Hi all, I'd like to preface this with the fact that I'm currently a supporter of the Venus Project. I've joined these forums because LVM first proposed this theory and I'm looking for comments directly from the source! So, now that I've lost all credibility being a TVP supporter and first time poster, let us proceed.
Here are the basic arguments as I understand them (mostly taken from wikipedia - I'm great at debunking my own credibility):
1) The price mechanism shows (indirectly) how abundant a resource is.
2) The price mechanism is necessary because it allows individual people to decide how much of a good will be produced and where it will be distributed
Please let me know if I have missed something fundamental about the problem so I can continue my research!
Here are the solutions that I have come up with:
1) Don't we already know how abundant our current resources are? For example, a mining company knows how much ore it's taking out of the ground every day and has likely had geological surveys done regarding the total capacity of the mine. If every company uploaded this information to a database, we could know how abundant our global resources are.
2) For basic goods and services (basic food, water, energy, shelter, clothing, communication) we know how much the average human uses of each - based on statistics and scientific studies on how much human beings need for a healthy lifestyle. So, the goal would be to provide this average amount for every single person. So really no need for consumer input for this. If there wasn't currently enough production to provide this, resources would first be allocated to develop it until there were enough basic goods for every person.
Next, we have luxury goods. We know how abundant each resource is, and we can determine how much of each resource a good requires (and uses in production). Individual manufacturers already have all this data. So for each luxury good we determine how much of each resource it uses. Then we can use the relative abundance of each resource to determine an overall value of the good. Here we would initially have to have some kind of credit system as demand would far outweigh supply.
Such a system could be implemented in real time as a networked software application. We could input all information on resource availability into a database and as people would input their orders, the value of the good would be subtracted from their credit supply and decrease the amount of resources in the database - in turn increasing the value of the goods.
This comprises the basics of how I believe the economic calculation problem would be resolved within TVP. Let the criticisms begin! However, if possible, please limit your criticisms as to how what I've proposed will not solve the economic calculation problem as opposed to any other arguments against socialism, TVP, etc. (i.e. I know most here would be opposed to this based on arguments of basic freedom/liberty but that doesn't really relate to the problem) Thanks!
My criticism is that you never addressed the calculation problem, and I guess if thats what you grabbed from the wikipedia page, it should be re-written.
A primary point of concern here is an incorrect emphasis on the abundance of scarce resources. While it is incorrect to assume to know the supply of any given good at any given time. Various stages of production are dependent on external factors of production who's supply fluctuate. Scarce resources in general increase in abundance arbitrarily and without notice, and likewise increase in their consumption or employment. There is no way to know exactly how many resources are available at any given time. However this is one gigantic red-herring as it does not even begin to address the calculation problem. The issue isn't being able to know how many resources we have available to us. What you have to do is provide an answer to the problems listed below.
So what you have to answer is the following.
The price mechanism solves all of these problems.
Knowing how many resources are out there isn't a solution, as it doesn't even begin to address the actual problem. This is why having a society full of robots who did our work for us, doesn't mean the elimination of capitalism.
Furthermore your offering a solution to the price mechanism(that functions just fine), whos underlying goal is to mimic, the pricing mechanism. It seems circular to me.
Austrian economist Robert P. "Bob" Murphy gave an Austrian analysis of the Venus Project.
Thanks for posting, I must confess I am endeared to your self effacing tone. There was a time when I myself was sympathetic to similar technocratic perspectives as to the solutions to humanity's problems. Also don't worry if you don't fully grasp the problem immediately in its entirety, frankly it is my suspiscion that many Austrians do not either.
Firstly, based on what you have written as you're understanding of the economic calculation problem, it would be good to equate yourself with both, distinct formulations of this problem separately, both Mises' and Hayek's. I will paste the links to both articles defining the perspectives of both these authors below:
Mises' formulation
Hayek's formulation
The reason why I stress such a distinction, is that unfortunately both arguments are often conflated. Mises' original argument was essentially about commensurability, and lack of comparability between different production processes according to a common denominator in which to base production decisions, a characteristic missing in all autistic economising systems, whether for Robinson Crusoe or the planner of a socialist commonwealth. If one were to use a slightly innacurate mathematical metaphor, one could say optimisation is impossible, since one lacks a criterion with which to optimise with respect to in the first place.
