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@Xerographica “pragma-socialism” and your claims about it not having profits or prices yet still achieving rational economic calculation is what I am specifically interested in(even if you're not personally in favour). Ether we are talking at cross purposes and there actually are market prices in PS. Or you are wrong. Or you are a genius who has refuted Hayek & Mises where no one else has. I just realised the key part of this “Did you know that it takes 6 dates to equal one lemon? I'm not talking about exchange rates...I'm talking about lemonade. You can replace sugar with dates. That's innovation! But could we maximize societal value if the person in charge of a lemonade factory didn't know the prices of lemons, sugar, or dates? Once he had the idea to replace sugar with dates...then he would test it out on a small group of consumers. If the consumers preferred the taste...then he would try and get more dates. If he could get more dates then he would need less sugar. So the people in charge of the sugar factory would know that they had more sugar than they had before. Sugar would be freed up for more valuable uses” that I missed was this - “If the consumers preferred the taste”. Far more interesting is when the consumers are indifferent to dates or sugar. Such as with my Tarp example & Steele's example. Faced with the decision to use one or the other which should he choose? For a lemonade entrepreneur who came up with the idea of using dates one of the key things he would consider is how much money he would have to pay compared with the suger he is using already. Is it worth him taking the risk? If dates are cheaper to use overall then it probably is and he has made himself and society better off by releasing higher valued sugar for other uses. How would the same man in pragma-socialism make that decision? What would his thought process be? I am a lemonade producer and I will decide what sweetener to use by..... Your answer to this question before has been that the consumers & other firms in the supply chain would regulate this. That “If Mr. Date has great foresight...then the uses to which he allocates his dates will yield significant amounts of positive feedback (money)” But why should the date producer have any more idea then the lemonade producer what the relative scarcity of dates and sugar is across the entire economy? If Lemonade producer asked the consumers they no doubt would like lower lemonade prices. But the Lemon man would still be left with the decision as to which input would achieve that. P.S I am fully on board with the subjectivism of the Lachmann quote.
@Xerographica “If he could get more dates then he would need less sugar. So the people in charge of the sugar factory would know that they had more sugar than they had before. Sugar would be freed up for more valuable uses” This seems to me to be begging the question again. Just because they can 'get' more dates does not necessarily mean that they should. I am afraid that I still don't have enough detail to piece together what you are talking about. It would be good if you could set it out systematically. What you have written is scattered around in comments & on you blog. From your blog it seems that the idea is that people are taxed at 100% & the individual decides where that compulsory levy goes through 'donating'. If this is the case how will they have any money left to buy anything at all? Do tax donated firms instead give stuff away for free?
Just to be clear I am talking about the Calculation/Knowledge problem. https://sites.google.com/site/malthusstorage2/calculation-storage/1980---1989 Take a look at the first two pages of David Ramsey Steele's article Posing the Problem - The Impossibility of Economic Calculation Under Socialism downloadable from the above URL. He has a very clear explanation of the idea. It seems to me that by comparing direct appraisal of opportunity cost & value by an individual (your example was time) with the same kind of problem across an entire economy is missing the point. Which is exactly that individual or firm can't know how their investment decisions will affect everyone else's plans without some guide. Trading, creates ratio's of exchange embodying relative scarcities which are revealed in money prices. These prices act as a reference for making decisions on how to economise. It is hard to tell what you mean to replace the guide mechanism of prices generated from market exchange with, as you were being rather vague as to the actual mechanism of this profitless and priceless 100% income tax system. You say “Yes...but no. Opportunity costs, not literal price tags, are necessary to guide economic activity” Well that invites the question. How are opportunity costs made into an objective guide if not through a profit and loss system & 'price tags' people can check when making their entrepreneurial decisions?
@Xerographica I am not sure you have understood the fundamental problem as Hayek & Mises saw it. Which is how to decide the inputs of productive factors in the absence of price as a 'signal'. Consumers & voters in a socialist community may know what they want. More tarpaulin for example. But that does not mean they know what it should be made of to achieve the lowest cost. Hemp jute, cotton, Flax, plastic & nylon ect, can all (if the consumer is indifferent)be substituted for each other in Tarp production. The decision to use one of these takes away from another use. If that other use is more valuable then tarps you have just wasted resources. I don't see in your links how you have addressed this issue. P.S. I don't know why I am signed in as 'D' my name is Nicholas. So that is not on purpose.
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Aug 14, 2013