Convince me about a planned economy

There's a rather neat quote from Iain Banks:

Let me state here a personal conviction that appears, right now, to be profoundly unfashionable; which is that a planned economy can be more productive - and more morally desirable - than one left to market forces. The market is a good example of evolution in action; the try-everything-and-see-what-works approach.....
....Intelligence, which is capable of looking farther ahead than the next aggressive mutation, can set up long-term aims and work towards them; the same amount of raw invention that bursts in all directions from the market can be - to some degree - channelled and directed, so that while the market merely shines (and the feudal gutters), the planned lases, reaching out coherently and efficiently towards agreed-on goals.

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Full text here - towards the end of the second section. This is a great article btw, even if you haven't read the books.

My question is this: Is he mad? Can humans ever pull that sort of planning off? And at a better efficiency/usefulness than modern capitalism?

It's easy to plan primary industries: Demand is relatively constant; there's some oil, there's some arable land, there's some iron ore. Go get. Heavy industry is fairly easy to plan: Plant takes time to build, and you'll only ever need so many refineries etc. - probably based on the available raw materials.

But the higher up the chain of production you go, the more fluid things can become. What proportion of oil do we make into plastics? How much paper will be used this year? What number of shoe sizes will be needed this year? Do people prefer yellow or red socks? Should some groups of people recieve preferential allotment of resources?

In Banks' article, he's talking about a post-scarcity society, with effectively unlimited means of production. But in the here and now, could a planned economy be made to work? and more importantly, how?

I can't convince you because I don't believe in planned economies.

As the wall came down I visited East Germany and there was a good aspect to their system which was that everyone had a job but apart from that the rest of it was about as efficient as the comparison between a Trabbant and a 3 series BMW.

Of course it is not as simple as planned vs free market, in Great Britain we have a regulated free market which means we try to curb the possible excesses of the beast with anti monopoly regulations, safety and standards bodies, the minimum wage and the suchlike.

A market economy can contain planned economies where they are more effective - they are called corporations

Thinking as I type. I can see a possible future, not too long away where planned economies come back into serious political thought. Considering the CO2 issues, oil peak theory, food shortages that may well arise. They're might only be a few areas of business that really matter.

Logically, they will have to be coordinated and planned out.

Free market capitlism seems an old fashioned idea and it's inherant faults will make it eventually redundant.

</thinking aloud>

Crispy said:

In Banks' article, he's talking about a post-scarcity society, with effectively unlimited means of production. But in the here and now, could a planned economy be made to work? and more importantly, how?

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not only does Banks' setting have practically unlimited access to matter and energy, it has also given over much of the planning to non-human intelligences - sentient machines which design each other to be egalitarian, machines that are conscious and have an analogue of emotion, but which are described as being able to make certain kinds of mental work "automatic", take place in the background, while the machine's main attention is on something much more interesting. we are also talking about immensely powerful calculating machines, machines that are capable of simulating universes even more complicated than the real thing. predicting population behaviours, their future needs, becomes possible through sheer brute force of simulation power (or does it? brute calculating force doesn't stop chaos being chaotic. in one story, a Mind points out that even though it can scan entire planets down to atomic granularity and run simulations of them, even it doesn't know where a snooker ball will end up after 12 collisions).

all this means that people only work if they want to. most don't. they just play. they have no real concept of the ownership of material goods, partly because half the stuff lying around like tools, houses, transport etc. is bleedin' alive, but also because if you see something you want, you can just have your own one, almost immediately, or the totally convincing illusion of it.

in a real life, terrestrial setting, none of this applies. the earth's surface is finite, a curved 2D space, as are its harvestable resources, in contrast with the immensity of outer space. people are more limited in their techniques for avoiding drudgery, and the fact that resources are limited means that they are in competition for them. they have aspirations which can be shortcut to if you allow yourself to profit at someone else's expense - the temptation is always there. and people resist being modelled, planned for. they hate being dictated to, even by logic. and in a limited space, there is a line beyond which people will not be pushed - the bottom line. in outer space, you can always fuck off somewhere else if you don't like it.