Hayek's point is about the relative information implied and communicated by the structure and changes in the structure of prices in the economy, helping communicate the effects of past events to delocalised market actors and enabling them to coordinate efficiently in response to these changes without knowing the gory details of the source of these changes, e.g. how the price increases of nickel "communicate" the problems anticipated by traders due to the breakdown of a mine. One could argue that the concatenation of these sorts of disparate effects are communicated by the "price mechanism," to use a colourful metaphor, as a result of the market process.
I don't think Mises would disagree with this, but he may have beared slight qualms about the determinate nature of Hayek's argument, since it is not directly past prices but the appraisement as to how thse prices will change in the future that is the fundamental element in entrepreneurial planning and profit seeking. Mises' argument regarding commensurability however, one can therefore conceive in a way as far more fundamental.
Now with regard to your suggestions, I think it would be more useful for both you and me(I'm tired, tbh, and probably going to sleep soon), is if you can consider the following(i'm only going to address one of your points for now).
We do have this information, that is true. Now consider the Misesian problem of commensurability, which in fact grants that all of this kind of information may be known to the central planner. Copper, Nickel, trucks, radios are all goods which are means that serve certain ends.
Generally, the means are largely substitutable to achieving different ends(often to different extents) yet often specific to an extent, but not entirely so of either (the possibility however of finding an absolutely specific means among the collection of means is a perfectly attainable prospect, e.g. mandrake weed was only considered useful for one use, when people mistakenly thought an extract produced from it could heal diseases). Furthermore, note that every process of production requires the collaboration of at least 2 means(one of which is always time, and if this is not the case the means would already be the end), and that almost all non-rudimentary production processes that take place in a modern economy are multi-stage, branching out into the production of many different ends and lower stage means(further along the stages of production to producing a final end). In addition the means of production, as they pass through the stages of production, from the highest nth order stage means, before eventually producing ends, become more and more specific and harder to convert. Furthermore, uncertainty and unanticipated as well as probabilistic change are a constant datum one has to deal with so, that means-end relations, consumer demand(or to make it simpler, you're own demand if you're a dictator) and supply are all subject to changes both anticipated probabilistically and completely uncertain.
If you think you can solve the economisation problem involved in organising such a complex economy, with unaviodably ambiguous comparisons of the results of heterogeneous inputs and ouputs, among a plethora of different production paths, without being possible to rationalise the comparisons of one's opportunity costs according to an objective common denominator, and at the same time know somehow whether you're entire capital structure is being maintained and not consumed, while being in line completely with the valuations to which you attach the ultimate ends you'd like to achieve; then perhaps you should take out a private island and try it.
If you're beginning to see Mises' point about a lack of commensurability rendering this problem ultimately hopelessly impossible, then welcome to the Austrian School! ;)
"When the King is far the people are happy." Chinese proverb
For Alexander Zinoviev and the free market there is a shared delight:
"Where there are problems there is life."
Spline:I've joined these forums because LVM first proposed this theory and I'm looking for comments directly from the source!
Directly from the source would be Mises's Socialism, found here in html format, here in pdf format, and you can buy it here.
When I have more time, I'll try to remember to come here and write a decent response.
Political Atheists Blog
This should provide a decent introduction to the topic: http://mises.org/daily/4924/The-Foremost-Austrian-Contribution-to-Economic-Science
Just get rid of government coercion and the pricing mechanism becomes the supercomputer ;)
http://www.youtube.com/watch?v=TsF4gAkuaeY&feature=player_embedded
Spline:1) Don't we already know how abundant our current resources are? For example, a mining company knows how much ore it's taking out of the ground every day and has likely had geological surveys done regarding the total capacity of the mine. If every company uploaded this information to a database, we could know how abundant our global resources are.
Spline:2) For basic goods and services (basic food, water, energy, shelter, clothing, communication) we know how much the average human uses of each - based on statistics and scientific studies on how much human beings need for a healthy lifestyle. So, the goal would be to provide this average amount for every single person. So really no need for consumer input for this. If there wasn't currently enough production to provide this, resources would first be allocated to develop it until there were enough basic goods for every person.
