In Soviet Union, Optimization Problem Solves You

** applauds **

In a just and merciful world, every Serious Person from Washington D.C. to Beijing would now be trying to get you on the phone. Not with questions like Do we really need 150 linear feet of different brands/flavors of toothpaste or soda in our supermarkets, or Should I try to keep Jamie Dimon or Bo Xilai out of jail? but more like Is the logic of capitalism REALLY the logic of the cancer cell?

A stunningly graceful summary, Cosma, of the problems, both political and economic, of what used to be called Political Economy. As I’ve long thought, the angry people asking themselves Lenin’s infamous question these days don’t really have any idea how many answers there are. One hopes that this is a momentary lapse….

If someone like Iain Banks or Ken MacLeod wants to write a novel where they say that the optimal planned economy will become technically tractable sometime around the early 22nd century, then I will read it eagerly.

They have done so! Specifically, Ken MacLeod, in “The Cassini Division” – though he rather pessimistically puts the date around the 24th century (IIRC) and doesn’t go into much detail about how it’s done. “Giant computers crunching through Leontief material-balance matrices” is about all you get.

Also, and more seriously, aren’t you missing something by basing all your feasibility calculations on “A good modern commercial linear programming package can handle a problem with 12 or 13 million variables in a few minutes on a desktop machine”?

Because a good desktop machine will run at about 100 gigaflops (10^11 per second) or so, and there are Cray supercomputers right now that will run in the 50 petaflop (5 x 10^16) range – so while it might well take your desktop computer a thousand years to crunch through the latest Five Year Plan, a Cray XK6 , fifty thousand times faster, will get it done by this time next week.
Apologies if I’ve missed something here.

How do you explain the historical success of New Kingdom Egypt, with its centrally planned and rationed economy? That unemployment is at whatever the value it is demonstrates that modern technology has rendered humans unimportant to the process of production. No serf ever went a day without work. A politics devoted to recreating freedom in the face of alienation may very well have set itself an unobtainable goal, but only such politics can address the problems we face today.

“How do you explain the historical success of New Kingdom Egypt, with its centrally planned and rationed economy? ”

Slaves.

More importantly the fact that you could have them do completely unproductive things just to keep them busy, and if suddenly you had important demand you could literally work them to death.

Henry: I am rather fond of “That unemployment is at whatever the value it is demonstrates that modern technology has rendered humans unimportant to the process of production”.

The facts, whatever they may be, support my opinion!

This trial-and-error method is actually quite expensive and the only reason people like Steve J. or Mark Z. etc. keep working on new stuff is of course the profit which can be expected once the right kind of product is found.
I hate to derail the conversation about Cosma’s excellent article, and I even strongly agree with your main point (that the finite, specified list of “12 million identifiably different products” does not contain an iPad or a Facebook) but the record quite clearly shows that Jobs kept working on new stuff because he felt it was important. Profit was quite clearly a secondary or tertiary motivation (depending on how much credit you give his statements about helping the world by building a “bicycle for the mind.”) From what little birdies tell me Zuckerberg is the same way. The reductionist “people only innovate because of the profit motive” argument is a zombie that really should die.

The reductionist “people only innovate because of the profit motive” argument is a zombie that really should die.

Yes.

Which raises the question, why socialism can’t do it just as well.

More broadly, if innovation rather than optimization is the secret of capitalism’s success (and they are not just different, but significantly in conflict), then it’s not clear how relevant the discussion here, fascinating tho it is, is to the actual historical and prospective performance of different economic systems.

“either the planners have to decide on relative values, or they have to decide on the ratios in the “given assortment””

Thanks for the wonderful essay. Note what happens at the very start. In order to overcome the logic of the commodity, the law of exchange value (Wert), through complex planning, the planners have to assign individual things an exchange value. That necessarily implies enough knowledge to assign value in the first place–knowledge of specific products’ natures, of their “quality” (which somehow has to be quantified), of the level of demand, and so on. Not only is the total amount of information required–even with significant abstraction–daunting; all the qualities are also in flux in a dynamic economy. The problem is not so much daunting as impossible–especially if one takes into account the way the plan itself is going to affect all the economic inputs.

This is, of course, the starting point of the critique of planning. (And here, Henry, I find Hayek at his most useful and interesting–not in his discussion of the road to serfdom, but in his discussion of calculation, value, and the limits of knowledge.)

Perhaps more interesting is how this approach to planning finds itself, as already noted, forced to reinvent exchange value, whether arbitrarily (trying to keep prices fixed over long periods of time and treating them merely as counters) or through direct measurement (as though the labor exists in a commodity before the commodity itself is sold). In this connection, I’m not so sure that Kantorovich’s reference to the measurability of labor can simply be set aside as a concession to ideology–a real problem of how to measure value is necessarily part of the entire problem. Comprehensive planning finds itself, then, seeking to recapitulate the totality of exchanges in capitalism, and then to trump that totality by putting a shell of planning over it.

Perhaps no surprise, then, that in the world of really existing socialism, the plans themselves often appeared long after the plan periods had begun.

Lots of interesting points and questions.

Cosma, what kind of result does the market compute? (Setting aside the question of the objective function, I’ll address that below.) Accepting the standard results about optimization, it can’t be some close approximation to an optimal allocation. But an implicit premise of a lot of what you say is that it is a pretty good approximation to a (pretty bad) objective function defined by effective demand.

Making the computation distributed and stochastic (as in real markets) shouldn’t free us from the constraints of the results you cite. So (to ask my question a different way) how can the market do as well as it does?

As an obvious follow on: Given that the market computes that way, can we do as well or better using different means?

Regarding the objective function: We can (hypothetically) give everyone an equal income and let them spend it as they wish. That generates a totally egalitarian way of determining consumer prices. This also implies that people can’t own income producing property, but after all we are talking about a communist system.

My question for you here is: Given this sort of flat income distribution, what problems remain with determining the objective function?

I have lots of other comments and questions but I’ll wait for the context of your reply.

Ok, this post is now in competition with Holbo’s Frummery for the best blog post I’ve ever read. Just on a meta level the structure of the argument is superb. I am not unfamiliar with the techniques for solving the big problems and my initial objections from the early paragraphs were methodically disposed of one by one as the piece unfolds. Very very satisfying. Even if the practical implications aren’t.

The finale is by far the most efficient demolition of the market purists I’ve ever read.

I wonder why Cosma’s arguments against totalitarian planning and against market purism and for people (all people, not just batches of sorted out sets of people) can’t be the foundation for the left today. If you look at Democratic Party rhetoric, all I see is the market is always right, except where we need to fund (health care, food, education… for) the poor or unlucky, with no mention that constraining inequality as a corrective to the pure market’s inherent suicidal tendency is the right method for much of the funding.

Anyway, a heartfelt thanks for this, Cosma. It kind of makes my day.

p.s., the links in the piece are really really great. I spent waaayyy too much time following them.

Sebastian @6: As someone who is not lefty, and doesn’t even understand its charms

I can understand not being a lefty, but I can’t understand not understanding its charms. Its charms are what underlies the first half of that old chestnut: “Anyone who’s not a radical at 20, has no heart … ” Anyone with a heart is deeply disturbed that, in virtually every society, present or past, the rich grind the faces of the poor and many, many lives are blighted by unnecessary suffering. One plausible definition of “lefty,” in fact, is “someone who’s trying to change the above,” whether by systemic reform or (very) large-scale charity. It’s not that the right simply has a different way of going about trying to relieve the world’s vast unnecessary suffering, it’s that it seems to have no interest in doing so.

Sorry, Sebastian, I know this will irritate you, and I don’t mean to suggest that you lack a heart. But that’s only to say that I believe you have an inner lefty yearning to be liberated.

Janie: here. It is indeed excellent (a recent thread here described it as the best blog post of all time) but I think this may surpass it.

Great essay and once again brings up the question of whether linear programing and optimization are adequate tools for understanding economics. They are the tools we have got but that is a different issue. Mendelbrot offers an interesting take on this in The Misbehavior of Markets but the best discussion, also covering the socialist calculation debate and so overlapping the present discussion, is still Phil Mirowski’s Machine Dreams: Economics Becomes a Cyborg Science which could use an extended symposium like this one. There is also the question raised by Mirowski and explicitly put forward by S. Amadae in Rationalizing Capitalist Democracy of the explicitly ideological use of both optimization and linear programming. The irony of that in a discussion of the socialist calculation debate is considerable.

Wow! Now that’s a what I call a post. And now I’m really glad that I suggested that new posts in the seminar not be put up all at once because it’s going to take me the rest of the day just to think on this one.

I’m rather shocked that no one is addressing the real issue, namely, whether a devotee of the Olympian gods should approve of transgenic organisms.

Oh, and, btw, Centaurs 4eva!

it’s hard to see how a centrally-planned economy, as discussed in Red Plenty and Cosma’s post, can do product innovation at all well. This is both because of the calculation problem (how do you calculate the resource allocation for things that don’t exist yet?) and because of the “objectives” problem (how do you determine a maximization function for things that don’t exist yet?)

Tricky problems, for sure. So how does capitalism solve them? Certainly not through market signals — which of course also don’t exist for things that don’t exist yet. Rather, through planning: A designated group of experts considers various proposals for new firms or projects, and allocates a portion of the social surplus to them based on their assessment of their prospects. Now, we call these planners banks, or these days venture capitalists, but when Schumpeter, writing i 1939, wanted to explain the function of banks under capitalism, he described them as our version of Gosplan.

