilities we have in the present day, socialist calculation would be downright easy.

[Antarctic Commonwealth of Equality]

The ideal economic system i'm thinking of is a combination of capitalism and socialism, with free enterprise and state owned business of all sizes, from a person selling something to a corporation. However, they both must be regulated to prevent the evils of capitalism. We must also educate the people to be kinder, as well as using some of the tax money, especially from rich people, to benefit the less fortunate

Do you mean that all companies are state owned but started by entrepreneurs or just capitalism with a strong welfare state and many state owned companies?

[The Federation of Kendor]

The ideal economic system i'm thinking of is a combination of capitalism and socialism, with free enterprise and state owned business of all sizes, from a person selling something to a corporation. However, they both must be regulated to prevent the evils of capitalism. We must also educate the people to be kinder, as well as using some of the tax money, especially from rich people, to benefit the less fortunate

Do you mean that all companies are state owned but started by entrepreneurs or just capitalism with a strong welfare state and many state owned companies?

The latter

[Antarctic Commonwealth of Equality]

The latter

The question then would be how you would sustain such a system. Currently social democracies are slowly selling off their state companies and to make the companies "more efficient". They are also making liberal(economic) reforms where the tax burden on the rich is decreased to "create jobs". Without competition from a socialist system there simply seems to be no need for a government to sustain it's welfare system in the long run.

[Constantinopolis]

The latter

The question then would be how you would sustain such a system. Currently social democracies are slowly selling off their state companies and to make the companies "more efficient". They are also making liberal(economic) reforms where the tax burden on the rich is decreased to "create jobs". Without competition from a socialist system there simply seems to be no need for a government to sustain it's welfare system in the long run.

And this, comrades, is the main reason why I do not support social democracy.

I see strong evidence that as long as a capitalist class exists, the welfare state is never safe.

So let's get rid of the capitalist class.

[The Federation of Kendor]

The question then would be how you would sustain such a system. Currently social democracies are slowly selling off their state companies and to make the companies "more efficient". They are also making liberal(economic) reforms where the tax burden on the rich is decreased to "create jobs". Without competition from a socialist system there simply seems to be no need for a government to sustain it's welfare system in the long run.

And this, comrades, is the main reason why I do not support social democracy.

I see strong evidence that as long as a capitalist class exists, the welfare state is never safe.

So let's get rid of the capitalist class.

I don't want to have my freedom and individualism removed. I do support teamwork, however, but I also think that freedom must be kept too. Plus, I think life will be more bland with communism/pure socialism. My suggestion is merely a wide reform of the capitalist state to make them more center-left, while actually caring for the people.

[36 Camera Perspective]

@Constantinopolis

I read earlier in this thread that you don't believe the misallocation of resources under central planning was necessarily a structural issue. How, then, would you respond to Mises' socialist calculation argument?

Ah, I wrote a paper on this once! Let me see if I can summarize my points.

First, Mises' argument relies on a non-falsifiable assertion that there is some kind of information that is revealed by market prices but which central planners cannot learn. He doesn't actually provide any evidence that this is the case. He simply asserts it. And in fact, since the information is question is by definition something that is only revealed by market prices and cannot be learned any other way, his argument isn't merely without evidence, it is actually non-falsifiable. It is by definition impossible to prove that such information exists, because if we could find it, then central planners could find it too. We pretty much just have to take Mises' word for it that there is something that market prices reveal that cannot be learned any other way.

I'll just start here because it's your first point, and coincidentally the one I would be able to engage with the most. I am unsure if you have summarized Mises' premise correctly. The argument is that without a market, there is no way to determine prices, and therefore it is impossible to rationally allocate resources. This is why we saw chronic shortages throughout the history of the Soviet Union. Of course, if the central planners control the productive structure of the entire country, then there is no market, no prices, and the signaling function of prices is lost. Mises does not need to provide "evidence" that central planners don't have access to this information, because the signaling function of prices is obviously lost if there is no market.

It's incorrect to say that any information provided by the market would also be available to central planners. Mises' exact point is that equilibrium emerges dynamically from the subjective preferences and interactions of economic agents. On Mises' view, we don't need to "find" this information, because the market will work everything out and "find" it for us. If you're a central planner, however, you are tasked with allocating resources a priori rather than dynamically, and you still have your work cut out for you to determine how to best rationally allocate resources.

[Constantinopolis]

And this, comrades, is the main reason why I do not support social democracy.

I see strong evidence that as long as a capitalist class exists, the welfare state is never safe.

So let's get rid of the capitalist class.

I don't want to have my freedom and individualism removed. I do support teamwork, however, but I also think that freedom must be kept too. Plus, I think life will be more bland with communism/pure socialism. My suggestion is merely a wide reform of the capitalist state to make them more center-left, while actually caring for the people.

But the point is that the capitalists will fight you every step of the way, and then after you've won, they will never stop trying to tear down your reforms.

Practically all of the things that the center-left wants today (and then some) were already implemented in Western and Northern Europe by the mid-1970s. Then the capitalists fought back, hard, and destroyed most of those reforms over the course of the neoliberal era.

So it does not appear to be possible to make a permanent peace with the capitalists. When you have an enemy that will never make peace, the only options are victory or death. The capitalists want war. So let's give them war.

[The Federation of Kendor]

I don't want to have my freedom and individualism removed. I do support teamwork, however, but I also think that freedom must be kept too. Plus, I think life will be more bland with communism/pure socialism. My suggestion is merely a wide reform of the capitalist state to make them more center-left, while actually caring for the people.