Spline:Next, we have luxury goods. We know how abundant each resource is, and we can determine how much of each resource a good requires (and uses in production). Individual manufacturers already have all this data. So for each luxury good we determine how much of each resource it uses. Then we can use the relative abundance of each resource to determine an overall value of the good. Here we would initially have to have some kind of credit system as demand would far outweigh supply.
Spline:Such a system could be implemented in real time as a networked software application. We could input all information on resource availability into a database and as people would input their orders, the value of the good would be subtracted from their credit supply and decrease the amount of resources in the database - in turn increasing the value of the goods.
Spline:This comprises the basics of how I believe the economic calculation problem would be resolved within TVP. Let the criticisms begin! However, if possible, please limit your criticisms as to how what I've proposed will not solve the economic calculation problem as opposed to any other arguments against socialism, TVP, etc. (i.e. I know most here would be opposed to this based on arguments of basic freedom/liberty but that doesn't really relate to the problem) Thanks!
JonnyD:Just get rid of government coercion and the pricing mechanism becomes the supercomputer ;) http://www.youtube.com/watch?v=TsF4gAkuaeY&feature=player_embedded Indeed. The price system is the stigmergy of human action. The keyboard is mightier than the gun. Non parit potestas ipsius auctoritatem. Voluntaryism Forum | Post Points: 5
Indeed. The price system is the stigmergy of human action.
The keyboard is mightier than the gun.
Non parit potestas ipsius auctoritatem.
Voluntaryism Forum
Welcome to the Mises Community, Spline!
Sure. One thing to keep in mind, however, is that not all caches of the same resource are created equal. Some are easier to get to than others. But as Johnny Doe asked about "luxury goods", I have to ask what are "resources"? I assume you mean "natural resources", but these days it takes non-natural resources to extract more natural resources.
There are many different kinds of food to eat, clothes to wear, and shelters to live in. How much of each should be produced?
Things like "energy" and "communication" are even harder to pin down. With the former, just how much energy is "basic" to people? In which form(s)? How can the latter even be quantified?
I'm with Johnny Doe on this one -- what do you mean by "luxury goods"? Otherwise, what do you mean by "credit system"? It seems to me that that would just be a price system by another name. :P
Also keep in mind that many luxury goods use the same resources. Of those that do, how many of each should be produced?
Human societies themselves can be said to be real-time networked software applications. People's minds constitute the software, and language is the network infrastructure. Evolution set everything up. :)
Johnny Doe:What is a luxury good?
Whatever your wise overlords determine is not of necessary importance to you, of course.
Spline:This comprises the basics of how I believe the economic calculation problem would be resolved within TVP.
Spline,
You didn't address economic calculation at all. The thing you seem to be missing is valuation.
A system of economic calculation is the system by which we determine both supply and demand. It isn't how we create products, it's how we create products that people want. Your system focuses entirely on managing supply, with not the slightest bit of thought for demand. This quote is telling:
Spline:So really no need for consumer input for this.
There is always a need for consumer input. Rationally, the individual tries to continually improve their situation according to their individual valuation of products, services, etc. That valuation is completely independent of the amount of effort it takes to prepare the product or service for consumption. Economic calculation does not exist just to shotgun products onto the market for consumption. They need to be the right products at the right time, place and price. Otherwise you aren't rationally distributing resources.
edit: One more bit I overlooked:
Spline:1) The price mechanism shows (indirectly) how abundant a resource is.
This is incomplete and seems to be tied to your misunderstanding of the reasoning behind the economic calculation debate. The price mechanism shows how abundant a resource is compared to the demand for the resource. Abundant things can be expensive if demand is high. Scarce things can be cheap if demand is low.
cporter:You didn't address economic calculation at all. The thing you seem to be missing is valuation.
cporter,
Finally, someone here spelled out the major flaw in the OP - incorrect value theory!
(The price mechanism shows nothing of the sort. This is the first mistake in your reasoning. What the price mechanism shows is how much the seller perceives he can acquire for his good. There could be one cell phone in the entire world, but if no one wants it the price will not be very high. Ergo, the abundance of cell phones is indeterminate from the price. Prices will, it is true, end up lower when things are mass produced, but that isn't the only reason for low prices.)
