The economic calculation problem

40 posts / 0 new
Last post
888's picture
888
Offline
Joined: 30-09-03
Jul 10 2011 07:55
The economic calculation problem

Economists are so mathematically incompetent (or just dishonest) it's hilarious!

http://en.wikipedia.org/wiki/Economic_calculation_problem

This article instantly demolishes their argument (in the first few pages, I didn't read the rest yet)
http://www.macs.hw.ac.uk/~greg/publications/ccm.IJUC07.pdf

Economists are complete lying cunts or delusional halfwits without the slightest grasp of mathematics or scientific method.

Toms's picture
Toms
Offline
Joined: 16-05-10
Jul 10 2011 10:11

And in econometrics if a city is bombed and destroyed and, for example, 10% of its buildings are rebuilt, even though 90% of its population is homeless that will show up in econometric models as economic growth.

Economy is a social science, but a lot of economists actually think of it as a physical science. If in any branch of a physical science someone said "And this factor here is too erratic so we'll just take it as exogenous and assume it to be..." he would be laughed out of the room, but in social sciences people need to do that because there are factors that they can't yet explain or equate.

I'm just trying to say that it's useless to try to argue with an economist that doesn't believe its economic models to be conjecture.

bastarx
Offline
Joined: 9-03-06
Jul 10 2011 10:56

According to Australian economist Steve Keen in his book "Debunking Economics" the mathematical foundation of economics is bullshit.

Toms's picture
Toms
Offline
Joined: 16-05-10
Jul 10 2011 13:50
Peter wrote:
According to Australian economist Steve Keen in his book "Debunking Economics" the mathematical foundation of economics is bullshit.

I've heard that he only critics the economics taught at Universities as very lacking and that defends that higher level economics are still valid. Is that the case or does he actually attack the foundations? Because if he goes for the foundations I think I'm interested in reading the book.

RedHughs
Offline
Joined: 25-11-06
Jul 10 2011 17:53

These "Austrian" arguments are actually fairly plausible for central planning in a state capitalist system.

Unlike a communist society, a centralized capitalist bureaucracy is still a competitive system where bureaucrats hide information from each other. It is also engaged primarily in commodity production. Thus comparing distinct commodities is a problem for it. But this has nothing to do with communism.

Anyway, it can also shown that the market pricing system doesn't maximize the allocation of good if you consider the production system as an abstract model. The parameters for maximizing an abstract production system are the Lagrange Multipliers or "shadow prices". But "shadow prices" are not equal to market prices except in very restricted circumstances.

Still, maximizing production absolutely hardly seems necessary - the main task will be to adequately allocating resources under a larger number of constraints (environmental, redistribution across geographical areas, providing a pleasant work environment, etc). Unlike a bureaucratic capitalist society though, information would be exchanged freely, circumventing this "economic planning problem".

RedHughs
Offline
Joined: 25-11-06
Jul 10 2011 18:09

Also,

It is true that most economists, at least the ones I've seen, are frightfully ignorant of mathematics.

Still, creating an elaborate and consistent mathematical model of a hypothetical economy is not impossible though it can require considerable boring work. (I once sat-in on a lecture by Gerald Debreu. I'm sure his manifold theory was fine but he had to be single most boring speaker I have ever heard). Anyway, the problem is the complexity of the real economy is such that a consistent model is not more likely to be accurate.

Basically, most (but not all) economic theories are a collection of special cases which deal approximately with the situation under consideration but aren't consistent with each other. Sadly or not, this applies to Marx's Capital as well (though I would argue that later academics put the theory on relatively sound, consistent basis - others here would certainly violently disagree with one or another of the previous statements).

888's picture
888
Offline
Joined: 30-09-03
Jul 14 2011 00:12

I agree - I think markets are only useful if there is a lot of private, hidden information that only the owners of certain things know about. I don't think the economic calculation problem only applies to state capitalism though, at least the free marketards think it applies more broadly - http://www.la-articles.org.uk/ec.htm

RedEd's picture
RedEd
Offline
Joined: 27-11-10
Jul 14 2011 02:44
RedHughs wrote:
this applies to Marx's Capital as well (though I would argue that later academics put the theory on relatively sound, consistent basis

Can you briefly say who these academics are and, if it won't take too long, how a layperson can find out what their major theoretical achievements are.

jacobian
Offline
Joined: 18-03-09
Jul 14 2011 15:39
Quote:
These "Austrian" arguments are actually fairly plausible for central planning in a state capitalist system.

Which "Austrian" arguments are plausible for central planning? I don't think they are plausible at all.

Axiom 1: Price signaling gives us perfect allocation

Theorem: Central planning will always do worse than the market.

