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Don't be fooled (lemmy.world)
submitted 1 year ago by to c/politicalmemes@lemmy.world
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[–] 5 points 1 year ago* (2 children)

In contrast, a socialist economy allocates resources and labour according to society's needs, which are determined by some mix of economic planning and limited market dynamics.

The only problem being, that while nice in theory, socialist economies never actually did that in practice. Since humanity has never figured out, how to actually do economic planning in some centralized or semi-centralized way without being very inefficient and corrupt. I used to think AI could do that one day, but I guess that was too optimistic...

It's easy to see capitalism is terrible. It's hard to see a better system, that could replace it.

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  • [–] 4 points 1 year ago* (last edited 1 year ago) (1 child)

    I don't think that's true.

    Central planning ran the USSR and its satellites for some 40-70 years. They didn't even have computes for the majority of this period and many of these economies experienced high rates of growth. If I remember correctly, the USSR speedran economic development so that the GDP per cap of the USSR increased 10 times between the beginning and the end of the experiment. The US grew about 3 times during the same period while being the main world hegemon, profiting from the vast majority of the world. Of course there were problems, like the famines in the 30s, but they didn't repeat post-WWII. It's not like capitalism hasn't caused famines around the world either. So despite the standard criticism, I don't think planning did poorly overall.

    China is also demonstrating how long term central economic planning allows to build an economy efficiently, with a long term focus and avoiding most crises capitalist economies experience on regular basis. They're clearly leading in development of solutions to climate change in a way that is above and beyond any other economy, in solar, wind, battery and EV production. Just earlier this month we saw their emissions fall despite higher electricity usage for the first time. And they're powering a lot of everyone else's renewables transition. Then on the ageing front, they're already doing a lot of manufacturing automation. I read they're also doing farming automation now. Apparently DJI's other job is spraying fleets for example. I don't know much about healthcare and elder care but I imagine they're either working on reducing labour needs or planning on it. So yeah, while we're afraid of automation because we know we'll be left jobless and/or deskilled by the capital owners (even if it eventually leads to a crisis), them socialist fkers don't have that problem. The more they automate, the less population they need to maintain and grow their standard living, the cheaper they can manufacture what they make, the easier the ageing population problem becomes. Given how many universities they're opening each year, growing the highly skilled research labour share, I think they're only going to accelerate these trends.

    One more thing about planning - the largest capitalist corporations that deal with actual physical production and large supply chains already do the type of planning that's been done in past and present socialist states. In fact it's probably larger and more complex than some whole countries. A common example is Walmart. You'll find little market forces within its operation. In fact companies like this, that have complex enough products and/or supply chains do everything they can to isolate themselves from the free market in order to decrease uncertainty, therefore increase the likelihood of successfully producing and delivering the product, and of course maximize their profits. If you consider how every major sector of the economy is getting consolidated through competition into a monopoly or oligopoly, and similar economic planning process goes on in most of those, you could perhaps see how capitalism itself trends towards central planning. Of course for profit maximization and not social benefit.

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  • [–] -1 points 1 year ago* (last edited 1 year ago) (1 child)

    First of all, it is hilarious that as part of criticizing capitalism, you use economic growth as a metric instead of let's say availability of goods in stores. Yes, if your economy revolves around state directed things like building weapons, infrastructure and growing industry, it gets easier to manage than unpredictable consumer demands.

    China started it's explosive growth when they relaxed their central control. I am not advocating some absolute libertarian market freedom either. Yes, state exerting control, ideally with consumer interests in mind, can be a good thing to avoid the pitfalls of "pure" capitalism. But there are also risks to that, see China overbuilding high speed rail and housing.

    And finally, isn't Walmart the poster example of decentralized planning? It does the "planning" at the level of store selling final goods, where there is best access to data, such as shopping habits and trends. That's the point of decentralized planning, not having unreliable ad-hoc supply chains.

    PS: To be clear, you also have many good points. I addressed only the ones I disagreed with.

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  • [–] 1 point 1 year ago* (last edited 1 year ago) (1 child)

    Economic growth is just easy to check data. Many people are completely unaware even of that. Not saying you specifically are. If one's interested beyond that, could look into other indicators such as education, life expectancy, etc.

    China's relaxed some sectors and not others depending on their importance and the competency within.

    Generally markets and competition do well in figuring out how to do something we don't know how to do well and cheap. Once we figure that out for some product or category, profits fall competitors fail and consolidation sets in, cost of production falls further due to decreasing duplication and increased scale. At that stage, you have to re-establish control or the monopoly begins draining resources from the economy by raising prices. I think this is what China's doing. They do a high level plan on what they want to develop, get their centrally controlled bits needed in place, e.g. capital from banks, raw resources for batteries, then let existing or new companies enter a competitive market to develop the thing. We saw this occur with EVs. I don't think they've reached the consolidation point yet.