But the point is that the capitalists will fight you every step of the way, and then after you've won, they will never stop trying to tear down your reforms.

Practically all of the things that the center-left wants today (and then some) were already implemented in Western and Northern Europe by the mid-1970s. Then the capitalists fought back, hard, and destroyed most of those reforms over the course of the neoliberal era.

So it does not appear to be possible to make a permanent peace with the capitalists. When you have an enemy that will never make peace, the only options are victory or death. The capitalists want war. So let's give them war.

So we must sacrifice most of things we loved, like video games, capitalist/bourgeoisie fun, sports car, etc, and become a selfless being, who works for everyone, without wanting capitalist hedonism

[Antarctic Commonwealth of Equality]

So we must sacrifice most of things we loved, like video games, capitalist/bourgeoisie fun, sports car, etc, and become a selfless being, who works for everyone, without wanting capitalist hedonism

I honestly do not get why we would lose games or fun, but yeah we will likely lose sports cars.

EDIT:
Can you please provide your reasoning for this.

[Franklyn Kreul]

has served thousands of clients all across Southern California and the Western United States.

[Constantinopolis]

Ah, I wrote a paper on this once! Let me see if I can summarize my points.

First, Mises' argument relies on a non-falsifiable assertion that there is some kind of information that is revealed by market prices but which central planners cannot learn. He doesn't actually provide any evidence that this is the case. He simply asserts it. And in fact, since the information is question is by definition something that is only revealed by market prices and cannot be learned any other way, his argument isn't merely without evidence, it is actually non-falsifiable. It is by definition impossible to prove that such information exists, because if we could find it, then central planners could find it too. We pretty much just have to take Mises' word for it that there is something that market prices reveal that cannot be learned any other way.

I'll just start here because it's your first point, and coincidentally the one I would be able to engage with the most. I am unsure if you have summarized Mises' premise correctly. The argument is that without a market, there is no way to determine prices, and therefore it is impossible to rationally allocate resources.

Correct, that is his argument. But the question then becomes: Why is that so? Why is it not possible to rationally allocate resources without prices? What is it about prices that makes them special, that cannot be re-created without prices?

It was Hayek who tried to answer this question, later, by making the argument about information. I assume Mises agreed with him.

This is why we saw chronic shortages throughout the history of the Soviet Union.

Actually, that was mainly due to "taut planning": The practice of allocating PRECISELY enough inputs to an enterprise to produce the outputs specified by the plan. This meant that if anything went wrong - the slightest human error, or perhaps some weather change or nature interfering in other ways, or if the plan was slightly wrong - the enterprise would be left with not enough inputs to produce the planned outputs. Hence, shortages.

Ironically, this practice grew precisely out of a desire for efficiency. It seemed inefficient to allocate extra inputs to an enterprise, above the resources they needed, "just in case" they might need more than was planned. Yet that would have been the way to fix the shortages.

Of course, if the central planners control the productive structure of the entire country, then there is no market, no prices, and the signaling function of prices is lost. Mises does not need to provide "evidence" that central planners don't have access to this information, because the signaling function of prices is obviously lost if there is no market.

But this argument relies on the existence of something that prices signal, which cannot be discovered in other ways. That was my point. What is that "something"? How do we know it exists?

It's incorrect to say that any information provided by the market would also be available to central planners. Mises' exact point is that we cannot really "find" what the equilibrum point is. It emerges dynamically from the subjective preferences and interactions of economic agents. On Mises' view, we don't need to find this information, because the market will work everything out. If you're a central planner, however, you are tasked with allocating resources a priori rather than dynamically, and you still have your work cut out for you.

Okay, let me put it this way: If the issue is finding the subjective preferences of economic agents, why can't we just ask them? Imagine some type of online rating system, for example. Consumers are asked to rate various products according to a certain point-based system. Et voilà, we've found their preferences without a market.

Of course, the Soviet economy did not do this. The technology wasn't there at the time. But we can do it now.

This is only one example. The general point is, whatever people say to each other in a market, they can also say outside of a market. Whatever information or preferences are revealed in a market, can also be revealed outside of a market. Mises asserts that this is not so, that there is something quasi-magical about markets that makes them unique, but he never really defends his assertion.

[Constantinopolis]

But the point is that the capitalists will fight you every step of the way, and then after you've won, they will never stop trying to tear down your reforms.

Practically all of the things that the center-left wants today (and then some) were already implemented in Western and Northern Europe by the mid-1970s. Then the capitalists fought back, hard, and destroyed most of those reforms over the course of the neoliberal era.

So it does not appear to be possible to make a permanent peace with the capitalists. When you have an enemy that will never make peace, the only options are victory or death. The capitalists want war. So let's give them war.

So we must sacrifice most of things we loved, like video games, capitalist/bourgeoisie fun, sports car, etc, and become a selfless being, who works for everyone, without wanting capitalist hedonism

Um... who here has a sports car...? We won't be sacrificing capitalist luxuries. We never had them in the first place.

As for video games and other non-luxury entertainment - I don't see any reason why socialism would imply giving up that. Obviously an entertainment industry would still exist, and in this day and age, video games are a big part of it.

[The Portland Territory]

Saving money is the side effect of wage-fixing. If they wanted to just save money, why would they try and gather their competition to literally do the same thing?

The same reason Google and Apple did:

They save money together.

But why would Google want one of their biggest competitors to also save money? That doesnt make sense

[The New California Republic]

As for video games and other non-luxury entertainment - I don't see any reason why socialism would imply giving up that. Obviously an entertainment industry would still exist, and in this day and age, video games are a big part of it.

Tetris is a good example, made in the USSR.