Innovation under capitalism has nothing to do wit markets. It is organized by our Gosplans in the financial system, and they — as Jed Harris suggests above — are no better able to solve the optimization problem than the original Gosplan was. Everything Cosma says about the intractability of that problem, applies with just as much force to capitalism.

This is not to say there’s no difference. Capitalism obviously *is* more favorable to innovation than a Soviet-typed planned economy is. But the reason, I think, is orthogonal to the subject of this post. Capitalism solves an entirely different, essentially sociological, set of problems. What it does, is remove the biggest obstacles to innovation by disempowering incumbents (workers foremost of course, but also those further up the hierarchy) and breaking the links between economic activity and social life. In other words, the success of capitalism, IMO, has as much to do with primitive accumulation as with markets.

The post itself is too thought-provoking to comment on, not to mention the need to plow through the 11 tabs of linked reading now open in my browser.

It was an excellent article, a classic, and has led me to too much reading to be able to comment at any length. In any case, I spend too much time trying to understand actual historical wildly successful centrally planned economies, three in particular in Japan (Tokugawa, Meiji, Post-War) to have time understanding why they were impossible.

“Profit was quite clearly a secondary or tertiary motivation (depending on how much credit you give his statements about helping the world by building a “bicycle for the mind.”)”

This is a harder question than you’re giving credit to. Steve Jobs wanted the ability to do what he wanted to do, on a large scale, involving lots of expensive research for things that lots of people (maybe even most techie people if we’re talking about the ipad–until it was released there was a large contingent of people who thought it was a waste of resources–see especially Microsoft) thought were stupid ideas when in the planning stages. The way he got the freedom to do what he wanted on such a large scale was that he made enormous amount of profit by pleasing a lot of people and selling them stuff. It is true that very few innovators want money *just for its own sake*. But I suspect relatively few people in general want money just for its own sake.

“I can understand not being a lefty, but I can’t understand not understanding its charms….Anyone with a heart is deeply disturbed that, in virtually every society, present or past, the rich grind the faces of the poor and many, many lives are blighted by unnecessary suffering. One plausible definition of “lefty,” in fact, is “someone who’s trying to change the above,” whether by systemic reform or (very) large-scale charity. It’s not that the right simply has a different way of going about trying to relieve the world’s vast unnecessary suffering, it’s that it seems to have no interest in doing so.”

I don’t believe that, I’ve seen extreme heartlessness from the left and extremely charitable acts from the right, and all sorts of things in between. My problems with both sides is about lack of balance. Neither side seems interested in the fact that rights/responsibilities/needs/wants are about *balance* not elevating one fetishistic concept above all others. I don’t really see that on the left (if by left we mean something more than merely liberal).

But back to the topic at hand, I’ve always felt that communism tends toward scary authoritarianism because the planners fail to understand the scope of the problem, and when that failure bears fruit, they must get rid of the evidence in increasingly messy ways. (Which is not to say that all sorts of other systems are willing to get rid of the failures in similar ways, but the hubris of the command economy planners creates extra-spectacular failures which call into question the whole system in ways that capitalist failures do not. You’ve given up the material engine of captialism, and huge amounts of freedom, and you get more famines than before? That can’t be tolerated).

more importantly, even if you want to call them planners, they’re decentralized planners, answerable to a variety of entities with a variety of metrics for success.

OK, but why is that important? Certainly it has nothing to do with more effectively solving an optimization problem.

Sure it is. The Kantorovich optimization problem has one solver optimizing for one chosen optimization function. Perhaps that optimization function is complex and multifaceted, but at the end of the day, there is no fallback when the function is wrong – i.e., when it solves for iPad and says “nope, no one will want it.”[1] The VC system (except, as I said earlier, when it breaks down because of herd mentalities) will have someone else trying to solve the same problem, using a slightly different optimization function, and one of them will, at least potentially, say “ah-ha! iPad sounds great!”

Again, this is not to say that markets are the One True Answer (for all the reasons Cosma points out), just to point out yet another way in which a mere optimization problem (as best as I can tell) is not just not the One True Answer, but is very hard to imagine as even a component of the universe of answers.

[1] If you have multiple optimization functions, then you’re just a market again.

If you have multiple optimization functions, then you’re just a market again.

I don’t think this is true, at all.

what is wrong with a dynamic central solver – The programmers, or whoever, adjust the system as needed. At a fine level (miles of railroad cars of soybeans per day ) they can adjust hourly; for more complex things, like ipad vs x, they can adjust monthly.
In any event, the ipad discussion suffers from a serious flaw: we don’t know what the other solutions are, cause in a free market economy, particularly for IT systems, there are economys of scale, so you get this butterfly effect where an initial system takes over.
I bet if you went back, and looked at what ipad competitors were doing *at the time* some of em were better then jobs, but they got shut out fo the media light and $

I don’t think this is true, at all.

Sorry, should have been more general: if you have multiple optimization functions, you’ve got a coordination problem again (between the groups controlled by optimization function A and optimization function B), which you can solve by a market, or by another optimization function, or by something else. But if it is an optimization function, its turtles all the way down up: at some point, someone has to attempt to value risk-taking, and guide how/where that risk-taking occurs. And that’s a particularly intractable problem for mere calculators. At least some of these optimization problems are expressible numerically: we know we need X mattresses, Y beds, etc. And then you solve for X and Y. As Cosma points out, X and Y may be a subject of debate, but at least they are numerical, can be given units, and can hypothetically be solved for. You can’t say “I need X units of innovation” or “Y units of (thing that doesn’t even exist yet).” So you need some non-numerical (hence non-computable) guide.

Again, not that markets do this terribly well, but I don’t see any solution for a Kantorovich economy that is more than “have smart people make guesses about how to throw money at smart people, see what happens” – i.e., to use a decidedly non-Kantorovich approach. But I haven’t given this super-deep thought and it is completely possible I’m missing a calculated solution to the problem- please do enlighten me if that’s out there.

[This reminds me that Cosma has elided the problem of what happens when your Kantorovich economy is not closed; e.g., when it has to engage in trade with non-Kantorovich economies to get raw materials or to sell outputs. If you have to do that, then you have to recalculate the whole solution literally every time an external price changes, right? Or, again, am I missing something?]

(And of course gov’t can buy innovations- they do it all the time, often much more efficiently than markets because they aren’t paying overhead for self-important MBAs. But at root they do it the same way VCs do – throw money at it, see what sticks. There is no magic, calculable metric for it, that’s all I’m trying to say.)

“And of course gov’t can buy innovations- they do it all the time, often much more efficiently than markets because they aren’t paying overhead for self-important MBAs.”

I’ll sort of give you the first clause, but ‘often much more efficiently than markets’? No. The major government innovator is the military, and whatever good things people say about technology and military hardware, ‘efficient’ is not one of them.

A post for the ages, and great comments as well. At the risk of lowering average comment quality, I’m interested in the time-indexing problem. It worried me in the novel: if the plan period is a year, how do you coordinate and stage deliveries between units during the year? But in any economic system, especially once you have some level of technical complexity, the timing of production-critical deliveries, and the inherent unreliability of such timing, must be dealt with somehow — whether through massive warehousing, deliberate excess capacity, duplications of various kinds. (There must be a huge operations-research lit on this…)

You can see this in a small way in contemporary internet vendors, who have incentives to lie about whether a product is in stock.

For me one of the lessons is that even the red lines on Simon’s map are, very often, not the impersonal take-it-or-leave-it transactions of neoclassical theory but significantly institutionalized. A purchasing manager builds relationships with counterparts at other firms, and a lot if that is about negotiating timing problems as they arise (as well as quality issues).

Sebastian @52: But government also buys innovation for industry, both through civilian applications of military technology (like DARPANET) and by supporting basic research in universities, for which it does not (in general, at least as far as I know) demand a share of profitable applications.

One of the insights I take away from this post has to do with the function of planning in both its good and bad aspects. Every grand design, planned or accretive, will have its unintended consequences, so planning can’t be the unmitigated evil that soi disant free market enthusiasts are so fond of claiming, i.e., it doesn’t have to result in a Stakhanovite nightmare in some commissar’s dark satanic mill somewhere.

More simply put, the way to optimize the benefits of planning might be to make our plans smaller, and the communications between them more robust. Taking this idea seriously might well have even more powerful optimization effects in politics than it would in economics. (Cue discussions of participation, democracy, investment of individuals in macro outcomes, etc.)

And no, contra Hayek, it doesn’t seem to me that the market price is the greatest of all imaginable discovery mechanisms, although it does point the way to others which might share its advantages.

Well, yes, if we had genuine market prices in anything other than simple commodities (at best), it would be harder to scoff at all the ideological superstructures built on their supposed magical efficacy. On the other hand, why we don’t have them, and why producers think it’s so important to game them in the ways that they have, is very instructive about some of the things we too would have to worry about if we woke up tomorrow in a universally declared Socialist New Jerusalem.

This was a very fascinating read! I’m naively trying to intuit up ways to avoid both the problem and as much of capitalism as possible. Here is a first attempt.

As a matter of unconditional right each citizens freely receives
– modest housing, and
– a personal fabrication unit (fab) and a bundle of raw input materials, and
– sufficient nutrients as specified by the science, and
– access to internet where all open source hardware/software are available

Would a centrally planned economy within the limits set by the above also be unfeasible for the sorts of reasons detailed in the original post?

Why can’t GOSPLAN throw darts too?

As the headline post makes clear, the problem is not with communism per se but is a problem of planning more generally and, more generally again, one of rationalism. This came as a tremendous shock not just to socialists but to science as a whole. Capitalism does not solve these problems however. Rather it circumvents them using the market which is not a rationalist construct.