Proof (More than one given):

a) Central planning will not have total information about all aspects of the economy therefor it will be inefficient. Since by Axiom 1 markets are perfect, Central planning is worse than markets.

b) An economy in kind will not have a unit of account in which to determine the appropriate allocation of resources. Therefore it will be less than perfect and again by Axiom 1 we have proved the theory.

Both proofs are idiotic to start with since Axiom 1 is nonsense.

(b) is incorrect additionally because calculation in kind does not preclude calculation assuming we have the following:

A) An output schedule
B) A unit of account (Kantorovich style "Lagrange multipliers" or Labour units or some other).

Either A or B can be used in central planning to falsify b even if Axiom 1 was true which is nonsense in the first place.

(a) is a real problem, but (a) is also present in markets. Price signaling is a both slow, sticky and not very informative in terms of information conveyance.

Despite the fact that the Austrians are completely full of shit, I think it's worth wondering what real problems planning will encounter and how planning is related to the term "central" planning.

Centrality of planning is necessary to some extent because there are central (global) features that we want the economy to have. CO2 for instance is a global constraint. It must be dealt with by the polity of the world. In principle you could give each region/firm etc some right to CO2 release, but that doesn't account for the fact of specialisation. In reality the production of resources in one region might be used everywhere but requires large amounts of CO2. It wouldn't make sense to penalise this group sectionally when in fact the outputs are required everywhere but the externality only arises locally. Instead the total use of this product should be decided relative to its CO2 use.

Now, the question of where information is, who has the best ability to determine how to, for instance, source inputs or means of production or evaluate the quality of inputs is something which usually requires a fair bit of decentralisation. The quality of input transistors to a computer manufacturer is not something you can feasibly decide centrally, and this can have a huge effect on the outcome.

The question of where with what criterion which "substances" should be distibuted and at what scale to decentralise is a huge question that receives very little attention. I worry about this a fair bit since I see the anarchists generally just assume a mythical decentralised economy without thinking of the need for global constraints, and the Trots running off with a centralise everything perspective that rarely makes any serious inquiry to the USSR central planning fiasco.

The question of political control over the economy is a major issue. The administration of things can very quickly turn into the administration of people. However the administration of things is clearly necessary so we have to be careful.

The decentralisation panacea doesn't actually do much for us here either. It doesn't follow that political control increases from reductions in the scale of entity involved in the economy. Quite the reverse occurred twice in Yugoslavia when wages were decentralised and again when BOALs were created. Both of these decentralisation tendencies ended up reducing workers control and increasing the power of local economic fiefdoms. Real democratic political control over the economy will require careful thinking about the implications of any structure proposed.

Planned economy problems of the USSR:

* Difficulty in parametric reasoning
* Shturmovshchina
* Quality of parts from suppliers
* Need for "fixers" (secret, back-channel or black market transactions between producers and suppliers) due to under-supply in order to meet targets
* Tendency to over-reduce diversity (the "how many types of tooth brush" problem)
* Tendency to undervalue labour time
* Tendency toward hording of input materials (to ensure meeting plans)
* Lack of innovation and the failure at creation of new firms for new products or variants (or variant methods of production)

From the consumer point of view, there were additional problems. Consumers often had access to good wages which they were then consequently unable to spend due to under-supply. The consumer would have to bribe people or find inside channels in order to obtain goods as they could not otherwise be obtained for any price. This persistent divergence between the cost of goods, wages and their supply would be very easy to duplicate in any attempt at planning. (The Maximum in the French revolution comes to mind here as well).

My own thinking is that we probably need to have a cybernetic system which employs Labour-time accounting (and perhaps also Kantorovich style accounting) as an indicator of value production such that we can make determinations in a subsidiary way, with a reasonable amount of autonomy at the level of the firm <=> consumer level.

This would allow some amount of "parametric" reasoning in various approaches to production of the same items without requiring competition, and would indicate rather than dictate how polity wants resources allocated.

jacobian
Offline
Joined: 18-03-09
Jul 14 2011 16:17
Toms wrote:
I've heard that he only critics the economics taught at Universities as very lacking and that defends that higher level economics are still valid. Is that the case or does he actually attack the foundations? Because if he goes for the foundations I think I'm interested in reading the book.

I don't think that's true. He attacks some notions fundamental to neo-classical ecnoomics. I don't agree with a lot of Keene but he's well worth reading for his critique.

Toms's picture
Toms
Offline
Joined: 16-05-10
Jul 14 2011 16:23

Thanks, to my to read list it goes

tigersiskillers
Offline
Joined: 7-08-06
Jul 15 2011 10:54

A revised edition of Debunking Economics is due out in September.

