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There are dozens of reasons. Free markets have deduplication of labour, concepts like patents and IP that are inefficient are necessary, there are economic crises that wreck compound growth in the long term, there are issues of inequality, humans may be lazy and not attempt to allocate their capital in the most appropriate way (see index funds), socially useful endeavors may not be profitable, etc...

But central planning is insanely hard, so it's not easy.

That said, the USSR which literally used pen and paper for planning was the #2 economy in the world, so it clearly has some potential.

Now there can be other reasons to not want planning.

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> There are dozens of reasons. Free markets have deduplication of labour, concepts like patents and IP that are inefficient are necessary, there are economic crises that wreck compound growth in the long term, there are issues of inequality, humans may be lazy and not attempt to allocate their capital in the most appropriate way (see index funds), socially useful endeavors may not be profitable, etc...

There's no reason to think that economic crises and inequality would be absent in a planned economy.

Of course there are. If you have good knowledge of the economy and of production mechanisms you can simply not do anything that could cause a crash. The issue is getting the knowledge to behind with, obviously.

Inequality is necessary to some level but empirically it's possible to make it much smaller.

Empirically the USSR had a single economic crisis without exogenous cause which was caused by incorrect accounting of agricultural production at its heart.

> If you have good knowledge of the economy and of production mechanisms you can simply not do anything that could cause a crash

But we don't have that knowledge. Economists disagree on many foundational questions. At some point, economics shades into psychology and we certainly don't have theories that predict human behavior.

I don't discount the possibility that knowledge can help economies run more smoothly but you're understating the difficulty here.

> Empirically the USSR had a single economic crisis without exogenous cause which was caused by incorrect accounting of agricultural production at its heart.

The idea that the USSR had one economic crisis is a bizarre joke. The only way you can justify this comment is to ignore all the shortages and poverty and make some tortured semantic argument about what constitutes a "crisis".

Empirically speaking, free markets trounced centrally planned economies in the 20th century. If you can't recognize that, I'm not sure why anyone would take you seriously.

I mean knowledge of the real economy. What materials there are and what is done with it. That's all you need in a planned economy to avoid crises.

I said that the USSR had one economic crisis that wasn't due to exogenous circumstances. Which is true.

I agree that free markets outperformed them. I'm saying there is clearly potential for improvement since the USSR was so dysfunctional and was planned with pen and paper.

There is no way to gain accurate, detailed knowledge of the real economy. It has always been impossible. That's one of several reasons why economic central planning is stupid.

This is stupid. We can definitely do that, even today, with basic computer technology.

The USSR was unaffected by the Great Depression, unlike all capitalist countries. It’s because it used planning for use instead of markets for profit.

The USSR didn't have the great depression, but they did have the HoloDomor or terror famine of Ukraine between 1932 and 1933 and the wider Soviet Famine of that period.

The history of the famine later went on to inspire the book Animal Farm and were a pure artifact of the central planning economy forcing the export of the very food required to feed millions of people.

https://en.wikipedia.org/wiki/Holodomor https://en.wikipedia.org/wiki/Soviet_famine_of_1932%E2%80%93...

Yes, the Soviet famines were due to erroneous data due to dysfunctional bureacracies.

Which is exactly why "pen and paper" are an issue.

Calling the famine an issue of erroneous data does a disservice to the victims. Millions of people don't starve while having their food confiscated at gun point due to an accounting error.

It's the proximate cause. As we all know it had horrible effects. Had the USSR been able to accurately measure food production it wouldn't have happened, so it is indeed the proximal cause.

The interesting thing about market economies is that the economy itself measures the food and distributes it in a maximally efficient manner when left unmolested, no central planner needed.

Distributed economies will always be more efficient than planned economies, because everyone on a distributed economy participates in the cognitive load of measuring and distributing resources, so the network has more processing power and less latency than a centrally planned economy.

And yet many starved during the Great Depression as food was being destroyed to prevent its price from cratering.

Also, planning can be distributed too. Historically it always has been, to varying degrees depending on technology available.

Do you have a source that food was destroyed to prevent it's price cratering and that caused starvation? Usually if there's demand for food it's price won't crater, and the fact that people were starving tells me there was said demand.

Of course if that is the case that that happened, that's an external (government) intervention in a market.

Planning is distributed, in market economies. Central planning by definition cannot be distributed.

Planned economies can definitely be planned in a distributed manner. Especially anarchist-leaning planned economics has many possible frameworks for this.

I'd like more information on these anarchist leaning planned economics schemes that plan an economy on a distributed manner if you have it, examples or links would be cool.

Before the revolution, landlords in agricultural areas were already selling food to the industrial cities, with prices subject to market forces. After the revolution, the state planned this trade and set fixed prices for food so industrial workers could afford it. Since these prices were lower than what the landlords wanted to extract, they destroyed food rather than sell it to the state. “Fraud, famine and fascism” by Tottle has many quotes from primary sources, here’s a few http://marxism.halkcephesi.net/Ludo%20Martens/node77.html

Planning hasn’t been entirely centralised in any socialist country. There is naturally a lot of back and forth when determining what an area needs and what it can produce. A lot of planning is also delegated locally for matters that don’t affect other areas. Ultimately planning is the essential part, while some amount of centralisation is useful for optimisation to avoid merely local optimums.