Markets have no theoretical foundation. Q. What is the market price? A. Check the market. Q. What will be the market price tomorrow? A. Check the market… but you have to wait until tomorrow.

Markets are a powerful analytical tool (indeed an indispensable one). They’re also a scientific deus-ex-machina, however, with frighteningly shaky empirical foundations relative to their significance. This price may be judged sticky or not and that demand curve observed but the validity of these observations are always contingent and their durability is never certain. Given enough time, all such observations will become untrue. This may occur due to cultural shifts or due to changes in circumstances; the markets for diamonds and grain will differ inside a besieged castle from those in the larger world. Market economics makes certain problems tractable at the expense of accepting that other more general questions can never be solved — precisely those questions dealt with in the OP. This is not an advantage to be dismissed, however market evangelists habitually go on to make much greater claims — essentially to take assumptions about efficient markets as fact — without any proof whatsoever.

But the erosion of rationalism in the 20th century was not restricted to economics. Along with the analytical limits such as those proven by Bertrand Russell and Kurt Gödel, there were limits to what was calculable such as NP complete problems, theoretical limits to observation such as the Heisenberg uncertainty principle and observational constraints in fields such as chaotic systems or economics that appear superficially to be practical but are in reality fundamental.

These developments came at a time when scientists’ capabilities were widely thought to be limited solely by time and resources. The shock was profound and not just to the scientific community. It was a trauma to rival the Copernican revolution.

Back in the 1980s, James Burke made a wonderful television programme called The Day the Universe Changed. It was a brilliant inversion of normal scientific discourse, pointing out that prior to each scientific or philosophical revolution people lived in a world built around a more flawed understanding of reality. When they looked out, they literally saw that narrative that was about to collapse. So, when Copernicus wrote his treatise, as contemporaries saw it he didn’t just improve our understanding of the solar system; rather, he wrenched humanity away from the centre of creation where not just the bible but all prior observations had placed it. The universe ceased to be for and about us, a trauma that contributed to centuries of religious turmoil that have yet to fully unravel.

The 20th Century added insult to injury. Not only was the position we occupied of no special importance, in many spheres we were now also condemned to ignorance in perpetuity. The universe had changed once more. It’s interesting to speculate as to the role this shock played in the convulsions of the 20th Century or about the extent to which its reverberations will continue to echo in the 21st.

Though it started with science, its impact can be felt much more broadly. Artistic modernism for instance was ultimately an aesthetic and hypothetically any modernist aesthetic could be expressed as a system of rules, that’s to say as a rationalist construct just like law or mathematics. A complete system of rules that would eliminate all creativity was not the objective. On the other hand rules motivated by critical argument could separate the artistic from the purely technical: content from form.

The rise of postmodernism, which denies any absolute distinction between high and low art or indeed between any two artistic artefacts, closely paralleled the scientific and philosophical changes outlined. Its claim is that all cultural expressions are imbued with all other such expressions and if there were ever any doubt that there’s at least some truth in this the subsequent explosion of referentiality in art has dispelled it.

Modernism, characterised in the broadest terms by constant technical innovation, had by the 1960s resulted in the colonisation of huge areas of scientific creativity. Worse again, the helter-skelter rush to occupy the new territories had left much of them patchily covered but the number proved to be small of artists modest enough to limit themselves to at best the second rank by working in the shadows of the technical innovators. Certain arts, music and painting in particular, came to be seen as essentially complete by the 1960s.

While postmodernism is itself arguably just such an acknowledgement of the technical innovators’ greater significance it unquestionably opened up vast new areas just as the well of modernism ran dry. But this all came with a catch. Whereas art for art’s sake was a clever joke, if all artworks were inescapably imbued with every stimulus to which its creator had ever been exposed then all causal relationships in art really did become circular. This didn’t just alter aesthetics, it made any aesthetic impossible.

Postmodernism never did catch on in the USSR and for obvious reasons. It was not a society where fools could prosper, and any fool could see that an assault rationalism would constitute an assault on communism itself. The world of today is the opposite; when there is an artistic controversy everybody comes away with what was sought: offender, reporter, offendee. Identities are reassured rather than unsettled. The rituals and superficial forms of creativity remain, abstracted of intent.

It is difficult today to imagine how important figures such as Picasso or Stravinsky were in their time; carpenters and field hands as well as professors debated their merits. Henri Rousseau demonstrated that with commitment and integrity it was possible then for the individual to leap ahead of the cultural elite. Derided as an idiot, his creations are universal and eternal.

I don’t know that any civilisation has prospered for long while exhibiting the cultural stagnation of the current age. We need to remember that only at the margins is postmodernism incontrovertible. Its arguments can be applied to Mozart or Picasso but such examples reveal its limits as a perspective because the ways in which they extended human expression simply had no precedent.

The market is an emergent system. One of the funny things about scientific leftists is that they believe in emergent systems in evolution, but have trouble believing in them in markets. They want god/planner in charge somewhere in economies.

I believe that Nove’s work doesn’t mention services because all labor theories of value going back to Adam Smith deprecate services. There may be a class aspect to this since in Smith’s time provision of services had a definite tinge of submissiveness to it.

Also, the ln(1/h) in the expression about computability reminds me of information theory, any connections?

@sebastian, markets are surely emergent, but we seem to understand them far less than evolution. The turnover of firms and products is not fast enough for an equivalent process to natural evolution, for example, and the standard economist’s model of them is strangely off as well.

Without understanding ’emergent’ is just another word for ‘exists’.

It was interesting to see who funded Spufford’s book (e.g., Target). There’s a lot of scholarly interest in the big retail chains, who have some of the same problems as the commissars in Red Plenty (though most of the interest seems to have been from the social side). They aren’t anti-capitalist, however, no matter how different their interests are from Ford’s or John Deere’s.

” So how does capitalism solve them? Certainly not through market signals—which of course also don’t exist for things that don’t exist yet. Rather, through planning: A designated group of experts considers various proposals for new firms or projects, and allocates a portion of the social surplus to them based on their assessment of their prospects. Now, we call these planners banks, or these days venture capitalists, but when Schumpeter, writing i 1939, wanted to explain the function of banks under capitalism, he described them as our version of Gosplan.”

It’s important, in understanding the way the US REALLY works (as opposed to the nonsense ideological versions) to also include in this list of planners
– DARPA (THE Ministry of Planning for the US, but don’t call it that, of course), and
– NIH and all the other science funding agencies: NASA, NSF, DoE etc

Damn, how do I turn the italics off?

It’s important, in understanding the way the US REALLY works (as opposed to the nonsense ideological versions) to also include in this list of planners – DARPA (THE Ministry of Planning for the US, but don’t call it that, of course), and – NIH and all the other science funding agencies: NASA, NSF, DoE etc

Fair enough.

Luis: I am happy to stipulate, at least for the moment, that a number of independent planning agencies will approve a greater number of blue-sky projects than a single centralized agency, and that this kind of decentralization is more likely in an economy with private ownership of the means of production. What I object to, first, is the idea that decentralization decision-making is definitionally equivalent to markets, and second, that the greater innovation it results in has anything to do with “optimization” in the sense discussed in Cosma’s post. What is the optimal frquency of iPhone-like innovations? How on earth could you know?

Oh. [Looks hastily at book.] I think that’s a grant from Target to Graywolf Press to support it as a publisher, presumably as a piece of Minnesota-to-Minnesota philanthropy. It didn’t come my way.

Capitalism can have institutions: think about Toyota and its subcontractors. Each subcontractor has a contract specifying what it produces and when, but this is an incredibly complicated contract, and one that is always changing as Toyota’s needs change. What makes this noncapitalist? Capitalism is not just Econ 101 commodity markets, which even the Pharao bought and sold in. There is a developed theory of the firm to address the existence and behavior of firms, which is worth looking into.

Malfunctioning italics. Accusations of corporate sponsorship. The delegitimisation begins ( I couldn’t resist – but I should)

I think I’m going to try and keep my serious comments for the responses, though. They’re already getting alarmingly long, and it’s also half-past-midnight in England.

For The Market to tâtonne its way to equilibrium requires rather well-behaved excess-demand functions on the part of the economy anyway, so is there some reason in principle that The Planner cannot assume that the same?

There is a shortage of something: so make more, comrade! Central planning is easy under the conditions which the market works perfectly.

80 seems exactly right.

80 is you (?)

Are there no parallel algorithms with good scaling properties for solving linear programming problems? Like ajay, I don’t understand why the computational reference unit is one desktop computer; many scientific problems solved by computer today would not be tractable on one desktop computer.

More serious is the problem that people will straight-up lie to the planners about resources and technical capacities, for reasons which Spufford dramatizes nicely. There is no good mathematical way of dealing with this.

Governments and corporations have developed and continue to rapidly improve electronic panopticons for the purposes of waging war, enforcing laws, and optimizing advertising. Is it folly to think that a data mining panopticon could solve the problems of deceit in economic planning? Merely creepy?

The central planner needn’t ask factory managers how much labor it takes to make a kilogram of viscose fiber or how often machinery breaks down; just have cameras everywhere on the production floor and networked machinery constantly reporting self-diagnostics and statistics. Everything that happens is recorded; if central planner and lower managers alike are competent and acting in good faith, it aids them both, and if not it identifies the weak point. The instance of elaborate sabotage and its twisty motivations, described in Red Plenty, came about only because planners could lie about how much production a given machine was capable of and lower managers could lie about how much was actually achieved.