Tojiah's picture
Tojiah
Offline
Joined: 2-10-06
Jul 16 2011 04:10

People argue through the Internet that central planning cannot work because there is no way to gather, process and coordinate the necessary information efficiently. I imagine they google papers to prove their point and share their triumphant posts on facebook and twitter. Obliviousness or malice? You be the judge.

ajjohnstone
Offline
Joined: 20-04-08
Jul 17 2011 05:05

A defence of free access against proponents of ECA, also a critique of Central Planning, something different from the occasional centralised planning.

http://www.cvoice.org/cv3cox.htm

jacobian
Offline
Joined: 18-03-09
Jul 17 2011 17:21
ajjohnstone wrote:
A defence of free access against proponents of ECA, also a critique of Central Planning, something different from the occasional centralised planning.

http://www.cvoice.org/cv3cox.htm

This is exactly the "strawman" I attack here:

http://libcom.org/forums/theory/press-socialized-socialist-society-14072011#comment-435799

The approach of refusing to calculate or describe calculation, except perhaps at looking at scarcity of stocks will be a total failure as it falls victim to the problem of not realising the relative opportunity costs in producing another car, as compares another loaf of bread.

The law of the minimum applies, and that minimum in almost everything is labour. There are of course other substances which demonstrate real scarcity which may have increasing marginal costs (in labour) to obtain, but for the most part, labour is a good proxy for the value of everything. This approach to calculation will not recognise the value of anything.

RedHughs
Offline
Joined: 25-11-06
Jul 17 2011 19:34
jacobian wrote:
...
The approach of refusing to calculate or describe calculation, except perhaps at looking at scarcity of stocks will be a total failure as it falls victim to the problem of not realising the relative opportunity costs in producing another car, as compares another loaf of bread.

The law of the minimum applies, and that minimum in almost everything is labour. There are of course other substances which demonstrate real scarcity which may have increasing marginal costs (in labour) to obtain, but for the most part, labour is a good proxy for the value of everything. This approach to calculation will not recognise the value of anything.

First, calculation... I mentioned that we can consider an "economy" as a production system whose output is a continuous vector function of inputs with the obvious constraints?

For any reasonably simple function (convex, linear, quandratic), such a system has been mathematically solvable for long time now (at least by approximation). As mentioned, a system of Lagrangian multipliers or "shadow prices" will accomplish this. With hypothetically perfect knowledge, there just is no problem.

It is indeed necessary to ascribe some weighting of the various outputs - that would be the job of various councils, ad-hoc meetings or whatever overall guiding process we'd want.

Of course, real production probably can't be fully characterized by such well-behaved functions. But if we maintain a process of constant communication to manage the inevitable deviations from optimality, our problems will be solved (unless there are truly huge jumps in our crude production functions - which would involve something like a natural disaster but communication would most likely deal with this well).

So, on a "high level", I would this outlines the solution of any "calculation problem".

Now, labor value... Marx began with the labor theory of value because that's where classical political economy begins. Generic, undifferentiated labor power is a constrain of capitalist society because Capitalism rests on being able to buy the labor power of any and all of the dispossessed at any time it wishes for the cost close to the cost of reproducing the laborer.

Capital doesn't care about a variety of other constraints that would influence communist society - the current economy rides being able to buy oil at the cost of pull it out of the ground rather than considering either its scarcity or the environmental cost of using it (as easily accessible oil dries up, we can notice capital going to the even more devastating sources like shale-oil and deep-water wells).

So a post-capitalist society, when it was producing necessities would have a variety of constraints aside from labor time - indeed, organizing production to be maximally-pleasant would be an important constraint but so would making production more local, conserving scarce natural resources, avoiding the release of toxic chemicals and the optimal reuse of previously produced products (reuse and recycling). A communist society could satisfy all these constraint because it would begin at a high technical level and because the constrained, planned part of production would be for biological necessities while the majority of each person's time would be spent in the "potlatch" of direct social interchange - hanging out, rituals, dances, promenades, "species being", etc. Though there would certainly be intersections of the two tendencies - the creation of fine food, the brewing of good beer, craft items, etc.

But regardless, the extent we're calculating and using shadow prices, even if labor-power was the only input, the shadow-prices of goods would not in general equal either contained labor-power or the stable simulated-exchange value of the goods.

So, labor power/the labor theory of value is not a universal theory but a theory of capitalist society. The total labor power contained in good X is not something a communist society would necessarily want to do.

RedHughs
Offline
Joined: 25-11-06
Jul 17 2011 19:48
RedEd wrote:
RedHughs wrote:
this applies to Marx's Capital as well (though I would argue that later academics put the theory on relatively sound, consistent basis

Can you briefly say who these academics are and, if it won't take too long, how a layperson can find out what their major theoretical achievements are.

