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2
planned economy
(
idea
)
by
Loinen
Thu Sep 27 2001 at 17:59:00
Why planned economy?
Socialist
s argue that we could achieve much more
efficient
production
if we planned our economy in a national and finally in
global scale
. They point out
private companies
already plan their functions in great detail and all we have to do is to apply the planning in larger scale. Thus we can be efficient thanks to
economics of scale
and we can avoid the negative consuquences of
boom and bust
, the disadvantages of
cyclic nature of capitalism
when planning our production. They say that competing capitalist companies produce the goods before they know what is needed on markets thus resulting wasted work through the
anarchy of production
.
One important notion is that in some areas of production the cost of duplicating a product is next to zero and then in planned economy these products could be given away for free instead of creating
artificial scarcity
familiar in
capitalism
. Especially this is the case with programming, music and information in general. Remember
Napster
?
How it works?
Well, it doesn't but...
It sounds very simple: You only have to know what people need and produce that.
Two kinds of plans are created: a
long term
plan with undetailed
visions of future
and
short term
plans with specific information of production. The production plans are handed out for factories and other producers and they have to fulfill the plans.
Instead of
market mechanism
of prices familiar in capitalism and in other
market economies
those who lay down the plans have to find out what people need and want. They have to react on
consumption
and consciously give impulses for production through updated plans.
Also prices are defined by those who plan the whole
economy
. Prices are basically equal to the costs of production but we may decide that there are some
luxury
goods that should be taxed to get some other benefits, like cumulating capital for
investment
s.
Why it doesn't work?
The answer here is very simple: No one cannot control that much information that there's involved in national or global economy as a whole. Think about yourself as a
consumer
: It certainly is troublesome enough if you have to say beforehand what you will need, say, in next six months. Multiply that by billions and think about the trouble controlling the whole
mankind
's wishes. And that's only the consumption part of it, then we should handle the data of production too..
Well, lessay we somehow manage to solve the problem above with some sort of
supercomputer
and very sophisticated program. Unfortunately people are not perfect.
Homo Sovietus
was never realized (althought we have to admit that
education
and
culture
have a very great deal with human being). It's in consumers'
interest
to say they need as much everything as possible and on the other hand producers say they can produce only so few products... With this
false information
the duty of planning is simply impossible.
People's
unperfectness
also results the
poor quality
of production because it will be easier to do and the planned economy lacks the
incentives
of market economies.
Is there something we can do?
Well, mild yes. Through planning/
taxation
we may soften the effects of
fluctuation
inherent in market economies. And already in
Soviets
they introduced some incentives similar to market mechanism but then we cannot speak about the planned economy as such. However, the
mixed economy
may have a lot to give while creating more
equal society
. And IMO,
information should be free
- but however, this doesn't justify planning.
Divide-by-zero joke
Questions for those who don't like capitalism
Why equal distribution of income is good
mixed economy
The Regina Manifesto
Theory of surplus value
market economy
artificial scarcity
political economy
Karl Marx
Depictions of the Purges
market mechanism
Napster
capitalism
Socialism
Soviet Union
A brief history of economic thought
atheist jihad
The early decline of Soviet Communism
Dream Log: November 17, 2002
Risk perception
The planning process
Command economy
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