If a machine reports as idle for a day when it was supposed to be in production, maybe the machine is faulty. Check the video camera footage to see what was happening with the workers and the machine. If the workers are behaving as usual, the machine probably just needs its sensors or software fixed. Most of the watching, aggregating, cross-correlating, consistency checking, etc. can be done by computer, otherwise you’d just be solving one problem with a worse one (lying replaced by enormous amounts of oversight labor).

Thanks for an extremely engaging, thought-provoking piece. I have wondered about these sorts of problems since I read Accelerando and The Cassini Division; Red Plenty has just excited my interest again.

Matt @ 93 – I found slides for a 2005 talk by Jacek Gondzio, “Massively Parallel Implementation of Interior Point Methods for Very Large Scale Optimization” in which he reports that a linear programming problem with 1bn variables and 353m constraints can be solved in 50 minutes using 1280 processors. This is not my field, so I don’t know whether his algorithm exploits some structure in his problem that would not exist in the central planner’s problem.

On a related note, Cockshott and Cottrell have a number of papers arguing that central planning is feasible with modern computer technology. As I understand it, the algorithm they present (e.g. in “Towards a New Socialism”) does not consider a linear programming problem; rather, it takes as given a target for final goods production (determined elsewhere in their model, which includes some markets for consumer goods) and solve for the gross output levels required to meet this target. They exploit the fact that the input-output structure of the economy is sparse (only a small fraction of the goods in the economy are directly used to produce any single good). Their algorithm’s complexity increases with n*m, where m is the number of direct inputs for each product, which seems manageable even with n=12 billion.

Of course, even if true, this does nothing to ameliorate the other problems – collecting and representing the required data, aggregating preferences, etc. – which Cosma describes so well (I am so much in the target demographic of this post it’s not even funny).

There’s a lot more here to comment on than I could cover, aside from to express agreement and appreciation, but as an economist-in-training (for what that’s worth), there are a few related points which I think are worth elaborating upon.

I would like to focus on the statement that there is no good mathematical way of dealing with the propensity of individuals to lie to planners. This seems to miss important recent developments in economics, by no means obscure, which have taken the effort to attempt to alleviate this. The rise of mechanism design as a major paradigm in economic theory has not only provided a way to approach the issue of lying, but has come up with a set of ideas and results which ought to reshape the way people think about markets and exchange in general. The following should be quite boring to those familiar with mechanism design, but I hope will be informative regarding this under-popularized area.

While game theory, including the branch of game theory which deals with games of incomplete information, focuses on determining the actions of individuals in a given social environment (formally a tuple consisting of, for each individual, a space of possible actions, an information set, and an objective), mechanism design reverses the process. Given a group of ex ante diverse agents, one seeks to design an environment which induces them in equilibrium to voluntarily*1 take desired actions optimizing a given social objective, which might be a social welfare function, or just the whims of the planner. The application to the problem of lying is direct: take your God-given social welfare function (the issues with which you have ably described here), open up your Contract Theory textbook*2 and program in the optimization problem over the set of all societies such that the technological structure of production is given and that all individuals will behave according to their individual objectives. Incorporating this extra structure adds to the computational difficulty of course, but as with the use of convexity in standard optimization, under some regularity conditions the problem of searching over the space of all possible societies, calculating equilibrium behavior in that society, and then optimizing over the resulting set of outcomes, can be drastically simplified. Indeed, the revelation principle reduces the problem to ensuring that each agent truthfully reports their type (say, their exact valuation for every kind of good), which mathematically amounts to adding a bunch of additional inequality constraints to the original programming problem of deciding what allocation to give them.*3 Adding these constraints of course takes you away from the unconstrained optimum, but one can at least attempt to achieve the best possible outcome over any society which is feasible given technology AND human nature, which sounds to me like pretty close to the goal of feasible planning. This does not overcome computational difficulties (and relaxing the assumption of quasilinear preferences takes it from impractical to computationally nightmarish, according to my colleagues who work in the area), and the social welfare function is still not something one can realistically define, but the problem is at least mathematically well-defined.

The relevant question to ask, once the setup is well defined, is what kind of restrictions are imposed by taking into account these difficulties, and here is where the results become somewhat ugly. Some of the more important results in mechanism design, aside from some clever tricks on the forms of institutions (“mechanisms”) which make people willing to reveal their information, are impossibility theorems. Once you take into account unverifiable actions, it becomes generally impossible to achieve a system which both ensures maximal productive efficiency without also imposing undesirable risks on workers: this is the well-known issue of moral hazard, though what is not well known is that except under extremely restrictive informational assumptions, it is NOT the case that the solution to moral hazard is to increase the size of the punishment for bad outcomes and reward for good ones. The relationship is in general nonmonotonic, a finding which strongly contradicts the moral intuitions of the kind of people most likely to talk about moral hazard. It also has some unfortunate implications for decentralization: the Myerson-Satterthwaite theorem, my vote for the result in economic result which is least recognized relative to its importance, is that there exists no possible mechanism under which bilateral exchange between agents who do not know each other’s valuation for the good can be conducted efficiently: completely decentralized voluntary trade, contra Hayek, is informationally inefficient. It has been shown in the one homogenous good case that as the number of agents grows, efficient exchange from sellers to buyers can be achieved asymptotically using a mechanism that looks like a market price, suggesting that the Walrasian fiction of exchange by informed agents under competitive market prices can be approximated in large markets even in the absence of knowledge of valuations by both buyer and seller, though how this applies to more general situations I can’t say. I believe most of the familiar limitations should apply (though, since allocations are being decided by a planner, things like public goods and pollution and other externalities can be handled in a similar way to the full-information social planning case, modulo the need to elicit valuations for such objects).

The approach also brings about the issue of who, precisely is designing the mechanism, and whether it is possible to force the mechanism designer to commit to the allocations prescribed by the mechanism ex post. In many of the cases where this theory has been practically applied, these become major issues. Small scale mechanisms, like an employer designing a labor contract, generally don’t have social welfare as the objective: usually the goal is to extract as much rent as possible. In the case of a government, this should also be an issue, with the additional complication that even if an objective is decided upon democratically, ensuring truthful voting will become even more difficult because votes not only make a decision but also reveal information, creating possibly conflicting incentives for voters. Ensuring that the contract is fulfilled by all parties is also difficult: clearly in the case of an employer, who has incentive to promise high pay and good conditions and then renege, but also for a benevolent government, which may want to implement a mechanism which ex ante entails bad outcomes for some people in some states, but may ex post want to forgo punishment or reward. One could always attempt to put an incentive structure for the government which attempts to remove this, but then you have to ask who will impose that on them and it’s turtles all the way down.

None of this suggests that at any point a centrally planned society could overcome the practical difficulties entailed by lack of knowledge and processing power, even with optimal mechanisms. Optimization is hard and approximately optimizing over a criterion that is approximately right is not a guarantee of approximate optimization (at least in the absence of uniformity in that approximation). Even if finding an ideal were approximately achievable in a centralized fashion (my suspicion is that in practice, since goods and services would need to indexed by time, location, and state of the world at a minimum, even without nonconvexities or social interactions which make the problem NP-hard it would be infeasible for the foreseeable future), it would be cheaper and easier to decentralize many aspects of the process, allowing individuals and organizations to make substantial fractions of their decisions individually or in small groups and so participate in activities that look something like (regulated) “markets” and “firms” and “social organizations”, while only some aspects would be carried out in a centralized fashion, with decisions informed by gathering information in some way from the populace. In other words, even with the ability to formalize the problem of extracting decentralized information, computational capability is likely to change the scale and type of activities which are carried out in firms, markets, and governments, and may even result in a greater degree of centralization as it becomes more practical to organize some activities in a way which takes advantage of capabilities for more complex economic arrangements to be determined mathematically, but it’s not likely to facilitate a planned economy. Instead, just as linear programming has become a part of the standard toolkit for operations research, affecting the way some businesses manage sales and inventories but not strongly changing the structure of the economy, mechanism design is today primarily used by companies like Microsoft and Google to find more profitable ways to sell advertising, and practical applications to government mostly consist of somewhat more efficient tax schedules.

So, in practice, although economists have given a lot of thought to the problem of social decision making in the presence of decentralized information and have some relatively intriguing results suggesting forms of allocation which often differ in details from Walrasian markets, most of the conclusions regarding the infeasibility of large scale planning seem to hold up.

*1 “Voluntarily”, meaning, of course that given the induced structure of society, it is in an individual’s best interests to do as told. This is perfectly compatible with said structure of society consisting of: “Do X or I will shoot you and your entire family,” see, e.g. Acemoglu and Wolitzky (2011) “The Economics of Labor Coercion”. Note also that in general such a social structure is not necessarily sufficient to ensure ideal response, as not all actions are verifiable, as aptly illustrated in the process of dekulakization.
*2 In our first year theory courses, we use Salanie’s “The Economics of Contracts,” but as this is not my area and it is a mature field, I suspect that just about any textbook on contracts, auctions, or market design will contain the relevant details
*3 These are usually referred to as “incentive compatibility constraints.” If you want to do more than just allocate goods, but also, say, force workers to do something when they have the possibility of doing something else, you also need participation constraints, but these can often be handled along the lines of Footnote 1

Wow. This was awesome. A lot of it went right over my head, but I still learned a ton. Cheers.

“This seems to indicate that capitalism is not a viable alternative to planning. So now we have two non-viable options.”

That’s what it seems to indicate. Stephen Leacock covered much of this territory nearly a century ago in “The Unsolved Riddle of Social Justice.” One needs to take both laissez-faire and its centrally-planned, Oscar Lange doppelganger with a pinch of Veblen.