Paul Sweezy was the one who revived interest in Bortkiewicz's recasting of the transformation problem.

I have books by Meghnad Desai (Marxian Economics) and David Laibman (Capital Macrodynamics and Value, Technical Change and Crisis) that use this formalism. Laibman at least points to ways in which the declining rate of profit can prevail in a system where price and value operate consistently.

I think this is just a small sample of the formal Marxian economics that's been produced at the edge of the university for the last however many years. And naturally, almost all of these academics are liberals and social democrats and so there hasn't been much, if any, contact between them and anti-state communists.

The article Noa Rodman posted on the long thread sort-of about value-form gives some idea of the way the various academic debates have gone - quantitative formulations came first but "autonomist/value-form" position seem to have gotten hipper in recent years. One point in the debate is that the original lump those believe value and price co-exist as elements of a capitalist economy with sraffians/ricardians who discard value entirely but otherwise use a "classical" rather than marginalist framework. Contrary to this, I think the distinction is important.

Certainly, most anti-state communists are also not mathematically sophisticated and given that social democrats revised Marx's politics in a fashion that we would not like, it is naturally they've rejected social democratic academic's revision of Marx's framework. Unfortunately, this lack of sophistication and emphasis on "the original text" in my opinion tends to result in many anti-state communist formulation being nothing but dead dogma regurgitated from a half-understood reading of the not-consistent text Capital.

The value-form people, as far as I can tell, more or less are evolutes of autonomism and efforts to "read capital politically". Angelus Novus makes the point that Capital was trying to both a critique of political economy and a critical political economy. He and I believe many value-form people would jettison the critical political economy part and keep only the critique of political economy. I disagree and would keep both (and I'd freely admit that most academic Marxists would only keep the critical political economy part).

I can see how the value-form approach seems to go along with the "communization" perspective - that we skip any revisions of the economic system and just get rid of it forthwith. But I actually disagree with this even though I agree with the general communization/let's-go-straight-communism perspective. An "objective" understanding of the modern economy is still useful for communists as a way of understanding modern society. I find it unfortunate that the palpably unstable state of the ruling modern financial system doesn't attract the interest of all the otherwise interesting modern I follow - (Aufheben, Endnotes, Dauve). Aufheben's latest is that this is a crisis but not a crisis of profitability/crisis of capital but something else (excess speculation in and of itself?).

Angelus Novus
Offline
Joined: 27-07-06
Jul 18 2011 09:40
RedHughs wrote:
"autonomist/value-form" position seem to have gotten hipper in recent years.

I'm not sure what the prefix "autonomist" here is supposed to indicate. As far as I know, "autonomist" is Harry Cleaver's synonym for "operaismo".

Value-form thinkers can't really be subsumed to particular political positions: Paschukanis was a Bolshevik, Rubin was a Menshevik, Hans-Georg Backhaus and Helmut Reichelt were in German SDS and reflected the infleunce of the Frankfurt School so prevalent at the time, Chris Arthur I think was even a Trotskyist. So I wouldn't go around trying to find a 1-to-1 correspondence between political position and one's reading of Marx.

Quote:
The value-form people, as far as I can tell, more or less are evolutes of autonomism

Again, no, if by autonomism you mean "operaismo".

Quote:
and efforts to "read capital politically".

I don't think that's really the case. Some of the older representatives of value-form theory in Germany, like Backhaus and Reichelt, tend to be quite "philosophical", and spend a lot of time examining what they think was Marx's successive popularization of his "dialectical method", etc.

However, some younger theorists, like Michael Heinrich or Ingo Stützle, have a much more hardcore economic orientation. Heinrich actually teaches economics at the HTW in Berlin, and Stützle is doing his doctoral thesis on "state debt as a category of the critique of political economy". Their emphasize upon form in Marx seems more strongly oriented towards showing how Marx was in many ways the original thinker of the role of money and finance in capitalism, decades before Keynes.

Quote:
Angelus Novus makes the point that Capital was trying to both a critique of political economy and a critical political economy. He and I believe many value-form people would jettison the critical political economy part and keep only the critique of political economy. I disagree and would keep both (and I'd freely admit that most academic Marxists would only keep the critical political economy part).

I think you're confused as to what the "critique" in critique of political economy means. It doesn't mean jettisoning economics and concentrating on a lot of philosophical discussion, or engaging in vague, quasi-literary poetic agitation like Principia Dialectica. "Critique" means Marx interrogates the categorical presuppositions of an entire field of knowledge, namely the classical political economy that was dominant at the time. Nonetheless, Marx's aim was to understand capitalism, and that he did quite well.

jacobian
Offline
Joined: 18-03-09
Jul 18 2011 12:34
RedHughs wrote:
So, on a "high level", I would this outlines the solution of any "calculation problem".