> After the revolution, the state planned this trade and set fixed prices for food so industrial workers could afford it.

So the problem stemmed from central planning? Sounds like a good example for my point.

> ...some amount of centralisation is useful for optimisation...

See, my point is that this is not the case, and beyond that, that planning cannot accomplish more optimal distribution of resources that markets, and I'm using analogous network topology to demonstrate how this can be proven to be true.

No, the fixed prices solved the problem of people starving due to not being able to afford food when market rates went up. Collectivisation later fixed the problem of sabotage by large landowners. Along with mechanisation, the poor periodic environmental conditions were also compensated for and thus the century-old periodic famines were ended.

Central planning could optimise further than the profit of individual landlords, since the USSR clearly prospered.

No, fixing prices below the market rate inevitably causes shortages. There is no way to prevent this. Central planning has always failed.

The conclusion doesn't follow from the premises.

As for food being always produced in market economies, see the Bengal famine. Food wasn't destroyed in the Holodonor, it was simply redistributed. Similar famines happened under capitalism, all it takes is for a crop to come up first or for cash crops combined with the anarchy of production to lead to a crop that is beneath the requirements.

So no, similar famines did happen under capitalism, and your thesis is simply incorrect.

Markets can have latencies measuring in years or more, see the bullwhip effect. It's incorrect to say that they will be lo always have more processing power and less latency. They would if they were theoretically perfect, but markets are already at their limit and are not far away from the most primitive of planning.

Optimal does not mean perfect. Externalities exist. For example, a meteor could hit the great plains and cause a famine. The market cannot solve that, but it can optimize available resources.

Markets emerge spontaneously, like evolution. Evolution functions more optimally than if there were theoretically some god pulling levers. Not perfect, optimally. Markets function better than planned economies for the same reason, that the depth and dimension of the information needed real time does not allow for some entity to make the minutiae of the decisions that need to be made real time. Feedback loops in a complex dynamic multiparty system like a market or evolution sometimes do have much longer latency, but the mean latency of all information flows in both examples is vastly smaller than if every one of those flows had to go through a decision making entity first.

Deliberate design always beats evolution, given the same resources. Why should we be at the mercy of random chances to improve our lives when we could directly steer production for our use?

That's a hard assertion with no real evidence, and it sounds like a truism.

Do you think climate change is an existential crisis? If you do there's flat evidence right there that deliberate design doesn't always beat evolution.

The idea that humans can engineer our way out of everything is hubris. Natural emergence seamlessly takes every variable into account. With man made things, they are designed within a scope so as a result there are always externalities. Literally every problem people are arrogant enough to think they can solve with central planning is an unintended consequence of attempts at central planning.

These unintended consequences are the direct result of part of what I'm talking about. Natural, emergent systems take everything into account because the entire system performs the information processing on behalf of itself. A central planner is incapable of that.

Do you have any evidence for your truism? There’s a lot of research about planning. You can even see some of it in practice in capitalist economies, like Walmart and Amazon. Imagine if they were optimising for human need instead of their own profits.

We have ample evidence that production for profit on markets is inefficient and ultimately a disaster, like climate change. All those isolated individuals unable to coordinate but through markets are leading us straight to extinction. It’s precisely planning that could solve this problem.

Central planning would lead to a lot of people starving too death. That always happens when central planning is tried because farmers have no incentive to work. So if a few billion people die that would "solve" the climate change problem, but we won't like the solution.

And yet central planning worked just fine for several countries for many decades and no one starved. And people are starving right now all over the world, in many capitalist countries.

Climate change can be fixed without falling prey to white supremacist ideas like overpopulation.

Which truism is it that I've said that I need to defend? Do you know what a truism is?

I already addressed the planning in companies inside market economies elsewhere in this thread, but to summarize, people can quit Walmart or quit shopping there, you can't quit your nation, so there are no feedback mechanisms to help it reorganize when it is functioning badly.

Where is this ample evidence? Climate change is caused by profits? So the USSR and China never put out CO2?

If planning can solve these problems then how come nobody can even draw me a picture of how planning would solve these problems?

Why did you address none of my arguments? Are you even talking to me? Leave the agitation to the pros man. Or get better at it.

You see this as a debate, but it’s an opportunity to step outside the mainstream liberal ideology. At least read “The People’s Republic of Walmart”, if you won’t read research.

You’re right that it’s pointless to continue, since you’ve been reduced to picking on my non-native English.

The Soviet famines were intentional genocide. Communist Party leaders always had plenty to eat.

https://victimsofcommunism.org/

This used to be believed by academic historians, until the opening of the Soviet Archives in 1992, and now the consensus is that it wasn't, it was just really bad data.

The link you're citing had multiple authors resign due to academic dishonesty and is funded by the US government, therefore making it state propaganda.

People died. That was not due to bad data.

It’s worth looking at primary sources for “Holodomor”, a depressing amount are from Ukrainian fascists.

