dchernik:Suppose we have a complex socialist society which is in the state of an evenly rotating economy or equilibrium.
Mises (among others) routinely refers to the notion of an evenly rotating economy as a hypothetical or imaginary construction.
dchernik:There are numerous production processes operating. The planner, Smith, has before him equations like these: C1 = P1 + 2P2 + 3P3... C2 = 4P4 + 5P5 ... P1 = 6P1_1 + 7P1_2 + ... where C stands for consumer good, and P for producer good. These are methods of production. On the left side of each equation, C1, P1, etc. are the revenues yielded by the sale of each good. On the right side are the costs of production. It seems these costs can be discerned if we solve the equations.
C1 = P1 + 2P2 + 3P3... C2 = 4P4 + 5P5 ... P1 = 6P1_1 + 7P1_2 + ... where C stands for consumer good, and P for producer good. These are methods of production. On the left side of each equation, C1, P1, etc. are the revenues yielded by the sale of each good. On the right side are the costs of production. It seems these costs can be discerned if we solve the equations.
There are often, if not typically, multiple ways to produce something. Which way is most economically efficient? Furthermore, there's also the time factor of production to take into account - which doesn't seem to be indicated by the above equations.
dchernik:Suppose Smith knows the state of consumer demand.
How does he know this? How can he know it?
dchernik:It seems that we have a instant motion from one inferior ERE to another superior one without any need for entrepreneurial competition or market for capital goods. There is neither disequilibration and profits nor imitation and disappearance of profits but what seems like a perfectly efficient smooth move from one ERE to another. There are neither monopoly prices nor entrepreneural losses. Please advise.
Please advise.
A final note: one could say that the market is a giant, real-time, massively parallel, and (most importantly) self-modifying linear programming system that is constantly in the process of solving itself.
The keyboard is mightier than the gun.
Non parit potestas ipsius auctoritatem.
Voluntaryism Forum
So, if "local, delayed, sequential, inflexible, and disinterested" sounds like a description of a capitalist business firm, then we have something here. V.I. Lenin who, when asked about the economics of socialism, answered that it would be organized on the lines of the postal service, was hopelessly confused.
The commies confused the global world market with their local oil change place.
dchernik: Then Smith will be able to make his improvements.
Then Smith will be able to make his improvements.
What (measure) is he "improving"?
Why'd you want to take a single sentence out of context, without reference to the flow of discussion, and ask a silly question like that?
Of course, Smith is improving consumer welfare or trying to.
dchernik: Of course, Smith is improving consumer welfare or trying to.
How does Smith measure (pre & post production) consumer welfare in order to (objectively?) establish an "improvement"?