I agree with the in-principle possibility of in-kind calculation subject to known constraints on outputs (those constraints must be given, or we can't work out Lagrange Multipliers). This presupposes we have some way to gather the outputs in a socially useful way.

The above article is vague on this point and presents too really bad alternatives. The first is looking at depletion of stocks. I've already addressed why this is insufficient information. The other is Maslow's hierarchy of needs, which is even worse. Needs are highly variable and can not be determined uniformly excepting in the most basic cases of food water and air. A system based on the hierarchy of needs would be extremely unresponsive to peoples desires.

So, assuming perfect information, yeah, there is probably no calculation problem, assuming the computational problems themselves are tractable. It seems likely that they are, but Kantorovich style calculations can be pretty intensive. I'd like to see benchmarks that would support the thesis of tractability.

I'm not disagreeing that it may be either possible or desirable to effect such a calculation. I do disagree with the SPGBs sloppy, vague and confused description of how they see the problem being overcome.

RedHughs wrote:
So, labor power/the labor theory of value is not a universal theory but a theory of capitalist society. The total labor power contained in good X is not something a communist society would necessarily want to do.

There are at least two reasons why I disagree. The first is that equality of labour is assumed when we value things at their labour - this means that people will be treated roughly equally regardless of profession. The second is that labour time is a substance that people should have the most control over and most scarcity is really a product of insufficient labour.

I think labour time is not just a description of capitalist political economy but also foreshadows an indicator of how we should value things since the substance within human control to change the world is essentially our labour.

The other reason I think it's a reasonable measure is that it could be used as an indicator to inform decisions about how investment should take place without dictating it. A planning system could be made more flexible to democratic political control than is likely to occur in a byzantine computational calculation in kind.

There may be, as you say, other constraints set. Absolute rules concerning the use of CO2 or mercury release into the ocean etc. I don't think we should discount them and we should likely use them in our calculations. However, they are fundamentally of a different character than labour, which will dominate as the substance which forms the law of the minimum in production, whether we be in capitalist society or socialist society.

ocelot's picture
ocelot
Offline
Joined: 15-11-09
Jul 18 2011 15:21
jacobian wrote:
There may be, as you say, other constraints set. Absolute rules concerning the use of CO2 or mercury release into the ocean etc. I don't think we should discount them and we should likely use them in our calculations. However, they are fundamentally of a different character than labour, which will dominate as the substance which forms the law of the minimum in production, whether we be in capitalist society or socialist society.

Assuming you are referring to Liebig's law of the minimum, why do you assume that labour is the scarcest resource ahistorically? Given the vast increase in not only absolute population but unit labour productivity since the onset of capitalism, together with the relatively inelastic provision of natural resources, it seems illogical to assume that those trends are not eventually going to result in natural resources becoming the scare resource at some stage. Even if we limit it to kWh as a proxy for carbon, etc.

Tojiah's picture
Tojiah
Offline
Joined: 2-10-06
Jul 18 2011 15:55

It's as if these calculations would require a computer in every home. roll eyes

Honestly, what is this problem that you people think is so hard to deal with? There is no need to have an exact solution of anything, you just have adaptive, distributed systems which correlate between production and need not "perfectly", as if one could respond perfectly to an unpredictable, ever-changing world, but more than adequately for human need.

Khawaga's picture
Khawaga
Offline
Joined: 7-08-06
Jul 18 2011 17:00

RFID, IR scanners, internet of things, computers and whatnot could keep track of pretty much anything that's produced, in existence and used-up. I'm with Tojijah on this one. Capital has developed pretty sophisticated logistics systems, there's no reason why we shouldn't just adjust them to a communist organization of distribution. Throw in some AI and we're set.

yourmum
Offline
Joined: 9-03-10
Jul 18 2011 17:57
Tojiah wrote:
People argue through the Internet that central planning cannot work because there is no way to gather, process and coordinate the necessary information efficiently. I imagine they google papers to prove their point and share their triumphant posts on facebook and twitter. Obliviousness or malice? You be the judge.

so you would call arguing on facebook, searching for something on google and putting it on twitter central planning? now i dont want to discuss the planning part of this, but where did the central go?

Tojiah's picture
Tojiah
Offline
Joined: 2-10-06
Jul 18 2011 18:07
yourmum wrote:
Tojiah wrote:
People argue through the Internet that central planning cannot work because there is no way to gather, process and coordinate the necessary information efficiently. I imagine they google papers to prove their point and share their triumphant posts on facebook and twitter. Obliviousness or malice? You be the judge.

so you would call arguing on facebook, searching for something on google and putting it on twitter central planning? now i dont want to discuss the planning part of this, but where did the central go?