(This examination of the pricing mechanism is a little backward, a little to the left of X and a little south of Y. So I'll try to get you back to 0,0. The price mechanism does not say either of those things. The price of something is set according to those factors. When a price is set and X sells well, the manufacturer may raise the price if he perceives he is selling too low. "Where" something is to be distributed is not automatically known. If a producer of a good happens to sell something somewhere, he may decide to continue sales in that area, but that does not exclude that there are other areas where he may have sold better. Nor does it tell him where such an area is, or where it would be a bad idea to sell. And the price that the producer fixes can indicate to consumers what might be going on in terms of worldwide production and distribution, but it is by no means clear cut.)
(Your analysis of the price mechanism was faulty. Wikipedia is bad research material. Read just about any section in Human Action dealing with government intervention in...anything. Read the whole book. Apart from having a lot of examples of precisely what you are researching, Mises has an undeniable wit about him throughout the whole book. If you aren't big into reading lengthy works, Economics in One Lesson offers some lesser examples, without so much wit, but still a fun read, and he gets the point across rather clearly. But it might also do you good to read works by supporters of central planning, and try to think through logically how their ideas would work. You will hit walls over and over and over when it comes to scarcity.)
(We do not know everything, but that is irrelevant. We can work within the confines of what we do know to answer your questions. The mining company may know how much ore is in a mine, and we may be able to keep that information on a database. This tells us nothing about what should with that ore. Specifically, it does not tell us why it is worth our time to mine these things, nor does it tell us if our mining is costing more than we can get a return on from the ore. Only the fact that we can sell the ore determines that we should be mining it. If we are simply mining it because some central computer says to, there will be no way of determining if the act of mining was not itself a waste of resources.)
(Do we really know how much clothing the average person needs? Or water? How can you determine how much communication a person needs? Let me offer some examples. You are giving all the food, water, clothing, and energy that a computer determines the average person needs. A freak storm tears apart your clothes. You've been outside in the cold, naked, for an hour. You rush home, heat the bath, and run some water. Now, in a market system with a functioning supply-demand mechanism, the market will adjust. You will simply pay more to get more energy, water, and clothes. However, with this database entry idea, you are using up a limited amount allotted to you. You've used more heat, water, and clothing than has been calculated for your use. How does the system respond? How can it just give you more without having to recalculate what everyone gets? And then have this happen in aggregate. Thousands of people on occasion using more than they are allotted. You either have to let those people go without water, energy and clothing until they get their next rations, or you have to recalculate everything so that everyone, across the board, gets less. And what happens when you do that? The people that are using more continuously use more, and end up getting more than everyone else, and each time this recalculation is done, the people who worked within their means get less, the heavy users continue to over-use, and soon everyone has to over-use just to survive. People starve, freeze, and die.)
(This comes from your faulty analysis of the price mechanism. Price does not come only from the abundance of a material. People have to want it, and with luxury goods, some people will want it more than others. You are also making the error of saying that the value of a good comes from something inherent in the good and the labor that goes into producing that good. Goods are not worth whatever work was put into making them. Goods are only worth what someone is willing to pay. But getting back to this idea of luxury goods, what will be the basis of your credit system? What will people have to do to earn luxury goods credits? And what happens when people decide to start trading their luxury goods for food, energy and clothing? How do you adjust the credit-to-goods ratio to keep people from getting luxury goods they don't want and trading them for things they do want? Those who want more of a luxury good than they can afford will get them from people who don't want those goods but want more clothing. The market will tear apart this whole system from within as people amass clothing or food and use them to trade for other things, all outside the calculation of some database. The redistribution of materials will throw everything out of whack. You'll have to start putting bullets in people's heads, essentially. And what do you mean by "initially"? At what point will you not have any credit system?)