in short, plans always fail - it is just a matter of time. longterm plans work best if they are limited in scope. and in a limited, closed world of limited resources, social planning turns into dictatorship very fast.

compare and contrast Asimov

please forgive lack of capitals, it's an RSI thing

this is why the Minds aren't gods, why they have to stick around and manage, why they don't sod off permanently into hyperspace even though they could if they really tried - if the universe was really deterministic, if you could somehow set the initial conditions and watch it all roll off like clockwork, you wouldn't need managers; there would be no Plan, the Plan would always be something that happened in the past

but you can't - it's literally impossible

so they intervene, and intervene, and intervene, in exactly the way God doesn't

I think the Mind's might have a few issues with your comments about having an 'analogue' of emotion, and being little more than glorified calculators

The problem with planned economies is that the power lies with those who do the planning, and therefore it's veracity and capabilities will only be as good as the worst person involved in the planning process - and humans being humans and there being some form of power that can be exchanged you have a way in for both the growth and development of a bureaucarcy but also the possibility of corruption. As with Neal Asher's universe, the AIs essentially take the toys away and behave like massively benevolent parents.

As the wall came down I visited East Germany and there was a good aspect to their system which was that everyone had a job but apart from that the rest of it was about as efficient as the comparison between a Trabbant and a 3 series BMW.

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The Poles used to have a saying 'we pretend to work, you pretend to pay us'

I guess the problem is telling the 'sellers' what the 'buyers' want. I see how the market is a mechanism for transmitting demand information so that supply can match it. But can we not, in this world of constant communication, find a way of communicating that desire before the supply is created?

My work is planned for the next year at least, and this is in a capitalist corporation. Most of the 'market forces' crap is just smoke and mirrors.

Crispy said:

I guess the problem is telling the 'sellers' what the 'buyers' want. I see how the market is a mechanism for transmitting demand information so that supply can match it. But can we not, in this world of constant communication, find a way of communicating that desire before the supply is created?

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TBH that's more a technology issue - if you could produce goods on demand or with an acceptable delay you'd be able to greatly reduce the amount of waste produced (esp if you were using as much recycled mush as possible). The sci-fi answer here is nano, obviously, but there's no reason why, for example, car manufacturing could go this way (Minority Report gives a good indication - a completely automated, very tiny factory producing goods to order), as well as other goods where the technologies of FP could be scaled up to usefule levels.

Fruitloop said:

My work is planned for the next year at least, and this is in a capitalist corporation. Most of the 'market forces' crap is just smoke and mirrors.

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That's forward planning based on guesswork of how and what the market will do, which in turn is based on the guesswork of your accountants and sales and marketing teams vs. what the board has promised shareholders/owners how much the company is going to grow in the next year.

If the market for your companies products collapses next year, all those plans will be in void - hell, if the market suddenly strengthens all those plans will be void too. To say that because one element of capitalism attempts to plan it's business proves that market forces are smoke and mirrors is wrong.

Isn't forward planning based on guesswork re: demand what a planned economy does? Can one not change if demand appears to be different to expectations? I mean, a car manufacturer doesn't wait to see how many people order their cars and then start making them - they guess how many may be required and then build them first, whilst keeping an eye on whether things are going to plan, which as far as I can see is exactly what a planned economy would do.

Fair enough, but capitalist companies are reactive to a market; a planned economy attempts to remove that uncertainty by remving the need for guesswork. A planned economy doesn't guess how many cars should be built, a planned economy says X000 cars will be built between now and 2008.

Planned economies guess what demand will be and manufacture to suit; corporations try and plan their internal economy and hope that they can sell what they are making in the market.

IMO that's not a planned economy, that's a nuts economy. Serious suggestions for planned economies like parecon etc obviously take into account whether anybody wants the shit they are planning on making, or whether they'd rather have something else instead.

What corporations do quite a lot of, and which a socialist economy hopefully wouldn't, is come up with an absolutely turd product and then try to create a demand for it.