I'm saying that the infrastructure for gathering and distributing the information needed for the "intractable" calculation problem are already in place, which pulls the rug from under this anachronistic argument.

RedHughs
Offline
Joined: 25-11-06
Jul 18 2011 20:30
Angelus Novus wrote:
I think you're confused as to what the "critique" in critique of political economy means. It doesn't mean jettisoning economics and concentrating on a lot of philosophical discussion, or engaging in vague, quasi-literary poetic agitation like Principia Dialectica. "Critique" means Marx interrogates the categorical presuppositions of an entire field of knowledge, namely the classical political economy that was dominant at the time. Nonetheless, Marx's aim was to understand capitalism, and that he did quite well.

Sure, I'm confused about the distinction between "a critical political economy" and "the critique of political economy" when you say make it. You yourself admit that Principia Dialectica at least shares this confusion. Perhaps you could explain it a bit more. I mean I know what I'd mean by "interrogate" etc but there's a lot of room for maneuver in paragraph above - for example, "economics" wasn't even a category when Marx was writing (see below)... Further, do you mean anything at all by "critical political economy" or was that just a rhetorical turn? (I liked the apparent meaning - if you no substantial use for the term, maybe I can barrow it).

Note that PD is trying to assert some politics coming out of their understanding of whatever-Value-form-theory-is while I am not asserting any political relation to value-form or trying to sell Value-form as the latest and greatest thing. I'm only trying to sort-out the the trends you and others talk about (and naturally asserting my own positions, which I won't claim has any direct relation to this stuff). Not reading German, I've got the Endnotes article, I've got some of your translations, I've got PD, got the "Letter Magazine" which seems into Value-form, I've the article from Rodman linked above. It's kind of a game of blind man's bluff. It seems like you are ensconced in the minutia of value-form theorists that there is overall you description you'd accept of them - which is an approach I suppose works for some things.

Anyway, I recall you saying that Value-form tend to jettison a "substantialist" viewpoint along with crisis theory. I don't mind calling myself a substantialist and it seems to me that view labor-power as a constraint on capitalist is indeed necessary for viewing capitalism as having a secular tendency to crisis. Now, just by-the-by, given that, as far as I can tell, we are in a roaring crisis as of the present, what explanation would imagine these non-crisis-theory-using folks give?

Further, on your reference to "economics" in the first paragraph, may understanding that the project of the neo-classical school was to create a field, "economics" to replace the field "political economy" wherein economics would purely scientific, quantitative and divorce from political considerations - thus the discourses of Smith or Marx on the political or subjective aspects of markets would be removed and the entire theory would be formulated in a crisp, compact, sterile fashion. Further, there are quite a number of folks who formulated a "Marxian economics" which had these qualities - the models are crisp and divorced from long essays on the details of production, markets and what some other expositor of political economy said ten years earlier. While such formulations have their distinct weaknesses - excluding important "subjective" or "philosophical" aspects. They've got their strengths too - Capital's long, discourage text doesn't just make it hard to get through. It makes it obscure (giving rise to countless, useless Hermeneutic debates on its finer points). And in the long, long process of Marx creating his long, long text it seems that he didn't find the problems involved of holding production prices proportionate to their labor-content until he got to Capital III, at which point, Capital I was far too long to change (giving rise to countless more debates trying to reconcile this situation).

My overall prejudice is that communists should a clear, crisp, reasonable self-contained explaination of the objective misery and "disasterousness" of capital as well as its subjective poverty. And I think such an explanation is reasonably in reach for us. While I like Endnotes, it seems like they're kind of on a "two track" approach, on one I think they do make some contributions such a crisp explanation and on the other side they seem enamored with the quest for deep, deep, deep insights culled from esoterica insights into Marx's texts. And, of course, you (AN) aren't Endnotes and I'm at the least confused from your approach.

Also, what do you think link of the article originally linked by Rodman and link by me above?

RedHughs
Offline
Joined: 25-11-06
Jul 18 2011 21:49

Edit: Tojiah and Khawaga basically give the correct summary, sorry to ramble-on here...

@jaobian

A) you haven't addressed my point that an important reason not to measure things in "generic labor" is to give priority to "pleasant labor" - ie, be willing to produce less or work longer if we can enjoy the production process.

B) Part of the reason to prioritize decentralization is to allow the total production process to be divided into many tractable pieces which would only then be combined for overall optimization. Another part would be to allow as much as possible of the information involved in a production decision made a location to be concentrated around that location.

C) I think you over-estimate the complexity of this kind of calculation a lot. The Soviets were doing production optimization pre-computer or with crude mainframes.