A terrific essay and absolutely the way into the future. Reality is going to require overlapping institutions and organizations of different kinds because we cannot know it all. It is not simply complexity that it the issue; it is that your brain can’t wrap around it.

Any institution allows you to act, while depending upon some pieces of information being held in the category of “being held by all others”, so that you do NOT have to re-obtain it locally. This saves your information budget. For example, the market system works by establishing that you don’t have to recalculate the value of the currency at each transaction, and you don’t have to establish the validity of consumer protection laws for each new thing you buy. Working for a business firm is the process of doing what is required without having to know the final ends of the owners, or even necessarily the next step in the production process. Having a government policy for climate or retirement security saves the citizenry from enormous cogitations on risk and the vagaries of life. Etc. etc… Market institution, business institutions, government institutions are the same sort of thing, at a deep formal level. Nescience is allowed, and indeed it is depended upon. You are freed from having to learn, or to re-establish everything. This reduces your time cost, and you don’t have until the end of time. All institutions do this, including government ones. It goes even deeper: any organization whatsoever, ideas, individuals, inventions, and institutions are all the same kind of thing: they are rings of transactions/transformations around a central context or central agreement that rules them, and that local central context (1) allows specialization among the parts, and the central context also (2) reduces the transaction cost between the parts, by making the repetition of common information unnecessary. All institutions must have radial connections between the members and the central rules — connections of focus, transparency, responsibility, and redress. Thus there are two types of basic connections in economics, the transaction between two parts, and the connection to the rules. Finally to work well, institutions should be narrowly focused. Even the market institution is quite narrowly focused, on balancing scarcity and desire by the use of the scarcity of money. That is all it really does. That is precisely why it works well, when it does work well. The “knowledge problem” assertion that all local information is communicated in markets is incorrect and has led people to fantasize that such a systemic calculation is being made. In fact, the local knowledge is specifically NOT transmitted; this non-transmission is the market institution’s function, that is how it reduces transaction costs: you do not need to know the other fellow’s business. We must look at the operation of negative information, of nescience, in information and organization of all types. The only way forward is to solve problems as they arise, which may require adjusting old institutions or creating new ones, to allow us to hardwire the common information, thus saving our information and energy budgets for new flexibilities.

[blockquote]
DARPA (THE Ministry of Planning for the US, but don’t call it that, of course)

The 2012 DARPA budget is about $3 billion—about the size of the R&D budget of Google and about a third of the R&D budget of Microsoft. Hardly close to anything resembling “The Ministry of Planning.”
[/blockquote]

The issue is not the raw money involved, it is the directions that are set.

What do you think a Ministry of Planning would refer to? Hint — the word Planning is not the same as the word Production.

Yet…the Soviet Union did not need an optimum solution. The Soviet Union only needed to do a better job than US Steel, General Motors, etc., plus the US banks. Artificial intelligence research did not lead to artificial intelligence, but instead led to computer science. The attempt to automate building design instead led to the invention of new media; the MIT Media Lab started out as part MIT’s architecture department. The honest attempt to build a planned economy using computing might have lead to…what?

Water under the bridge, of course; the Soviet leadership didn’t want that. They scorned the beginnings of information technology, much as capitalists did and for, it seems to me, very similar reasons.

Awesome essay, BTW.

BTW, the Mac, the iPad, and the iPod/iPhone were anticipated at Xerox PARC, roughly two decades earlier. These were pure research projects. Jobs’s role was marketer and popularizer; he is perhaps more akin to Edison or Sarnoff.

Ref: http://nchu-eucl-1st-speech-tips.blogspot.com/2011/11/third-paradigm-computing-ubiquitous.html

Thoughts just seem to be coming…

Here’s an optimization constraint for you: survival of human civilization.

Can we frame a sustainable economy as an optimization problem?

Great essay.
I wonder though if it wouldn’t be the case that a world with the computational power
and/or theory and tools to solve intractable problems like GOSPLAN wouldn’t also be a world where GOSPLAN is unnecessary because said computational power & tools could be used to create surplus’ by solving other hard problems – mapping the brain, whatever. What purpose would central planning serve in such a world ?

Like, wow. This has arrived about a fortnight too early for me to have time to join in the discussion properly, but only a week early for me to take full advantage of it in finishing a speculative paper on ‘The Market in Classical Antiquity’, trying to engage with similar issues in a much less elegant and coherent fashion (not least because of the need to engage with the debate as it actually exists in ancient economic history, rather than the debate we ought to be having).

Indeed, and each of these structures embodies a different spirit, logic and ethos and requires different things from us; we never have complete knowledge or understanding of how best to orientate ourselves towards them, even assuming that we’re conscious of how differently we ought to behave in different contexts; and however much we try to conform, the system is never consistent or coherent enough for this to guarantee success. I’m reminded for some reason of The Magic Mountain as well as Kafka.

I do wonder about scale; how far does this presupposed systems operating at a global or trans-national or national level, and how far does it go all the way down? One, very partial, reading of the collapse of the Roman system is that the effort involved in sustaining a pan-Mediterranean structure simply became too great in the face of external shocks and pressures, not least because there were too many conflicting if not contradictory forces and organising principles within which those in authority had to work and everyone else had to live. The establishment in many areas of societies based on dependence relationships with a local warlord and his clan, rather than societies involving complex relationships with state systems and markets, appears to come as something of a relief to many.

I, too, thoroughly enjoyed Cosma’s essay.

I found insightful the point in the book that the rulers were not going to turn the most important decisions over to the computer, even if they were convinced that planning would work.

I know Kornai had a two level planning algorithm, where the center’s problem is formulated as a game. I don’t think the game was set up to address lying. (I liked the novel’s depiction of the sabotage of one factory’s machinery, the whys, and the consequences.)

Anyways, suppose almost all commodities had embedded some sort of Radio Frequency chip. Being bought and sold are state changes to be recorded on the chip. Our phones provide a wireless sensor network to collect this information and forward it on to the center. How much of the problem of collecting the information on what, of currently existing goods, is wanted is then solved?

(I suppose the calculations of the plan can be distributed across this network too. Vector multiplication is easily parallelizable, but, I guess, matrix inversion is a bit more difficult. Maybe we make to with iterative approximations with matrix inverses. But I’m getting beyond what I know here. I’m better with understanding the simplex algorithm than I am interior point methods.)

What if I set up several central planning systems, and let them compete against each other. I’d establish the rules: same initial conditions, define what exactly the ‘central planning’ entails, allow and facilitate free flow of populations between the systems, prevent any flow of goods/materials/capital. With any luck, in fifty years you’ll have the central planning system that people like. Well, and why not add other, decentralized models into the mix? Same rules.

Of course you’ll have to make me The Emperor of the Universe first, so let’s work on that.

Data:

In an essay in the late 70s I also proposed a “market in plans”. My focus was on severing the link between planning and political authority, and I think that part was OK, but I was still quite naive about planning itself. It is symptomatic that I never even mentioned the issue of time — how long a plan would be in effect until it was subject to review/revocation. I had no idea how important it was for there to be ongoing feedback. How do you integrate the market or competitive aspect which generates this feedback and still have planning? Looking back, I now think I was trying to plan far too much and had not raised the question of how to identify the core choices where planning was needed. Even there, though, the time dimension matters a lot.

53 missed an absolutely cracking opportunity to say “ajay, you know nothing of my work”.

Wonderful essay! This fills in one of the big gaps in the previous essay on cognitive democracy: The notion of democracy not as elections but as feedback, and effective democracy as adequate feedback. It’s just that this is not the standard way of understanding democracy and it’s difficult to see how it can be aligned with the notion that the legitimacy of government comes from the election of representative agents. The whole core of your argument screams “representative government is flawed for all the same reasons as central planning.” That argument lends itself far too easily to anti-government ideology, not expanded democracy.

Specific things:

“Computer science, which is not really so much a science as a branch of mathematical engineering, studies questions like this.” Actually, I’ve come to the conclusion that computer science is a branch of the humanities (what are algorithms if not the work of man?) and has far more in common with art and literature theory than with any physical science. I’m still on the fence about whether the same can be said for all of math, but it’s definitely true about foundationalist problems in mathematics like the interpretation of probability.

“If someone like Iain Banks or Ken MacLeod wants to write a novel where they say that the optimal planned economy will become technically tractable sometime around the early 22nd century, then I will read it eagerly.” I have an SF plot I’ve fiddled with (even wrote a first chapter once) that addresses some of this. The economy is run by software agents with a significant amount of artificial intelligence and a capacity to modify their own code and copy themselves. They engage in barter and exchange of complex barter-backed derivatives in a large free market on behalf of humans who own or rent them. For a piece of software itself to survive and perpetuate its code, it has to pay for its runtime and storage space by acting as an accountant/buyer/broker for humans, who are paid at their jobs in certificates that constitute futures on their own production. Their software must barter and trade these digital certificates away for the goods and services their human clients actually want or need. No person ever has to see or touch money, no consolidated balance book exists, but if a human is dissatisfied with how well their electronic agents are providing for their needs, they can replace them at any time. It would be a true dog-eat-dog capitalism and free market for software, but practically a nanny state for humans, since all a person has to do is enough productive work to have what they want, and the entire system organizes itself around their needs.

