I suppose todays equivalent would ditch the cabal for a computer. Would you trust a computer to map out every dependency in the economy, down to the factory floor? Would you want to live in that world?
Sorry, what do you mean by "individual control"? Most companies I know are already controlled by a cabal of James Bond villains sitting in a room sipping stuff. It's called the board of directors, although usually they're drinking something lighter than whiskey.
>I suppose todays equivalent would ditch the cabal for a computer. Would you trust a computer to map out every dependency in the economy, down to the factory floor? Would you want to live in that world?
I mean, you trust combinatorially chaotic and unpredictable things called "markets" as if they were anything other than a combinatorially large, massively distributed stochastic optimization method, so I don't see why we can't solve large stochastic optimization problems with computers.
He means each company has independent control of its assets. They may be run hierarchically, but they only get as large as their competency allows. As soon as an individual company stops operating effectively, it stops growing its market share.
>I mean, you trust combinatorially chaotic and unpredictable things called "markets" as if they were anything other than a combinatorially large, massively distributed stochastic optimization method, so I don't see why we can't solve large stochastic optimization problems with computers.
I trust the mutual consent underlying every relationship in a market, which drives everything in markets to greater sum efficiency and value. I don't trust monopolies where managerial control over economic resources is not strictly required, by the incentives that emerge from its underlying rules, to be a product of creating Pareto improvements.
With top down systems, you need an artificial system of incentives to maintain production growth. In a system based on contractual relationships and independent control over the property one generates/acquires-in-trade, incentives are spontaneously and naturally generated.
Unless it has a monopoly, or is too-big-to-fail, or for some other reason.
>I trust the mutual consent underlying every relationship in a market
The what now? "Work or starve" is no kind of consent, and it's the most prominent marketplace relation around.
>which drives everything in markets to greater sum efficiency and value.
Under general equilibrium assumptions that were shown even by the 1950s to rarely apply in real life.
>With top down systems, you need an artificial system of incentives to maintain production growth.
I think you're confusing the autonomy of firms with the profit motive of firms. In order to really compare different styles of economy, you can't just axiomatically assume one is better, nor "work your way back" to axioms which prove analytically your favored approach is better. You need to define a basically empirical performance metric, and show how well different systems optimize that metric, including allowing for measurement uncertainty and computational difficulties.
https://www.jacobinmag.com/2012/12/the-red-and-the-black/
https://www.jacobinmag.com/2013/01/john-quiggin-on-the-red-a...
Yes, but that is the exception, not the rule. In contrast, central economic planning is power without market validation, by definition.
>The what now? "Work or starve" is no kind of consent, and it's the most prominent marketplace relation around.
Taking a job because the alternative is to starve is still a consensual interaction. We need to work to survive. We can go out into the wilderness, and live off the land, which would let us survive at subsistence levels, or we can go into civilization and work within an employment contract that gives us a much higher standard of living.
The freedom to choose ensures that generally speaking, people in a market economy are choosing one of the better options available to them, rather than one of the poorer ones. It also ensures that when people DO interact with others, it is because it is generally mutually beneficial. This basic dynamic leads to an emergent property of actions carried out in markets generally being a net-value gain for the economy as a whole.
>Under general equilibrium assumptions that were shown even by the 1950s to rarely apply in real life.
The ideal (general equilibrium) does not ever have to be perfectly realized for the principle to still apply. We don't have to have absolute proof to have reasonable cause to believe that a particular system is working.
>I think you're confusing the autonomy of firms with the profit motive of firms.
Where am I confusing the two? Sorry I'm trying to deduce what you mean but can't see how you're seeing that.
>In order to really compare different styles of economy, you can't just axiomatically assume one is better, nor "work your way back" to axioms which prove analytically your favored approach is better.
What suggests to you that I've done either of these things?
>You need to define a basically empirical performance metric, and show how well different systems optimize that metric, including allowing for measurement uncertainty and computational difficulties.
We have an empirical performance metrics: GDP, HDI, etc. They perform better under market economies. We can't obviously prove it, due to the inability to conduct controlled experiments on economy-sized systems, but common sense, and extrapolation from obvious axioms, leads us to the undeniable conclusion that a market economy is the most efficient means of advancing the public interest.
Depends... if that amounts to a central agency micromanaging every aspect of economy, then certainly not. We all know how that ends.
But if it means there is a central intelligence (democraticly controlled, like by a parliament and not a dictatorship!) that can override individual business decisions in important corporations, then sure.
It is well known in economics that decisions that make sense for individuals (corporations, persons) can be detrimental to society as a whole. A pareto-optimum by no means has to be the "best" or "most desirable" optimum.
It would be nice if someone could say, after appropriate research and debate, "Hello Amazon, it is great that you are running so well and expanding so much. But we as a society have decided that we can live without further delivery speed improvements in this year. OTOH, we think your workers deserve a bit more money. Please reallocate $N to their salaries."
Or, "Dear energy companies, after reviewing all the facts, we have decided that technology X (nuclear, fracking, ...) is not worth the risk to us. We'd rather accept a loss of 3% or stagnation for N years in wealth. Please reallocate resources to build more Y (solar, wind power, ...)"
We have that. It's just corrupt. Like everything humans do is doomed to be. So please, enough centralization already.
Computers already do that, for the most part. Computers also don't lie, humans do.
http://www.bbc.com/future/story/20150209-the-network-that-ru...