Well that was how 'planned economy' didn't work in Eastern Europe and China for decades. Russian industry would be told '50,000 refrigerators this year' and would duly go off and manufacture 50,000 refigerators, all would be distruobuted and that would be that. Same thing went for agricultural production - the people will want 1 million tons of bread this year, grow enough wheat to make 1 million tons of bread, bake 1 million tons of bread, evenly spaced out over 365 days.

THAT'S a planned economy. Everything else is based loosely around demand management, as opposed to demand control - it's one of the reasons I like Parecon in fact cos it avoids the scenario of your second statement!

Crispy said:

I guess the problem is telling the 'sellers' what the 'buyers' want. I see how the market is a mechanism for transmitting demand information so that supply can match it. But can we not, in this world of constant communication, find a way of communicating that desire before the supply is created?

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This does not have to be a problem assuming that the variant of the product at least already exists.

There is a thing called the just-in-time system (JIT), a methodology or even a philosophy of manufacturing that stresses:

1. Make only what you can sell.
2. Make only when you can sell it.
3. Make as late as possible.
4. Eliminate waiting and delays, quality, setup and production problems.

Within a JIT system production is pulled from real customer demand rather than pushed from company production forecasts. Specific pull mechanisms are developed and used to limit the total stock in the system.

Thus in a retail setting, the sale of an item from the shelf of a store might produce an order to replace that item from the shop's stock and the removal of the item from the shop's stock might produce the order for the supplier to deliver one more of that item. For the supplier the request to deliver one more of that item is the pull request for the supplier to make another of the item.

i'm not convinced that our economy isn't a lot closer to being a planned economy than many would admit.

bluestreak said:

i'm not convinced that our economy isn't a lot closer to being a planned economy than many would admit.

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In what way do you mean this?

I have worked in manufacturing and no one apart from us planned our production.

Aha, the anarchist answer

The market is a good example of evolution in action; the try-everything-and-see-what-works approach.....
....Intelligence, which is capable of looking farther ahead than the next aggressive mutation, can set up long-term aims and work towards them

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I do not accept that 'intelligence' is capable of looking farther than an 'evolutionary' process. Could 'intelligence' have created the wealth of life present on this planet? I doubt it. Unless you're some religious nut then I would hope that you can see the benefit of self organising systems that do just 'evolve'.

i'm not convinced that our economy isn't a lot closer to being a planned economy than many would admit.

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It's not a planned economy but it's definitely not a free market either, and in my opinion the words capitalism and free market do not have the right to exist alongside each other.

For example, Bank of England intervention in the economy in regards to interest rates demonstrate that it is not a free market. The supposed need for this intervention is to regulate the business cycle (boom and bust). However, the business cycle is the result of fractional reserve banking which is only possible due to a government supported monopoly in the banking system of which the BoE is part of.

How can a free market in the larger economy be possible when the core of that economy is regulated and controlled by such a centralised authority?

I guess the overall point I am trying to make is that a free market is most definitley better than a planned one, but that capitalism should not be confused with a free market. Capitalism is based on monopoly and regulation, it is the antithesis of a free market and it is the cause of instability in the elements of market that do exist.

Oh well, that killed the conversation. Lucky I reserve talk of the banking system to the internet and not real life.

weltweit said:

In what way do you mean this?

I have worked in manufacturing and no one apart from us planned our production.

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Tesco's don't just rely on the anarchy of the market. In order to keep our shelves stocked with foods from all around the world surely relies on an incredible amount of planning?

East Germany I would describe more as a bureaucratically directed economy than a planned economy.

The question is what drives the planing:

Under Capitalism: Profit
Under state capitalism/communism: Completing with the west, the interests of the nomenklatura etc.
Under Socialism: Planning takes place as under capitalism except rather than being decided by unelected boards of companies in their interests to make profit it is decided by democratic procedures of workers democracy to fullfill human need within the wider context of a workers' state where both the levers of political AND ECONOMIC power are in the hands of democracy.

I think there's something to it, maybe.