    A sector that hasn't been relaxed for example is banking and for a good reason.

    But beyond relaxing control, the other very important thing that was relaxed was foreign direct investment. Getting factories built in sectors you don't have by foreign firms, almost always as joint ventures with the clearly stated goal of knowledge transfer. Personally I think this is likely a bigger contributor to their economic explosion than planning changes although it also requires planning changes itself.

    On Walmart, I think what you're looking at is the feedback mechanism of shop/factory data going up the stack. A Walmart store has no capability of doing the planning needed to get a requested amount of a certain good on its shelves, beyond requesting it from Walmart HQ. Walmart HQ computes and directs everything from telling how many thousand plastic trays a factory in China should make, to eventually getting the 50 requested by a store in Bumfuck Nowhere delivered. Data feedback mechanisms exist in every operation of meaningful complexity. They existed in the USSR, they exist in China, they exist in every corporation I've worked in, currently automotive. Every large corporation takes data from its operations, either through people or directly from processes, or both, or from their products themselves, computes projections, decides what to make more of, less of, what program to cancel or start, what input resources to get more or less of, how many people to hire or fire, all in order to support the desired new projection. Then they turn that into their expected growth numbers for the next quarter and spit it out during their investors call.

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  • [–] 1 point 1 year ago (1 child)

    Economic growth is just easy to check data.

    That's debatable but ok.

    Generally markets and competition do well in figuring out how to do something we don't know how to do well and cheap. Once we figure that out for some product or category, profits fall competitors fail and consolidation sets in, cost of production falls further due to decreasing duplication and increased scale.

    Absolutely yes.

    A sector that hasn't been relaxed for example is banking and for a good reason.

    Yes, very good reason.

    But beyond relaxing control, the other very important thing that was relaxed was foreign direct investment.

    So the other big part of capitalism.

    On Walmart, I think what you're looking at is the feedback mechanism of shop/factory data going up the stack.

    I think this comes back to what you said before. If we are talking about established items, that you already have suppliers for, then you can centralize it.

    But good luck getting beer from a small local brewery stocked. The more centralized, the less flexible and innovative.

    Imo if you centralize on a scale of an entire national economy, you would have very hard time dealing with anything that's not a well established supply line already.

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  • [–] 1 point 1 year ago* (last edited 1 year ago) (1 child)

    The thing is, you don't have to centralize the entire economy in order to be positioned to solve for the difficult problems facing us. But I think having a robust long-term looking economic planning in the sectors everything else rests upon, like energy, natural resources, transportation, logistics, education, care, housing, banking, finance, basic research, defense, food, electronics components, chips etc. itself produces small firms that can do new things much easier due to the availability of materials, equipment, capital and labour at low costs. This doesn't mean that for example every chip made would have to be planned by someone in the capital. Nothing of the short. It means that the planner says, we need to have the designs and ability to mass produce low cost, high performance RISC-V cores for PCB integration by 2025. Then Huawei and SMIC get their shit together and assemble teams to do this. If they need more capital they get it. If there's someone who wants to start working on a design with a new team, there's going to be capital available for a startup. Once the core is in production, that core becomes an input for other large and small firms, or individuals who want to do something with a low cost processor in it that now have a viable path to form new firms. This is why there are a shit ton of small Chinese firms making innovative consumer items. This is why US firms keep explaining how they can't possibly make this or that product in the US in the context of tariffs. When everyone downstream from them is profit maximizing, their inputs become prohibitively expensive. Someone was talking about how much it would cost to source a small neodymium magnet motor for a consumer pump made in the states and said it's so expensive that it's only viable for defense, aerospace and such. And then the neodymium still comes from China.

    The consumer parts of the economy where you have smaller firms with interesting products often sits at the tip of the existing supply chains and infrastructure. Perhaps use them differently. That's also true for local breweries as they rarely grow their hops, wheat or build their own equipment from bare metal, or mine the metal.

    But even in the consumer sector here (Canada), most of the aisles in our grocery stores are filled by the products of a handful of companies. PepsiCo, Coca-Cola, Unilever, Colgate-Palmolive, Kraft, Nestle, Kellogg's, Danone, Mars, Mondelez and the store brand. Then you have Big Ag product filling the produce and meat section from the usual suspects. Outside of who provides these firms with direction and who collects their profits, they're what state-owned enterprises look like.

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  • [–] 1 point 1 year ago (1 child)

    It means that the planner says, we need to have the designs and ability to mass produce low cost, high performance RISC-V cores for PCB integration by 2025.

