Some NP-complete problem classes have polynomial time approximation schemes, but not all, unless P=NP. That is to say, sufficiently large markets may be arbitrarily inefficient. I'm curious to see that dichotomy resolved.
Your "if" is doing a ton of work there, and this paper is quite abstract market theory. The "practical use" is to better contextualize the efficient market hypothesis.
Anyway markets have a lot more going on than a simple greedy algorithm. For injecting noise into the optimization to get out of local minima. Markets clearly have a lot of this.
There's an intriguing recent book (that, admittedly, I haven't read) called "The People's Republic of Walmart" https://www.penguinrandomhouse.com/books/564287/the-peoples-...
If large corporations are the shining beacons of capitalism, how come they are run internally as top-down planned economies? And to the extent they prove than planning can work at scale, could planning work society-wide? Not saying I agree or disagree (again, I haven't actually read it), but dusting off the ye olde calculation debate and updating it for today seems like an interesting idea.
Look. I don't believe that P=NP. I can't describe a superior optimization process, and if I did, I would claim the Clay Math prize. I'm also not an economist.
My takeaway is that any simple strategy is almost certainly bad in the long term. You can optimize your own personal take, but in doing so, "the invisible hand" isn't going to somehow flip that into a benefit for all.
If all Walmart does is make mistakes then they go out of business. Central planning won't work but federated planning with 20 super corporations that are in competition with each other might actually be good enough. The only problem is that we both need and want the underdogs(startups) and this would undermine them.
You are conflating an economic model with a political one. In fact, the central planner doesn't even need to be a person, but a set of assumptions and strategies that can be measured against the benefit they provide and be continually adjusted.
You touch an important point, however. The people most affected by Walmart's central planning, their employees, have no say in what strategies and assumptions the central planner uses and that removes any incentive to provide benefit to them.
The notion that these huge corporate bureaucracies are somehow "efficient" at anything except trashing the environment and homogenising and controlling - if not ultimately economically cannibalising - their own workers and customer base is clearly counterfactual.
From reading the book synopsis (again, I haven't read the book itself), it seems the authors are proposing some kind of democratic socialism rather than USSR-style authoritarianism. Is it workable? I have no idea. To me it seems that USSR-style authoritarianism and current Western neoliberal capitalism are but two small dots on the political economy spectrum. There are other ways of organizing society as well; certainly worth thought experiments to see what kind of other options there might be and what we might learn from them.
Large corporations rule top-down because goals are set at the top. That’s very different from a society problem.
That said, it is indeed quite interesting to figure out at what size such central planning starts to become non viable. And for that the observations: "It is viable for wallmart, but not for all of the USA" give some interesting bounds.
But if large corporations prove the efficacy of planning at scale, then they surely prove the drawbacks as well. What are the society-wide central planning equivalents of layoffs and maximizing shareholder value? Does a centrally planned corporation outsourcing their supply chain or HR department represent a fundamental failure of central planning?
I love that meme for how wrong it is. Public companies don’t maximize short-term profits, maximize profits (with future profits discounted).
The fact that to a lot of people “profits” == “short term profits”, reveals quite a lot about our assumptions and time preferences..
Now if someone said companies focus on continuous quarterly growth, and sometimes sacrifice a portion of long-term growth for short-term growth, I could agree with that.
My own suspicions have been for quite some time now that fundamentals are what move markets and that technicals are mostly bullshit and are only valid because algo-traders school like fish based on technicals.
Actually it does. The central premise of the Efficient Market Hypothesis is that all relevant information is already priced in.
>"the market can remain irrational longer than you can stay solvent."
Irrational behaviour by uninformed investors is theoretically already priced in, if the market is efficient.
Thing is, the hypothesis can be useful whilst being only approximately true. If it is true to with 0.1% then, in most cases, it is quite appropriate to model it as being perfectly true. And obviously, there are other cases where that model isn't useful. In those cases, it would probably still be useful to take the 0.1% number into account.
IMO markets can't be efficient because we as humans aren't - our perception of value itself can be subjective and influenced by many things including FOMO, safety in numbers perceptions, risk aversion (usually), etc etc.
The intuition behind the efficient market hypothesis is that each of these deviations from "homo economicus", if it occurs in a market, is an opportunity for someone else to make money. EMH says that opportunity won't be wasted, at least for very long.
Well, define "well enough"...
We do get results. Are they "well enough"?