D) Certainly, in practice an entire, accurate production function wouldn't be available for each enterprise. What one would create is an adaptive, forward-looking model. And one would certainly want to estimate not just the "productivity" of various sectors but the fragility of the entire circuit and one would naturally aim to rearrange things to both maximize production and minimize bottlenecks/fragile points. The thing is, each enterprise could publish its estimated production on the web, calculate what inputs and outputs the total model would allocate to it, then look in detail at whether such estimates were realistic and change as necessary - such an approach would result in "churn" where nothing stabilizes but if we include some sanity-checks, we could make the process reasonably stable.

E) This isn't a unknown field that we're blazing a trail in. Operations research, industrial engineering and related research has been around a long time now. The task of communists is not to perfect such research but to understand it exists, be willing to use it but also to understand the overall knowledge and expertise of, say, the workers in the various production facilities, may even more useful than this still useful specialized approach.

Having mathematical knowledge, I feel like the fundamental mystification involved the phrase "economic calculation problem" is the belief that the problem is "unsolved" in the way that the Unified Field Theory or the Rieman Hypothesis is unsolved. Given a series of constraint, some approximation of the production and a production goal, it would be more-or-less "easy" for me to create a system which gets somewhere near to the goal. And there are folks who are much better at this I am. And such a system, information sharing and stability would be important characteristics - so, transparency and localization, something that communism would aim for anyway (it is worth noting that many of capital's world-wide circuits exist today not for efficiency but as part of the game to take advantage of wage differences in different countries. We wouldn't have a reason for such baroqueness).

@Ocelot: My Gosh! The production of a diversified economy is not comparable to the growth of a single plant crop - unlike plants, human beings have a choice of both the methods of production and the products produced. "Liebig's law of the minimum" is only going to apply to a system which uses all of its inputs in a (biologically) fixed proportion (so when one is scarce, you can't use the other but only then...). Jeesh, Why don't you try learning some actual applied mathematics instead of referencing models (apparently) without any understanding of them? Especially, I may not agree with Jacobian but he seems to have to some grasp of what models are applicable to what systems...

Consider going through A Concrete Approach to Mathematical Modelling by Michael Mesterson-Gibbons. I found this text fairly accessible back in the day. This might give you something like an idea of which models have some, some relation to the phenomena you're discussing.

Tojiah's picture
Tojiah
Offline
Joined: 2-10-06
Jul 19 2011 00:51

Just to be clear, I'm not personally advocating central planning. I think a distributed approach will be optimal, allowing an interplay between global concerns and local knowledge and know-how.

But really, the competition isn't so hot, either. Have you noticed capitalist pricing working out very well lately?

ocelot's picture
ocelot
Offline
Joined: 15-11-09
Jul 19 2011 11:21
RedHughs wrote:
@Ocelot: My Gosh! The production of a diversified economy is not comparable to the growth of a single plant crop - unlike plants, human beings have a choice of both the methods of production and the products produced. "Liebig's law of the minimum" is only going to apply to a system which uses all of its inputs in a (biologically) fixed proportion (so when one is scarce, you can't use the other but only then...). Jeesh, Why don't you try learning some actual applied mathematics instead of referencing models (apparently) without any understanding of them? Especially, I may not agree with Jacobian but he seems to have to some grasp of what models are applicable to what systems...

Consider going through A Concrete Approach to Mathematical Modelling by Michael Mesterson-Gibbons. I found this text fairly accessible back in the day. This might give you something like an idea of which models have some, some relation to the phenomena you're discussing.

*Ahem*. Did you even read my post before dashing this off? If so, you may have noticed that I was a) asking Jacobian whether Liebig's law was what he was referring to by the "law of minimum" and, should that be the case, then b) why assume labour to be the scarcest resource "eternally", irrespective of historical development? I'm still actually waiting for answers on both questions. I also made no mention of "the growth of a single plant crop". Whether or not Liebig's model is valid in this context is, again, something that I'm waiting to discuss with Jacobian, seeing as he raised it. The only contribution to that discussion from your post here seems to be that you enjoy being a patronising jerk more than reading what people trying to have a constructive discussion are actually writing. Null points.

Angelus Novus
Offline
Joined: 27-07-06
Jul 19 2011 12:03
RedHughs wrote:
Perhaps you could explain it a bit more. I mean I know what I'd mean by "interrogate"

Well, Marx takes up the categories of political economy, and subjects them to critical scrutiny by historicizing them or modifying them.

A friend of mine once poetically described it as "classical political economy gave partially correct answers to the wrong set of questions".

So the best example is the connection between value and labor, where the classical political economists like Ricardo attempted to determine the substance of something called "value" in terms of some "quantity" of labor substance measured in hours.