If I was looking for a reason to argue in favor of quasi-socialist planning, I would ask how, from the perspective of human workers, such a world is different from a large, comprehensive, detailed economic plan. The market exists only in the computer as part of the algorithm. Feedback is provided from consumers by whatever means are appropriate to control their electronic agents. It’s more or less Lange’s vision for the socialist firm combined with a kind of deconstruction of Iain Banks’ Culture novels (imagine a million Minds per human instead of the other way around) and a bit of old fashioned cyberpunk, but it poses a problem for the planning vs market argument: Plan construction is an algorithm of some kind. So is the market. Ergo, there exists an adequate planning algorithm, and the computational resources to construct the plan. To get away from this, you have to claim that market allocation is, in some way, non-algorithmic, but doing is counterintuitive.

“But, and this is I think something Marx did not sufficiently appreciate, human beings confront all the structures which emerge from our massed interactions in this way. A bureaucracy, or even a thoroughly democratic polity of which one is a citizen, can feel, can be, just as much of a cold monster as the market.” Indeed, this is a problem. My efforts to get decent Internet access in Germany attest to how alienating even fairly responsive governments can be. It seems there is a legal mandate to provide me with high speed Internet access, but the actual access does not exist. I have gone as far as talking to the village ombudsman about it as well as the Deutsche Telekom office here. No one seems to have any clear idea why I can’t have decent ‘Net access, since the village wants the infrastructure and DT wants to put it in. This feels very disempowering. Although it doesn’t quite rise to the level of Greek tragedy, I do feel pretty alienated.

I have my doubts that any solution to this problem exists at all. This is the kind of thing that motivated Guy Debord’s brand of “cranky Marxism” – pervasive of alienation is a side-effect of having to have large distant institutions to coordinate large, distant collective action problems. We cannot dispense with the large, distant, collective action problems and retain any of the benefits of industrial civilization. At the same time, alienation from distant coordinators of large scale collective action leads to things like, for example, Greece’s current mess.

Great essay! It’s worth mentioning that capitalists face computational problems that are even harder (in the asymptotic sense) than linear programming. For example, the best algorithms we know for finding a single-round Nash equilibrium for a non-zero-sum 2-player game are exponential in the number of available pure strategies.

Brilliant essay: many thanks!

Are there alternatives? Well surely it depends what people want. Marx wanted both to turn us from puppets of the economic system into its masters and to have an economy productive enough to dispense with scarcity. You show that if we want high levels of output, with lots of choice in a large-scale and complex society then we had better put up with being puppets to a larger extent than we like. Correct.

Alternatively we could be (much) poorer and have smaller-scale simpler societies run through participatory democracy. The Rousseauist option. (Cf. the 18th-century problem of the incompatibility of “luxury” and democracy.)

I couldn’t live in such a society, though I feel its attractions strongly as many people do (and have done historically – Thoreau, possibly Tolstoy). One thing we can do, though, perhaps, is to try to find ways of getting some of Simon’s “green areas” to have more of the look and feel of that alternative in their internal operations. But maybe this is also, like Marx, trying to have and eat one’s cake.

Well, for an interesting cross-check, how about NREL? I’ve seen some truly impressive estimates for the economic value of its work since the late 1970s, based on energy savings. Someone will probably point out that a lot of DARPA work fed into it. But my point is that US industry did internalise it, alter its objective functions, and of course other Western and developed Asian industries did even more so.

Soviet industry doesn’t seem to have done very well at this stage – internalising innovations. Mind you, was there even a Soviet Academy of Sciences Renewable Energy and Efficiency Laboratory?

@ 89
“Markets don’t provide much of an incentive for innovation …
OTOH, central planning is also adverse to innovation, …”

This is a vague argument, but innovation essentially perturbs the objective function, whatever it is by adding new parameters, as many have observed above. Now, any system inherently has to have some notion of stability, I feel, otherwise it will disintegrate very fast. Communism (or whatever it was) in Soviet Russia did have this problem to an extent. There is in fact a trade-off between stability and the random permutations we call innovations (much like evolution). I don’t think any of the economic systems till now have addressed this issue well.

Today I actually have time to read the comments. Thanks to Andrew Fisher, I looked at fn 4. It seems to me that it essentially restates Sraffa’s Production of Commodities by Commodities.

Also, Henry, get with the times: photoshop, not airbrushing! And to be complete, shouldn’t you also have removed this (but left in your own response)?

Not the Soviet Union

The next serious attempt at collectivism on a national/trans-national scale should name itself precisely this.

134: I think the idea is that “optimizing” production is what is theoretically meant to guarantee the “plenty” in perpetuity.

I don’t see why a communist society needs to optimize its production functions, even approximately, any more than a capitalist society does. It just has to be good enough at producing stuff and moving it around.

To give a practical example, right now we’re faced with the problem of figuring out how to reduce or eliminate our use of traditional energy sources (e.g., oil and especially coal) without needlessly impoverishing ourselves. This implies, among other things, a lot of optimization of production functions under constraints of using less energy and/or emitting less carbon dioxide. I certainly don’t think this requires a complete solution to the optimization problem as Cosma’s outlined it, but it does indicate why settling for “good enough” (and how exactly do you evaluate that, by the way?) isn’t necessarily good enough.

J. Otto Pohl: My impression was that by the 1970’s and 1980’s this was increasingly not true. Solidarity was motivated by increases in the rice of food at factory canteens, and the rates of alcoholism and premature death increased during these decades. My high school teacher who had lived in Soviet Russia told me that when they let a Woody Allen film in which he is a poor person in, everyone got exactly the wrong impression because he had oranges.

Things got worse in the 70s and 80s, but the really bad economic times were after Gorbachev’s reforms and the early post-Soviet era. Alcoholism also worsened in the early 1990s. But, the point still stands that in the 1970s that people in the USSR openly expressing opposition to the Soviet system did so largely because they disagreed with either its nationality policies, its general lack of freedom and democracy, or its moral decay. They did not protest the state’s ownership of the means of production or the various welfare provisions provided by Moscow.

Attitudes in Poland which had private agriculture and had only been communist for a generation were considerably different. But at the same time even at its worst the standard of living in Poland at this time was better than for most of the USSR. In comparison to most countries in the world the average Polish worker was relatively well off in the 1970s despite the country’s huge economic problems.

Chris Bertram, #129: “Alternatively we could be (much) poorer and have smaller-scale simpler societies run through participatory democracy. The Rousseauist option.” Does it have to be poorer?

It seems to me this should be considered an empirical question. In any case, why is it a binary? Surely Chris would agree that we could haver somewhat more meaningful participation in our economic lives, at the cost of somewhat less efficiency?

Last time round we discussed this in the context of food. How about clothing? Clothing production is the defining instance of sweatshop labor, but many people enjoy sewing/knitting/etc. as hobbies, and many more are fascinated by fashion and design. What if every item of clothing we had was made by someone who had an active voice in the whole process of designing it and who took the same pride in their work, and enjoyed the same autonomy, social status, working conditions, etc. as, say, a tenured faculty member [1] does now? And of course you’d know the name of the person and not just the company that made each item in your closet, and, if you were interested, their distinctive style, philosophy, etc. Some people — Chris B. maybe — will say that’s completely impossible, prohibitively costly, etc. But how costly exactly? If organizing the production of clothing like that increased its cost by, say, a factor of ten, wouldn’t that be a very favorable tradeoff in a place like the US or northern Europe? Certainly the technological requirements of clothing production don’t inherently preclude an active decision-making role for workers.

Or how about construction? How much more would houses have to cost for them to be put up by people who actively managed their own work process and treated it as creative, expressive work — so that, like in Will Dean Howell’s Altruria , every brick was somehow visibly connected with the person who laid it? (Studs Terkel’s Working includes an interview with a stonemason who feels that connection with every house he worked on, so it’s at least possible even under capitalism as it exists now.) If that doubled the cost of houses, would it not be worth it, in the rich countries, at least?

Perhaps more complex, integrated (non-convex?) technological processes can’t be run without some alienated labor. But on the other hand, it doesn’t seem to me it’s ever been really tried.

Chris B. (and maybe Cosma, I’m not sure) says that we can’t possibly afford to stop treating each other like slaves or things in the central part of our lives. But it might turn out to be much more affordable than he thinks. In any case the returns to greater material production in the US and Northern Europe are so low at this point, in terms of human well-being, that it must make sense to try to get at least a bit less alienation at the margin. No?

[1] Not a sneer – I really do think academia should be a model for other worlds of work.

This might interest some: Robert S. Whitsell, Why Does the Soviet Economy Appear To Be Allocatively Efficient? in Soviet Studies, vol 42, no.2 April 1990.

To Peter Dorman @ 111–see also Nitzan and Bilcher’s Capitalism as Power at http://bnarchives.yorku.ca/259/

To Anarcrissie @ 134 and Matt @138: A big shabby hippie commune is its own reward and does not need additional compensation…

Does it have to be poorer?

If there were justice in the world, yes, the West would be poorer. Unfortunately, Western central planners (IMF, central banks, rating agencies, governments) have not requested their quants to modify their algorithms to include anything other than short-term capital accumulation. The system is imploding just like the Soviets’.

@147 J W Mason

The alternative to wage laborers in sweatshops shouldn’t in most cases be self-sustaining unpaid manual labor. The alternative should be automation.

The ongoing small scale fabrication revolution will be able to handle many of the products you mention. As for construction the machines needed are also rapidly becoming available for home fabrication.
http://opensourceecology.org/gvcs.php
http://www.ted.com/talks/marcin_jakubowski.html
http://reprap.org/wiki/Wealth_Without_Money

I don’t see the technology as the biggest hurdle there but rather the political resistance that will be mounted by those currently gaining most from intellectual property protection over physical designs.