(So there would be a panic to buy the new goods? See, because that's not how price in terms of abundance really works. Every time someone buys an iPhone, the price of all other iPhones does not go up. This is an inherent difference in a functioning market and what you are supposing. In the market, a sale is made, and when enough sales are made the factory uses the funds to produce more, to meet demand, or less if there isn't much demand. But here you're just saying that you've produced X as much as X can be produced, so as it becomes rarer, the price must go up. But what if like...five people buy X? Doesn't that mean that all the materials used to make X have been wasted, when they could have been used to make Z instead? You again run into the problem of misusing all your resources. This is why Samsung doesn't use all the copper in the world to produce as many televisions as possible before selling them.)
(Done and done.)
DD5: cporter:You didn't address economic calculation at all. The thing you seem to be missing is valuation. cporter, Finally, someone here spelled out the major flaw in the OP - incorrect value theory!
That is the summarized whole of my first post above. :p
I tried being nice this time. It was so awfully difficult. I mean, we're talking obvious troll here. One post by an admitted Venus Project nut who claims to research things and can't even understand prices? I'm going to have to be condescending to the next three people I talk to, even if I agree with them...
My understanding of the Economic Calculation Problem is this:
1. It is Human Nature to desire infinite resources.
2. Resources are finite.
The Zeitgeist Movement's response to the Economic Calculation Problem is this:
"Human nature" does not actually exist. All human values and beliefs are programmed by culture.
If we re-educate people to understand the scientific fact that the earth is finite, their desire for resources will no longer be infinite. Economic Calculation Problem solved.
Charlie Prime:If we re-educate people to understand the scientific fact that the earth is finite, their desire for resources will no longer be infinite. Economic Calculation Problem solved.
If it were true that people did not know that resources were finite, we would have long since depleted our resources long ago. Prices would have been 0 across the board. People are very aware of the finite state of affairs, thats why they employ prices to help ration or economize on their decision making.
To claim that making people aware of the finite state of the earth, will magically place them in a state of content or nirvana, is as big of an assertion as any. What I mean is, in order for people to stop wanting to improve their condition(felt uneasyness), they must arrive at a state of complete satisfaction. Is it argued that we can simply explain people into this state of satisfaction? I surely hope the whole of their argument does not rest on that assertion alone.
"If it were true that people did not know that resources were finite, we would have long since depleted our resources long ago. Prices would have been 0 across the board."
Not entirely true. While limitations of supplies will affect the price the seller chooses, it is entirely impossible to just brush aside the concept of scarcity in terms of the obtainable rather than just the available. For instance, let's assume there are 3000 tons of X material. With the best machinery available, however, due to geographical circumstances, or other limiting factors, only twelve tons of X is obtainable. So even if there were an infinite amount of X, if only a finite number is obtainable, as is obvious to anyone the moment they undertake to obtain it, the idea of prices being zero across the board because of ignorance is fallacious. That also completely ignores the cost of labor and equipment. And the price of equipment wouldn't be zero, either, because even if people believed resources to be infinite, that doesn't change how much work has to go into building a drilling machine, and nobody is going to do that for free.
Thanks guys for all the great responses. I obviously have much to read and research now. I'll get back to you guys in a couple months ;)
@Valject I could see where my post could be construed as a trolling attempt but I'm really just looking to gather more information and feedback. I believe I was pretty up front about how much I knew and the depth of my analysis. There are some decent, scholarly folk in TVP you know. :)
Here is another resource:
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
Valject:Not entirely true. While limitations of supplies will affect the price the seller chooses, it is entirely impossible to just brush aside the concept of scarcity in terms of the obtainable rather than just the available.
What I mean is, if people truly believed that resources were unlimited, it would be reflected in their individual behavior of consumption, and that would ultimately be reflected in the pricing mechanism. The fact that we do have prices is enough of a testament that people recognize scarcity.
Valject:So even if there were an infinite amount of X, if only a finite number is obtainable, as is obvious to anyone the moment they undertake to obtain it,
If the resources are not readily accessible, they cannot then be called super-abundant, or scarce-less. based on what you said, there is still scarcity. I was describing a scenario in which people believed there was no scarcity, when in fact there was.
Spline:Thanks guys for all the great responses. I obviously have much to read and research now. I'll get back to you guys in a couple months ;)
Thanks for visiting Spline. I hope you get something useful out of all the texts people have provided! :)