Marx subverts this by saying the actual question is why labor - which exists in all human societies - takes the form of value in this society, and his entire analysis of the forms of value in Chapter One is intended to prove the necessity of money as the measure of labor-time in capitalism, since in a commodity society, social labor time cannot be measured directly in terms of hours, but only retroactively, in quantities of money.

Quote:
Further, do you mean anything at all by "critical political economy" or was that just a rhetorical turn? (I liked the apparent meaning - if you no substantial use for the term, maybe I can barrow it).

Yeah, I guess I'd apply it to people like Joan Robinson, Sraffa, Post-Keynesians, basically people who aren't analyzing capitalism but rather some nebulous abstraction called "the economy" and want to run it better, in the interests of the workers, etc.

Quote:
Note that PD is trying to assert some politics coming out of their understanding of whatever-Value-form-theory-is

Yeah, but with all due respect to PD, they don't know what the fuck they're talking about a lot of the time. They've picked up on some superficial rhetorical similarities between Moishe Postone and the Nuremberg "Wertkritik" school, and claim to be in the tradition of both, even though Robert Kurz has stated rather clearly his different understanding of abstract labor from Postone.

I think a lot of the enthusiasm for Postone in the "Wertkritik" milieu had to do with their embrace of his ideas on Antisemitism. But then his book came out and the smarter ones among them realized there are a lot of substantial differences as well. PD just haven't gotten the memo yet.

The really discouraging thing too is that PD have basically no interest in "value-form" theory outside of Postone and Nuremberg Wertkritik, which they at least unconsciously still seem to think constitute a common school.

I think they're just confused Ex-Situationists hungry for some kind of "next big thing", and don't realize that Wertkritik's 15 minutes of fame came-and-went in the late-1990s.

Quote:
Anyway, I recall you saying that Value-form tend to jettison a "substantialist" viewpoint along with crisis theory.

Hey now, I'm not jettisoning crisis theory. Nobody I know does. The possibility of crisis is already introduced in Chapter 3 of Volume I! I just have problems with theories of an inevitable breakdown of capitalism based upon a notion of the reduction of necessary labor-time. The reduction of necessary labor-time is the basis of relative surplus-value production, not some anamolous dysfunction of capital.

As for my problem with "substantialists", I just don't understand what the fuck they even mean when they purport that physiological labor expenditure is supposed to be the basis of value. What exactly is involved in the transformation? Calories burned? The breakdown of carbohydrates into glucose? How the hell does one "translate" such quantities into money?

888's picture
888
Offline
Joined: 30-09-03
Jul 19 2011 20:02
RedHughs wrote:
Consider going through A Concrete Approach to Mathematical Modelling by Michael Mesterson-Gibbons. I found this text fairly accessible back in the day. This might give you something like an idea of which models have some, some relation to the phenomena you're discussing.

Thanks for this. I have been interested in familiarising myself with modeling in general for some time.

RedHughs
Offline
Joined: 25-11-06
Jul 20 2011 02:47
ocelot wrote:
*Ahem*. Did you even read my post before dashing this off? If so, you may have noticed that I was a) asking Jacobian whether Liebig's law was what he was referring to by the "law of minimum" and, should that be the case, then b) why assume labour to be the scarcest resource "eternally", irrespective of historical development? I'm still actually waiting for answers on both questions. I also made no mention of "the growth of a single plant crop". Whether or not Liebig's model is valid in this context is, again, something that I'm waiting to discuss with Jacobian, seeing as he raised it. The only contribution to that discussion from your post here seems to be that you enjoy being a patronising jerk more than reading what people trying to have a constructive discussion are actually writing. Null points.

Yeah, I guess was being patronizing.

But Liebig's law is a specifically the law describing the behavior of plant crops or more broadly biological system. It specifically describes and is applicable to that. You could as well have said "are you referring to the unified field theory here", your reference so that unrelated to a plausible model of the economy.

I could be being a complete asshole here. I'll say that straight away. If you show I'm being one, I'll apologize, profusely, really. But at the same time, it looks to me like you're engaged in applying ideas without any substantial understand of them. You're interested in "Systems theory", you take various "laws" out of Wikipedia - essentially, you don't understand that mathematical models aren't things that can be applied merely by their written-English summaries. IE, you don't know how much you don't know. I mean seriously, can you solve a differential equation?

Like I say, show me I'm wrong and thus that I'm being an asshole and a self-righteous over-weaning jerk. Sure, I will eat crow. I'll post a humiliating picture of myself, whatever. We are here to debate, to challenge each, right?

Certainly folks here have handed me my head on the question of Marx's positions on various points. I went back and read more - I'll freely admit I'm still far from a Marx encyclopedia but I think now at least I've got some idea how much I know and don't know on that subject.