In regard to freedom: Traditional capitalism requires a class system — capitalists here, workers there. The class system requires class differences of power, that is, inequality, and a state to maintain this social order, by force if necessary. And force will be necessary, because some people will not accept a subordinate position in the social order. Therefore, freedom in the social order of capitalism will always be limited to those persons, ideas and activities which do not threaten the position of its ruling class. In hard times, and if the technology of surveillance and repression is available, this freedom may become very restricted indeed. Look around at present developments.

In the case of the Soviet Union, China, and other countries, the victory of the Communist Party simply led to the replacement of the old bourgeoisie with a new pseudo-bourgeoisie, the party apparatus — ‘state capitalism’ I think Lenin called it. So the same sort of problem arose. There was no actual communism as far as I know.

There was no actual communism as far as I know.

You know, I find this every bit as tiresome as when some libertarian trots out the idea that the problems we have is that we’ve not yet tried pure capitalism. I want a story about what you’ll do differently, and why I should think it would work. “who knows what free people will do?” isn’t enough, either.

JW Mason- how sure are you that you’re not unjustifiably univrsalizing your own preferences? What percentage of people do you think would enjoy and do better being their own bosses? It’s much more stressful, if success is required.

Great essay. I want to pick out and disagree with a small part.

“For the capitalist or even market-socialist firm, there is in principle a simple objective function: profit, measured in dollars, or whatever else the local unit of account is.”

I’m not sure about this. Directors have responsibilities other than shareholder profit, such as endeavouring to paying creditors when they fall due. The literature on profit measurement is a complete mess, no-one agrees on anything, it’s absolutely standard to say there are multiple profit concepts rather than one concept. I’m not sure that translates to a simple objective function.

“In any case, profits are money, i.e., claims, through exchange, on goods and services produced by others. It makes no sense for the goal of the economy, as a whole, to be to maximize its claims on itself.”

I don’t think profits are money. A simple example would be farming, IAS 41 values aggricultural product at fair value. So if all you have is stock of 2 potatoes fair valued at $2 each at the start of the year, and 6 valued at $1 at the end, and no other items or transactions – you’ve made a profit of (6 * $1) – (2 * $2) = $2. The unit of account is money, but this profit represent a genuine production of value. If means you can consume $2 and still be as well off at the beginning of the year in terms of financial capital as you were at the end.

Just back from Moscow where I gave a lecture at the Central Economics and Mathematics Institute (TsEMI), which dates from 1963 and was founded by the immediate followers of Kantorovich such as Nemchinov, the people who really believed that they would achieve proper mathematically founded central planning. Some of those folks are still there. Anyway, a few practical problems I did not see in either the essay or the comments noting so far.

1) The mathematical planners never had their programs at the level of detail that the actual GOSPLAN planning was occurring. Think of it in terms of the SIC levels. As of the mid-80s at the last gasp of the dreamed effort, the input-output model of the Soviet economy was essentially at the three to four digit code level, whereas the actual planning was going on at the four to five digit code level. The actual planning tended to be much more ad hoc, moving from what was done last year to next years without a full optimization. The “plannification” involved in aggregating up to make everything coherent (and implicitly solve the GE problem) was never done in a mathematically proper way. It was ad hoc all the way.

2) Part of why they could not get to the proper level of detail was indeed information problems of a Hayekian sort, the really relevant details were either local or buried deep into the lower level niches of the GOSPLAN and other planning entities (this went on at several levels). Lower levels did not report accurate information to the higher levels. Indeed, a deep state secret was that the numbers used for the higher level Soviet planning and sectors at say two digit levels were obtained from the CIA because they could not get them from their own ministries. That the CIA numbers themselves were problematic, as was much touted and whined about at the time of the fall of the USSR simply emphasizes how bizarre the whole situation was.

3) Oh, the old mathematicians at TsEMI are still very interested in deep issues of computational complexity and even deeper into the foundations of mathematics, particularly regarding the recent efforts to reconstitute mathematics itself on a constructivist foundation. This was something strongly advocated by some of the top Soviet mathematicians before Kantorovich did his work and who operated at a much higher and deeper level than he did, although I believe he was in agreement with them. I am thinking in particular of Kolmogorov and Markov. This stuff is being studied now seriously in the West through category theory coming out of computer science and in economics by people like Velupillai, who seek to reconstitute the foundations of mathematical economics on a constructivist foundation. These old guys at TsEMI are all for this.

@154 JW Mason: Because so much labor is toil that break down the body and hasten death and make us so tired that we are sapped of energy to pursue other things of great value.

Let’s turn the tables: what is the moral argument for thinking that labor is life’s prime want i.e. the intrinsically best activity for any human? On the automation alternative you can of course freely pause your robots and toil as much as you want. But what is wrong with not wanting unnecessary toil?

Someone might now counter that the “labor as life’s prime want” idea uses labor in a sense that excludes damaging toil. Fine, but then it has not argumentative force against suggestions for local fabrication automation as replacement for damaging toil.

Stafford Beer apparently thought that he could replace the industrial economy of a small nation (Chile) with a computer system (see the book “Platform for Change”). Any idea on how he missed the intractable complexity of the problem? (For bonus points: how did he manage to miss the incentives problem?).

JW Mason @ 147:
(Apologies for the piling-on…)
What if every item of clothing we had was made by someone who had an active voice in the whole process of designing it and who took the same pride in their work, and enjoyed the same autonomy, social status, working conditions, etc. as, say, a tenured faculty member does now? And of course you’d know the name of the person and not just the company that made each item in your closet, and, if you were interested, their distinctive style, philosophy, etc. Some people—Chris B. maybe—will say that’s completely impossible, prohibitively costly, etc. But how costly exactly?

That’s a pretty good description of bespoke clothing. How costly is that? Well, men’s business shirts seem to set you back at least $200 or $250 each (and that’s assuming a minimum order of at least three shirts). Some of that is due to expensive cloth, but not all of it. (And, if you’re going for lovingly hand-made, non-exploitative clothing, you may also decide you want organically grown cotton, etc., in which case the cost of the fabric will probably go up even if it’s not super high quality). Pants will probably cost at least $300, probably something closer to $400 or $500. Bespoke (men’s) leather shoes are, at the very minimum, about $1000 a pair (maybe as low as $500 a pair for funkier casual shoes).

(A hand-waving justification for the shoes: a talented shoemaker can probably average only one or two pairs a week[1], which means less than 100 pairs in a year. So they need to make at least ~ $500 per pair in profit, after materials and other expenses, to have a decent living, given your “tenured faculty member” standard. Also, you’d need about 3 million shoemakers in the US alone just to produce one pair of shoes per year per person….)

Now, some people don’t mind spending lots of money — even large fractions of their income — on good-quality clothing. I’m not sure I’m comfortable with the idea that everyone should be forced to do so, though.

[1] I’ve seen references suggesting that something really simple like ballet slippers can take as little as ten hours, while lace-up dress shoes might require 40 hours.

Sorry, didn;t have time for a shorter response.

@168

Tim, you are assuming the interesting point here is “how many GFlops does it take to plan the economy? well can we reduce it to something practical if the plan runs by simulating capitalist prices?”

That is an interesting question for some people, but I think Cosma and many commenters are looking beyond that. In particular what I, and quite a few other commenters have focussed on are issues like behavior and incentives. As I stated above — the plan is not self-fulfilling — and prices don’t just act to propagate information and co-ordination, they act as a reward/punishment system.

You appear to want to claim that you can get prices (or their plan equivalent) to perform the “propagate information and co-ordination” role without requiring the “reward/punishment system” role. This strikes me as a highly dubious claim. (And note that I say this as a leftist, not a libertarian — but a leftist interested in schemes, realistic possibilities, that could actually change the world, not schemes of no relevance to actually existing humanity.)

‘There was no actual communism as far as I know.’

‘You know, I find this every bit as tiresome as when some libertarian trots out the idea that the problems we have is that we’ve not yet tried pure capitalism.’

Usually you’ll find that the libertarian is defining capitalism in a rather peculiar manner, omitting such features as the class system, the exploitation of labor power, and so on, but without saying so. Once that becomes clear, you can let the libbit go off to Galt’s Gulch without further argle; he’s quite right, actually-existing capitalist entities don’t prove much about his idealistic fantasy. Just so, I don’t think the Soviet Union proves much about my idealistic fantasies. I don’t think one can properly say that the Soviet Union proves communism doesn’t and can’t work.

Just a quibble. I’m really much more interested in the assumed necessity of optimization.

Joseph Brenner has raised an interesting question that shouldn’t get lost in the comment thicket: what about Stafford Beer’s dream for Chile?

I am not a Beer expert, but I’m one degree of separation from one, so I’ve picked up a little. Beer was a cybernetics theorist; his main interest was in thinking through and formalizing the feedback process at the heart of an interactive (or adaptive) management system. In a way, at a societal level, this means elaborating the process sketched by the 1930s market socialist crowd—Dickinson, Taylor and Lange. It is also much richer in principle, not beholden to simple mechanical rules like “set price equal to marginal cost”. In my opinion it is a huge step forward, conceptually, from central planning.

Beer’s main work was at the enterprise level. Ask anyone who has heard of him and who isn’t a socialist, and they’ll say he was a pioneering management theorist. He conceived the enterprise as a hierarchy of functions that adjust to each other cybernetically, and he was especially interested in the challenge of combining innovation and flexibility with organizational coherence. There is a school of management theory that draws on his ideas, and it seems to me to be as realistic and practicable as another other. It also provides, in my opinion, a possible foundation for a healthy compromise (and partial overlap) between democracy and efficiency within firms, which socialists ought to be pursuing. I can get references later if anyone is interested.

