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Economic Calculation and Central Planning

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GoldenGoose Posted: Mon, Oct 24 2011 3:27 PM
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I had a 'Smart Meter' insatalled on the house the other day which links into the 'Smart Grid.' It is stated that it will allow the electric companies to move demand around by being able to 'see' and analyze, in real time, the energy usgae of every household. It communicates with other meters and the central power company via radio.

Question: Will the implementation of Technology solve the Calculation Problem?

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"move demand around?"

 

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"Question: Will the implementation of Technology solve the Calculation Problem?"

 

No, the crux of the calculation problem is the central planner's inability to price capital goods due to the lack of a market for them (the means of production i.e. capital goods, labor, and land are owned by the State). It is impossible then to determine costs and thus impossible to calculate profit (even if there are prices for consumer goods as market socialists allow). It is likewise impossible to determine the best combination of inputs to use in production. Even if the central planner has all the technical knowledge about a given input, that does not tell it's relative value in production, for which you need both technical knowledge and prices.

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