[ExI] Economic Calculation Debate/was Re: The End of the Future

[Dennis May]

Stefano Vaj wrote:

> Let us assume, for the sake of discussion, that the Market is a
> perfectly efficient and infallible way to allocate resources in a
> given context. Even there, the Market is nothing else that the sum of
> the decisions of "n" market players. Now, those market players take
> those decisions making use of organic brains, with some support by
> other computational resources.
 
OK lets assume, for the sake of discussion, that each player in the 
market can model the entire market and the central planners who
are attempting to control that market.  Will each player change his
behavior based on that knowledge or his knowledge and behavior
to remain static - an unrealistic assumption.  
 
"n" market players with knowledge and capabilities equal to the 
central planner will compete with each other and with the central 
planners.  Or are the central planners to forbid knowledge and
changes of behavior while implementing their model?
 
Stefano Vaj wrote:

> Provided that one accepts the idea that all the brains and computers
> and behaviours of each market player can be emulated by a sufficiently
> powerful system, it is incomprehensible how one can at the same time
> claim that such system would be inevitably be defeated by the Market
> itself.
 
The independent self interested players in the market will react
to the controls - once they do so the artificial pricing structure
directed by the central planners will be wrong leading to shortages
or wasted production in items for which there is no market.  The
only way to avoid that would be to continually downloads of all of
the brains of all of the players in the market and all of the
information present in the market continually.  After this impossible
task you then need a model of how the players will interact even
while they know they are having all of their information downloaded.
 
Stefano Vaj wrote:
 
> For the practical one, we are indeniably becoming better and better in
> dealing with micromanagement of larger and larger organisations, ...
 
I disagree - I have worked for government, large corporations, and
small corporations.  There are severe information bottlenecks
leading to very real knowledge problems the larger an organization
get.  The more micromanagement employed the greater the 
inefficiencies and more serious the information bottlenecks.
 
Stefano Vaj wrote:

> ...without anti-trust legislation or State intervention there is no
> obvious reason why scale economies and critical mass should not
> continue deploying their potentials, or why smaller fish should not be
> eaten by bigger ones, ...
 
Large corporations invite anti-trust legislation and State intervention
stifling smaller competitors and raising the costs of entry into the market.
They complain all the way - while meeting with legislators and writing 
the rules they want to live by.
 
Stefano Vaj wrote:

> One has just to try and create a motor company or a processor
> fab from scratch with a couple of friends to realise that.
 
Central planners are the primary barrier to entry in any market.

Stefano Vaj wrote:
 
> This is not to say that all that is plausible, desirable, or likely
> to happen anytime soon. But one would think that before declaring
> something "impossible" some more thought should be given to the
> subject...
 
The first task of any central planner is to control information available
to those they control.  This leads to an information issue among
players in the market [market uncertainty] leading to reduced 
efficiency.  The "n" players in the market necessarily react to the plans 
of the central planners.  The interests of central planners do not 
necessarily coincide with many of the interests of the "n" players.  In 
the real world central planners work to benefit the interest of central 
planners - not those they control.  In the real world the "n" players
see their interests at odds with the goals of central planners and
react accordingly - leading to reduced productivity, less creativity,
and increased efforts to avoid the efforts of central planners.
 
I would continue to say that it is "impossible" for central planners
to produce better results than the free market.  The assumptions of
what is required for central planners to do better are impossible.
They simply can never gather the information to make correct
decisions - it is a serial computer attempting to control a massively
parallel computer - each component of which has the potential to
have better information than the serial computer.
 
Dennis May
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