His hope was to build a functioning cybernetic planning apparatus for Chile, but the coup cut it short. Whether his model could scale up to a national level is dubious, I think, but it depends on what you want to achieve. Beer’s approach leaves maximal room for autonomous decision-making at the base, subject to the constraint of coherent decision-making at higher levels. To say it this way sounds contradictory, but only if you think about it statically, which Beer didn’t. It’s an interactive model.

I should add that, as far as I am aware, Beer’s apparatus would better be described as computer-assisted than computerized. He wanted to support human decision-making at all levels, and the machinery was for facilitating and organizing the necessary information flows. Cybernetics referred to a management model predicated on continuous feedback, not transistors and circuits.

In the original article there is a serious error. Complexity in practice is not of order n^3.5 but substantially lower due to very high sparseness of the i/o matrix and to the acceptability of solving using approximative iterative methods. It appears that as N the number of products grows, the number of direct inputs to each product grows as Log N, so that to represent the data in matrix form is pathologically inefficient. I published an algorithm in Future Computer Systems, vol 2, Num 4, 1990, that uses this sparseness to solve the problem with complexity kNLog N where k is the number of iterations used and where the accuracy of the answers is proportional roughly to to 2^{-k}

Paul – are you not losing with the approximations what you gained with the sparseness? And if not, what’s the actual relationship for an acceptable degree of approximation? Is it closer to N^2 or N^3?

From: A Comparison of the Limits of Growth with 30 Years of Reality by Graham Turner CSIRO 2008

CONCLUSION Appropriate and publicly available global data covering 1970-2000 has been collected on the five main sub-systems simulated by the Limits to Growth World3 model: population, food production, industrial production, pollution and consumption of non-renewable resources. In the style of predictive validation, this data has been compared with three key scenarios from the original LtG publication (Meadows et al., 1972). This comparison provides a relatively rare opportunity to evaluate the output of a global model against observed and independent data . Given the high profile of the LtG and the implications of their findings it is surprising that such a comparison has not been made previously . This may be due to the effectiveness of the many false criticisms attempting to discredit the LtG.

As shown, the observed historical data for 1970-2000 most closely matches the simulated results of t he LtG ‘standard run’ scenario for almost all the outputs reported; this scenario results in global collapse before the middle of this century. The comparison is well within uncertainty bounds of nearly all the data in terms of both magnitude and the trends over time. Given the complexity of numerous feedbacks between sectors incorporated in the LtG World3 model, it is instructive that the historical data compares so favorably with the model output. By comparison, the ‘comprehensive technology’ scenario is overly optimistic in growth rates of factors such as food, industrial output and services per capita, and global persistent pollution.

Similarly, significant departures in the trajectory of key factors such as population, food and services per capita and global persistent pollution are evident between the data and the ‘stabilized world’ scenario.

Anarcissie, I agree that liberal-capitalism can and has provoked wars, but in a world with several nuclear powers and a profusion of other dangerous weapons wouldn’t the sort of chaos of perpetual global resource wars, on top of the effects of climate change, be a direct threat to the holders of capital (and their families) as much as to everyone else, bar, perhaps, military commanders (whose safety is only ensured as long as those under their command don’t mutiny)?

Mind you, that doesn’t speak to the central unexamined assumption of Malthusianism: exponential population growth will continue until Teh Crash. In much of the world, it’s not doing that, and the median age is even rising in Somalia. Forecasts for population have been repeatedly revised down.

Capitalism thrives on scarcity. It is scarcity which makes the direction of the community by elites (capitalists) necessary. When scarcity becomes scarce, it must be replenished. From that point of view, recourse to constant war is a feature, not a defect.

And certainly we can see that, as this hypothesis predicts, capitalist states are more warlike than non-capitalist states, and pre-state societies are the least warlike of all.

Oh, wait, that’s not true at all, is it?

Paul Cockshott, #177: I would really like to see Cosma’s comments on this. Maybe the problem is not hopelessly intractable after all.

FYI, the problem of nonlinear optimization has largely been solved; look up the work of Kohn and Nerode if you’re up to the mathematics.

(Not that that really helps in this case: the primary problem is the problem of bad input data due to people lying to you. Garbage in, garbage out.)

‘Capitalism thrives on scarcity. It is scarcity which makes the direction of the community by elites (capitalists) necessary. When scarcity becomes scarce, it must be replenished. From that point of view, recourse to constant war is a feature, not a defect.’

ajay 06.01.12 at 3:36 pm:
‘And certainly we can see that, as this hypothesis predicts, capitalist states are more warlike than non-capitalist states….’

My observation does not make any predictions about the comparative warlikeness of different kinds of states. I was responding to #180, in which Emily proposed that war would prove inconvenient for the capitalist variety.

Am I the only Cosma superfan slightly disappointed by this piece?

By the evidence of this thread, you are. But Id be interested in seeing you develop the thought.

Very off topic…

Am I the only one to wonder how to get superscript working properly here? Like this maybe, or like ^this^?

(Sorry)

JW Mason at 194:

But you know, I was just tonight at the Luthiers Co-op in Easthampton, where a couple dozen people were engaged in a quite complex, closely coordinated process of producing bluegrass music. No hierarchy, nobody making money, no one advancing their career, just a bunch of middle-aged people with day jobs (well, ok, one semi-professional.) Why do people do that? … Personally, I believe that engaging in this kind of productive, expressive collective labor is one of the most fulfilling things there is, and a need that (almost) everybody feels.

I think that’s important, and not just J W Mason’s personal taste. For whatever it’s worth, I argued at length for that claim about what fully human work would be like, and used the same musical analogy, in a recent public lecture. Anyone interested can download a recording from archive.org here

Apologies for the self-advertisement, but it is at least on topic…

I suppose that I’m more on the Cockshott side than the Shalizi side here; but I think that all of the discussion of complexity misses the point, made in the essay, that even if you could calculate these things effectively, the real difficulty lies in selecting democratically valid objective functions and adjusting them in real time to the situation on the ground.

Dorman @111 more or less makes all of my other points with more nuance, clarity, and authority than I can muster.

@ Anarcissie 134

I recently read Sheila Fitzpatrick’s Everyday Stalinism, and it left me with the impression that the failure to solve the optimization problem was a hidden cause of many of the bad features of soviet society. People behave badly when there’s not enough to go around.

It went something like this: The transition (in the early 30s) from the quasi-market policies of the NEP period to centrally directed planning immediately produced economy-wide shortages. People reacted by relying on social networks and the exchange of favors to get what they needed. That led to widespread ebezzlement, corruption, the establishment of patron-client networks and local personality cults. Harsh labor laws were introduced to try to get workers to produce more. Confronted by an unresponsive bureacracy, ordinary people were encouraged to inform on misbehaving officials to the secret police, whose power grew.

People didn’t understand the cause of the problem, and it was natural to look for scapegoats. It all came to a head with the great terror of 1937-38, which, unlike previous waves of persecution, was directed at managers and senior party officials who were accused of the same behaviors the system had itself caused: building client networks, embezzling to support friends and clients, mismanagement (either not meeting impossible production targets or else trading on the black market in order to meet the targets), etc. Fitzpatrick represents the terror as being as being supported by some less privileged people who were glad to see local the bureaucrats get their commupence. Peversely, it looked like the system was self-correcting.

Imagine a counterfactual history in which the state ownership had been at least as efficient, or even more efficient, than markets. Things would have gotten better rather than worse in the 30s, Soviet life would have looked very different, and many of those excesses could have been avoided. So I regard the the viability of the whole socialist project as depending on whether the optimization problem can be successfully resolved, and I wish more attention were paid to it by other lefties. (That’s why I was so glad to see Red Plenty featured by Crooked Timbers.)

Perhaps we need to re-conceptualize the problem. Instead of thinking up an ideal, one-size-fits-all scenario on some macro scale, why not parcel out the problem and suggest a grab bag of mixed solutions? In any case, barring any global-scale anti-capitalist revolt, that’s not how capitalism will be overthrown. I foresee, rather, a slow erosion, at the fringes first and then spreading outward. So yes, some of the market elements of the capitalist system may well remain intact whether other areas of the economy may be subjected to economic planning. In any case, that’s what Cosma seems to be arguing for.

Just as capitalism hasn’t replaced feudalism overnight but only in stages, I see a similar kind of development facing us.

After reading this essay, the first reaction I had was pondering that the one real advantage that free markets have over central planning is in the reaction to friction, as the term is understood by military planners and commanders. Which motivated me to reach for the Clausewitz and see what ol’ Carl had to say about that. From Book One, Chapter 7 of ‘On War’:

“If one has never personally experienced war, one cannot understand in what the difficulties constantly mentioned really consist, nor why a commander should need any brilliance and exceptional ability. Everything looks simple: the knowledge required does not look remarkable, the strategic options are so obvious that by comparison the simplest problem of higher mathematics has an impressive scientific dignity. Once war has actually been seen the difficulties become clear; but it is still extremely hard to describe the unseen, all-pervading element that brings about this change of perspective.
Everything in war is very simple, but the simplest thing is difficult. The difficulties accumulate and end by producing a kind of friction that is inconceivable unless one has experienced war….countless minor incidents-the kind you can never really foresee-combine to lower the general level of performance, so that one always falls short of the intended goal.”

In short, Murphy’s Law always rules supreme. As it applies on the battlefield, so it applies to economics, markets and especially to central or any other kind of planning. And the more complex the system, the worse the friction.

The inventor of the OODA Loop, John Boyd, had a possible solution to solving the friction problem but I’ll save that for a later post….

PLJ