Comment by eesmith | Hacker News Reader

Comment by eesmith | Hacker News Reader

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"however, when it happens in market economies, it is not caused by planning for greater efficiency (saving money)."

I think the author addressed that, writing:

> "For the capitalist or even market-socialist firm, there is in principle a simple objective function: profit, measured in dollars, or whatever else the local unit of account is."

"I disagree with that .. I think the objective is"

I'm not sure what you disagree with. My incomplete summary? The author also goes into detail about the problems in determining the objectives. I mentioned them in passing in my last line.

"In theory, perhaps"

Well, yes. That's because it's a response to the theoretical statement you wrote: "You can have an efficient system but it's robustness (ability to withstand a failure or adapt to change) will be very low."

Do you have any evidence that this is a universal statement?

Anyone worried about possible environmental catastrophes as the result of greenhouse gas omissions must certainly be wondering what can be done to include that robustness factor in a market economy.

"I'm not sure what you disagree with."

I disagree with the usual notion that the problem of planning is somehow (algorithmically) difficult, once you know the objective function.

Instead, I argue there is a tradeoff in the objective function, which is hard to estimate in theory without experimentation. This experimentation goes against the goal of efficiency (you need redundancy).

So even if you knew all the demands of all the consumers, and could calculate what to produce (which e.g. von Mises argues is impossible), I argue you would still have a problem with central planning, because the resulting optimal plan would not be robust enough to execute. I also don't think the former is a big issue with computers, to be honest. There are examples of top-down logistical planning operations in the world which are comparable to an economy of a small country.

"Do you have any evidence that this is a universal statement?"

Well, in optimization problems, usually as you get closer to the possible optimum, the number of acceptable solutions decreases. So the closer the solution to the optimum, the less leeway there is to adapt the solution to some unforeseen circumstances.

Addendum: I think many economists try to paint free market as being efficient, and that's why they argue the optimization problem is impossible to solve. However, I don't think free markets actually are efficient, but rather, make a different trade-off, which works better in practice (it also has downsides).

The impact from greenhouse gases is already either a factor in some power markets (which heavily use state of the art optimization and are among the hardest problems to solve when you look at the size versus the time it has to solve in) or planned to be included. It is indirectly there in all power markets as coal is currently becoming less and less economic.

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