The consensus among historians is that there was indeed a famine, one of the periodic environmental ones in the region. Planning was indeed slow to react to the famine and the sabotage by landlords, so food aid arrived late.

It was also the last famine in the region. The landlords that destroyed food were expropriated, land was collectivised and agriculture was industrialised. Talk to any older Ukrainians and they’ll tell you there was plenty of food throughout their lifetimes until the 90s after the USSR was defeated.

Wasn't the Great Famine in 1932 and 1933 a direct result of central (mis-)planning? PS: also I wonder if you actually experienced living in a centrally planned economy, the East German economy for instance stumbled from one crisis into the next, not as bad as the Soviet Union under Stalin obviously (as in: people didn't starve to death), but a healthy economy is pretty much the opposite of the "real socialist" economies of the Eastern Bloc.

There had been periodic environmental famines in Eastern Europe for centuries. The one in the 30s in Ukraine was exacerbated by landlords (kulaks) refusing to sell food to the state for lower prices and even destroying grain and cattle in an effort to raise prices. Incomplete information meant central planning was slow to react to both of these problems and many did starve, but of course capitalist countries also exaggerated the numbers.

My parents and extended family lived in România before 89, they describe quickly improving conditions, in some ways better than today. Guaranteed homes, education and jobs went a long way, for example.

All of the Eastern European economies also started off semi-feudal with little industry when compared to Western Europe. They were also under constant attack and blockade from the capitalist countries, that’s what the Cold War was about.

Regardless of all that, it’s a fact that the Soviet economy was unaffected by the Great Depression, which was the whole point on planned economies.

Doesn't it have more to do with the fact that they didn't even recover yet from the 1st World War? Also don't forget Holodomor. It literally happened after the Great Depression yet unlike Western Nations, 3.5 million people died from disease or starvation. Unlike in said Western countries that just had an economic collapse.

#2 economy per capita, or in absolute numbers? I'm quite sure western nations had better economies when you adjust for each country's size.

In absolute numbers. But planning economies becomes so much more difficult at scale, though if we looked at the communist country with the highest per capita economy we would still see numbers that are middle of the pack.

At its highest, relative to the USA, USSR per capita gdp was only one third that of the USA. Not that impressive, even if you trust their numbers.

The USSR never published a GDP figure. It couldn't, because GDP makes no sense without a market.

But yes, the USSR as a whole had a third of the US's average GDP. I agree, it was less than the US. The thing that is surprising is that they got there by planning an economy with pen and paper, which is insane to me.

I don't know how it's possible, but nearly every sentence you wrote is completely wrong.

I made a typo which I corrected (s/world/US/), other than that I don't see anything wrong.

A central planning economy requires calculating desired outputs and required inputs through multiple layers of a supply chain. The resultant outputs through each layer of the economy, exports, and imports have a direct value that was in fact measured in the soviet currency of Ruble's - these Ruble's could be exchanged for dollars and provide a useful GDP figure in any desired currency. The basket of goods a given amount of these Ruble's could buy internally vs. their dollar equivalent elsewhere also provides a reasonable measure of Purchasing Power Parity.

One can also bypass the production component and measure GDP in terms of the incomes in Ruble's paid to Soviet workers in combination with the export/import figures to arrive at a reasonable estimate.

This is not in fact true.

The basket of goods didn't have any fixed ruble price, as much of it was free.

Much of production was never given a full price in rubles, as a large part of it was by direct resource allocation.

You can indeed estimate it using a basket of goods and their equivalent values, but not with income and import/export + exchange rates because you're then removing all natural wealth.

It's a very difficult problem. You can make an estimation, but it's still an estimation, that is, for hard GDP. For PPP I agree the numbers are accurate, but that's not what was being discussed.

Something being free simply means the government paid for it on behalf of the worker. Direct resource allocation likewise just implies the government paid for it albeit without consideration for margin or potentially the ability of the resource allocator to remain solvent.

Direct resource allocation implies that valuable resources were taken from one activity and allocated to another, the workers who produce the resource still get paid (hopefully!) and the equipment still undergoes wear and tear or upgrade requirements. The production's value can still be estimated either by the equivalent market rate of the good or by the cost of making it.

When the government pays people to build housing that they give away for free there is still "production". When the government orders a mine to ship steel to another location the workers are still paid.

When the government orders a mine to produce for no input and doesn't bother to maintain equipment they effectively take a loan against the capital equipment in the mine. Eventually the mines productivity falls to zero as the mine fails to remain solvent requiring more capital infusion.

If the government can order workers to work without pay then the estimation has to account for similar economics to slave states, which unfortunately is also well trodden ground owing to economies such as the US's prior to 1865.

The issue always comes to assign a price in US dollars.

The government may pay people in other things that were the result of direct resource allocation, so you simply cannot put a price to it.

What is the cost of land that the government gives you? What is the cost of a lump of coal? Clearly this is a lot more than the simple capital cost used to extract it.

The long and short of it is, you're not getting a meaningful price is US dollars.

Do you accounted the zarist backwardness from which the USSR started and the incredible WWII destruction in the USSR territory in lives and buildings?

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