Maybe the problem isn't with planned economies per se, but with the failure of the planners to plan well when they tried it in the past. Maybe you need to have supercomputers and a population online who can tell you what they're short of and what there's too much of, and have a powerful piece of AI that processes all their data in a useful way. Maybe it was asking too much of any bureaucracy to get it right when all they had was their brains and fairly low-tech data gathering; , yes I can definitely imagine that market forces might be thought of as a primitive way of deciding how to distribute goods in a possible future.

But you would not be doing away with market forces, at least demand would still be there. The only change to a command economy is that the control and or management of supply is taken away from capitalists and given to burocrats.

The burocrats taking responsibility for supply in a command economy still have to decide under what philosophy they supply the market and whether they try to satisfy total demand and choice or limit supply to whatever they may deem as necessities.

For example: Is it a necessity that so many variants and makes of cars are supplied to the market. Under capitalism many types and variants are being bought but would a command economy continue to permit this given the enormous complexity that creates. Multiple colours and types of toilet paper, would a command economy supply planning burocrats bother to keep that up or just limit supply to grey double thick bog paper?

Personally I can't see what is so bad about the current system that means we should consider a planned economy, for my money regulated free markets is the mechanism that fosters development and innovation and these are things to be proud of.

Just think of the Wartburg and the Trabbant, the pinnacle of the planned East German economy and even on those the waiting lists were of years and years.

So for me the questions are:
. Why would you want a planned economy?
. Why would it be better than a regulated free market?

weltweit said:

. Why would it be better than a regulated free market?

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surely a regulated market isnt free, if it was free it wouldn't be regulated.

the argument really is not about markets but whether a planned economy is, as hayek titled his extaordinalary boring book, 'the road to serfdom'

will post more

weltweit said:

So for me the questions are:
. Why would you want a planned economy?
. Why would it be better than a regulated free market?

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The short answer is: Waste

Crispy said:

The short answer is: Waste

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I am not convinced a planned economy would be less wasteful than a regulated free market.

I have just been watching question time in which there was a complaint about the thousands of doctors that have been trained, some even to consultant levels, but for whom there are no jobs in the NHS. Consequently these people are emigrating to places like New Zealand which is benifiting from the excess doctors in Great Britain. Training places in universities and medical schools and demand for people by the NHS are imho about as planned as it is possible to be yet there has been vast overproduction and waste.

Waste to a free market is losses or loss of profit, free markets do not like waste or excess.

Where you get regulators interfering with market forces like they have in European agriculture then for sure, then you can get large excesses.

disownedspirit said:

surely a regulated market isnt free, if it was free it wouldn't be regulated.

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We have a regulated free market, partly because it is only a poor approximation of the economists concept of a perfect market.

Their idea of a perfect market includes perfect knowledge for all players in the market place and no entry or exit barriers to permit players quickly moving into any sector where excess profits were being made to bring profits down to normal levels.

Perfect markets are also not good for human workers because they assume workers can easily move around the market from places that have no jobs to places that have them. This is also impractical and perfect markets would have scant worker protection, no minimum wage for example. Plus perfect markets do not price pollution or health and safety issues.

Hence we have and need regulated free markets, or if you prefer regulated markets.

disownedspirit said:

the argument really is not about markets but whether a planned economy is, as hayek titled his extaordinalary boring book, 'the road to serfdom'

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hmm ... imo there are plenty of, usually uneducated, people operating on the bottom rung in our regulated markets that are effectively serfs.

weltweit said:

So for me the questions are:
. Why would you want a planned economy?
. Why would it be better than a regulated free market?

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A planned economy would ensure fairness and equality. On the strict condition that it is democratically controlled.

A regulated free market would be impossible to enforce in a world economy.Individual nation states could and do introduce limited regulation but the whole point of free enterprise is to be free from regulation.

Capitalism cant and wont be managed.

Also regulation does not and cannot tackle the vast class inequalities in society.

In short it is the free market that has proved unsuccessful.(I have to add, very successful for the tiny minority of capitalists who benefitted!!) At every step in the history of capitalist development large expansion has ended up in war.This will continue until the capitalist class destroys us all either through war or by destroying the environment.

I am going to bed now.