    But this is the hard part. Who is qualified to say that RISC-V is the way to go instead of x86? An elected politician? Experts? If experts, how do you select them? Who checks they really are experts? Who holds them accountable?

    If there's someone who wants to start working on a design with a new team, there's going to be capital available for a startup.

    Who and how decides if a startup is worthy of funding? How do you prevent ideas being rejected for personal reasons, e.g. religious objection? How do you prevent fraudulent startups?

    If they need more capital they get it.

    Who and how decides when it is no longer worth it? How do you avoid fraud, wastefulness, etc.?

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  • [–] 2 points 1 year ago* (last edited 1 year ago) (1 child)

    The same way decisions are made in large public (state owned*) or private firms as well as public service institutions in our systems. People get hired and do these kinds of decisions across such institutions all the time. All of these issues are tackled and there are imperfect solutions that with all the pitfalls and mistakes work alright.

    * Actually I'm not sure if the US does state corporations but we do in Canada. For example in rail, air travel, nuclear power (design and implementation), telecom, housing, etc. Of course we've privatized many of them with not so great results for the public, just like the UK did. They've made a lot of money for their private shareholders though.

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  • [–] 1 point 1 year ago* (last edited 1 year ago) (1 child)

    Yeah, my parents work for a public utility. The level of waste, inefficiency and corruption there is comical. It may still be fine for core infrastructure like utilities to be that inefficient in order to be reliable, but certainly not for normal industries.

    Or maybe my country is particularly bad at running them.

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  • [–] 1 point 1 year ago* (last edited 1 year ago) (1 child)

    I don't doubt your parents' anecdote.

    My anecdote is that I've worked for 3 major Canadian private corporations (10000-100000 employees). Currently working in a major American corporation. My wife works for a Canadian public institution. I know a few others who work at large Canadian corporations. The waste and inefficiency at the corporations (banking, telecom, food) is staggering and similar between them despite the different sectors they operate in.

    The one I'm currently at (a well-known name) just canceled a 4-year old program that 75% of the software engineering teams worked on, because the leadership finally figured out that we can't deliver it fast enough with sufficient quality to support hardware going in production. That has been obvious to a lot of us in engineering for at least 2 years and we've kept raising the alarm. The new hardware is now going to ship with the old software stack, some people would get reassigned, others laid off *, no one outside would ever hear about what happened. The profit figures are going to go up due to the decreased labour cost and there would be no new costs down the line since the program was mostly pointless to begin with. Our current software stack is more than good enough to last us at least another decade. The initlal program was sold to us by a third party corpo as something that could reduce cost over time. It was a lie that worked because of massive undercount of labour. Things like this happen all the time in large private corporations. I've seen it more than once myself.

    In contrast, my wife's public institution is way more careful with how money is spent, how and who they hire, and they pay less for most positions. They're constantly understaffed and overworked.

    And yet all of the above deliver decent products and services to people. The corporations I've worked for make significant profits. They keep their prices as high as they can be and their product design and marketing is such that they sell as much as they could, trying to increase every quarter.

    Given my experience and what I've read so far in my life I've come to the realization that inefficiency isn't dictated so much by the type of institution or even the market pressures it faces. Rather the primary driver is complexity. I think all large enough organizations develop similar structures and problems as they're inherent to any social activity with imperfect information.

    * Actually the cost of that mismanagement doesn't end at the layoffs. Layoffs externalize a part of the cost of the mistake to the rest of society - workers families, social programs, healthcare, political stability, etc. I.e. the cost is socialized.

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  • [–] 1 point 1 year ago* (last edited 1 year ago)

    Big doubt on the size being the main factor, though it contributes. IMO the main factor is scarcity. An underfunded large organization will find way to operate efficiently. See NASA or some large charities.

    A small startup with nearly unlimited Venture Capital will most of the time find a way to squander that money and get results that shouldn't take tenth of the money.

    The difference being that there are natural mechanism to correct waste in private companies, if it becomes significant compared to its scale. A public company often won't have the same. E.g. which politician is going to go order layoffs? Hope he does not plan to get elected again. I think there is a good chance, if your company was public, the sw engineers would still be wasting time and resources. Perhaps on a different pointless project.

    And that is before even addressing outright corruption and embezzlement.

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  • [–] 3 points 1 year ago (2 children)

    Since humanity has never figured out, how to actually do economic planning in some centralized or semi-centralized way without being very inefficient and corrupt. I used to think AI could do that one day, but I guess that was too optimistic…

    You nationalize Walmart.

    The big national retailers already operate as central planners.

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  • [–] 1 point 1 year ago

    isn't Walmart the poster example of decentralized planning? It does the "planning" at the level of store selling final goods, where there is best access to data, such as shopping habits and trends. That's the point of decentralized planning, not having unreliable ad-hoc supply chains.

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