No, a planned economy cannot actually work.

In 2019, Leigh Phillips and Michal Rozworski published an article Jacobin Arguing that, “Yes, a planned economy can actually work.” Based on their articles, their books, Walmart’s People’s Republic: How the World’s Largest Corporations Are Laying the Groundwork for SocialismArgues that large companies like Walmart have solved the problem of central planning by:

inside People’s Republic of WalmartWe show that, contrary to the historical logic of the likes of free market economists Ludwig von Mises and Friedrich Hayek, economic planning for millions of goods and services involving infinitely variable and abundant non-price information in supply chains is not feasible, but works incredibly well…

Walmart, the world’s largest company, employs more workers than any other private company; It is the world’s third largest employer after the US Department of Defense and China’s People’s Liberation Army. If it were a country, its economy would be roughly the size of Switzerland.

Walmart, of course, sells products in the market. Under capitalism prices are still inputs to the planning process for corporations and states alike. In addition to prices, however, firms today have an exponentially increasing amount of information at their disposal that is directly related to people’s preferences or the use of resources…

Walmart engages in large-scale planning without the direct mediation of markets on the scales to Bristol Hayek. Internally, like almost all companies large and small, it’s an authoritarian planned economy: managers tell employees what to do, departments realize goals from on high, and products flow by fiat.

Sam Gindin, also writing JacobinThrows a wrench in their claims:

The scale of organizing a total society in a non-market way is of a different scale than that of addressing internal corporate calculations under a single, even gigantic, corporate, capitalism, which has an advantage that centralized socialist planning would not have: they have external market values ​​and market-driven values ​​that can be measured by

Moreover, although they acknowledge that “under capitalism prices are still inputs to the planning process for corporations and states alike,” the authors never grapple with the problem of how to compare the relative values ​​of different goods and services without throwing away:

There is a difficult question about how we relate things to each other – steel with cotton or mind numbing with industry – but it is a poverty of imagination to think that we ourselves can only democratically determine these multidimensional comparative questions, rather than markets.

Although someone unencumbered by an impoverished imagination could conceivably devise a way to democratically answer “this multidimensional comparative question,” no one, including Karl Marx, succeeded for more than a century and a half.

Apart from this, there is absolutely no mention in the question of how to compare different production processes and capital goods without market prices.

The authors’ solution to the Mrs-Hayek socialist calculation problem is to get a large calculator:

Jack Ma, founder of China’s Alibaba Group – one of the world’s largest and most valuable companies – argues that state planners in the Soviet Union and the early People’s Republic of China failed because of insufficient information. He predicts that within the next three decades, thanks to artificial intelligence and the amount of data we have access to now, we will finally be able to achieve a planned economy.

Before conceding that an artificial intelligence program running on a supercomputer could manage an economy, however, let’s consider solving something very simple: the game of chess. Compared to economics, chess is child’s play. First, there are only thirty-two “persons” on a chessboard, and none of them have free will. Their movements are severely restricted: only one piece can move at a time, each side moves a single piece in turn; The position of each part is not limited to sixty-four squares arranged in two dimensions; And each piece has a set way in which it can be moved.

But even in this simple world, there are over 318 billion ways to play the first four moves on each side. It has been estimated that there are more possible moves in a 40-move game than there are atoms in the universe. As a result, no computer program has yet been able to solve the game, although they can now routinely beat even the best human players.

Make the game a little more like real life. Suppose each piece is given magical free will and the ability to move itself. Now the pieces can move all at once or move at all. A pawn can decide to act like a queen or a knight. A rook can betray and attack pieces of its own color, or kings can negotiate a peace settlement and leave the board entirely. After only the first step the number of possible board positions becomes infinite.

Yet this modified game of chess is immeasurably simpler than an economy composed of millions of people – acting and interacting simultaneously – each with his own motivations, incentives, responsibilities, cares and circumstances; And every thought and action is in four-dimensional space and time.

But it’s worse than that. A supercomputer needs no information to solve a chess game; It’s just a matter of pure number crunching and access to an impossibly large storage array. In contrast, “solving” an economy requires the ability to acquire vast amounts of knowledge, some of which cannot even be pronounced, and some of which is generated by countless market transactions that occur second-by-second. Worse, this data must be collected, transmitted, formatted and “crunched” in real time.

In 2007, computer game expert Jonathan Schaeffer reportedly solved the checkers game by performing 100,000,000,000,000 (10).14) calculations on an array of 200 desktop computers over an 18-year period. Checkers are much simpler than chess (with only one 1020 10 vs. possible board positions120) and is vastly simpler than a country’s economy.

So, billions assume a lower limit of 18 years to determine the relative value of goods and services, even if we can perform the impossible tasks of:

  1. Identification of all goods and services in the world,
  2. Building a supercomputer or computer array, large enough to handle the calculations,
  3. Creating storage arrays large enough to transfer data, and
  4. Acquiring and uploading all required data to our computer immediately

Uploaded information is outdated and will become useless years before the computer is finished working.

Like many politicians, Phillips and Rozwarski claim that the country can be “run like a business.” Such assumptions are based on unimaginable ignorance and arrogance – a deadly combination.

Richard Fulmer has worked as a mechanical engineer and systems analyst in industry. He is now retired and writes freelance. He has published about fifty articles and book reviews in Muktbazar magazines and blogs. Robert L. Along with Bradley Jr., Richard wrote the book, Energy: The Master Resource.

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