The Early Days of a Better Nation

Saturday, June 16, 2012

Red Plenty debated

A lively discussion of Francis Spufford's novel Red Plenty (about which I've enthused before) on the academic blog Crooked Timber has just about wrapped. Participants have looked at the book from many angles. One of the most intriguing contributions was by Cosma Shalizi, on the mathematical feasibility of the linear programming advocated by the book's central character as a solution to the problem of central planning. (Shalizi responds to responses here.)

My take, amended from one of my own comments:

In the 1970s I thought that central planning combined with democratic control along the lines argued for by (e.g.) Ernest Mandel was possible and desirable. Towards the end of the decade I stumbled upon the economic calculation argument, as briefly stated by David Ramsay Steele in a readable pamphlet. I didn’t understand it fully but I kept worrying at the problem it posed. In the 1980s I read Geoffrey Hodgson’s The Democratic Economy, and Alec Nove’s The Economics of Feasible Socialism, which made some socialist sense of the same argument.

Recently I’ve been interested in the more radical market socialism proposed by David Schweickart. The only serious socialist arguments against market socialism are those of Paul Cockshott et al for a democratic, cybernetically planned economy – which I don’t have the mathematics to follow in detail, but which I keep dragging to the attention of anyone who does.

Meanwhile, in my own neck of the woods, the Scottish Socialist Party offers a 12-point plan for a ‘Scottish socialist republic’, one of whose 12 points is:

‘Supermarket prices will be frozen.’

Sometimes I wonder why I bother.

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I red RED PLENTY while following the Crooked Timber seminar. It may be one of the most interesting books I have ever read in my life.

Enjoyed your comments, Ken. Just pointing out, it should be "Shalizi".

Thanks (to you and to Henry Farrell in email) - corrected.

Patrick - same here.

If, by any chance, you haven't read Francis's The Child that Books Built and Backroom Boys ... well, they could have been written for you.

I worked on ERP (Enterprise Resource Planning) software for many years. These systems are central planning for corporations.

Corporate practice evolved from what we called "push systems" (plan the work, work the plan) to "pull systems" with feedback loops based on demand.

The ultimate pull system would be when a consumer took a product home, a pull signal would be generated all the way through the supply chain (a form of socialized labor) to the sources of raw materials calling for another of the same to be produced.

Uses a market (in the sense of someplace that consumers can take stuff home and trigger pull signals), put doesn't really require prices.

See, Ken,
This is why you should write further about the "GBR" from "Sidewinders;" look at all the material you have to draw from. Also, the protagonist of "Sidewinders" tell his adversary that the GBR makes planning work.

Don't have time to say all I want on this - but

Cockshot and Cottrell have impeccable math. However they also have a premise - that labor time, properly measured, including some very simple classification according to quality, can translate at least approximately into use value. To the extent this is true their plan it feasible. To the extent that this is false, it is not. I think that if you write you them you will their agreement that this is a fair statement of their theory.

Also Lange & Taylor offered part of the solution to feasible non-market socialism - a trial and error process where shadow price optimize a plan. Of course that does not solve the problem of how to set the plan in the first place. But this can be tackled through a similar iterative process, either involving everyone in society participating in the planning, or in what amounts to market research that is sampling and projection that is adjusted in the same iterative process as price setting. Such shadow prices can even be used to set the price of capital. Price and production would be adjusted up and down as actual demand varies from projected, and as supplies of natural resources vary from projected.

This is similar to what happens in actual markets. Firms from mining firms and factories to retailers start with initial purchases, supplies and prices based on projected demand interacting with one another and then adjust all these in the same iterative process

This is absurdly concise for what I am saying. An example that has been worked out is Parecon. . You will probably hate the idea of balanced job complexes, but for purposes of this discussion you can ignore them and look at the planning methods. Also they insist on every consumer participating in planning, but you can imagine substituting a small sample combined with consumer surveys interacting with producers.

‘Supermarket prices will be frozen.’

Sometimes I wonder why I bother.

Would you care to enlarge upon this evident exasperation Ken?

Anon - I've worked on (or on the margin of) that kind of software too - MRP II I think, at what was then Ferranti. So the mainly military avionics company I worked for was developing central planning, at more or less the same time as the NHS (where my wife works) was being re-organised as a pseudo-market.

John - If supermarket prices were frozen, very soon some goods would be over-supplied and others would be under-supplied or unobtainable, at least in the supermarkets.

In the UK in the 1970s there actually were price controls on a lot of everyday consumer goods, and suddenly there were shortages all over the place.

If the SSP doesn't understand this much of elementary economics (or does, but prefers to make demagogic promises) why should anyone take anything they say seriously?

‘Supermarket prices will be frozen.’

They should've gone with ‘Supermarket prices will be available in microwavable pouches.’ But I suppose it's better than ‘Supermarket prices will be tinned.’

The CT Red Plenty discussion was pretty special, wasn't it? & thanks for the link to David Schweickart, who I hadn't heard of previously. I'll certainly be digging out more of his stuff to think a bit more about all this – do you know if have any UK affiliates ?( I couldn’t find any links on the site). I’ve ever blown the dust off of my 30 yr old copy of the Nove book: there it sits next to my bed, glowering threateningly at me, demanding I re-read it.
Any old leftist must surely take heart at this minor flurry of interest in what Sellar and Yeatman might have called 'The Socialist Calculation Debate & All That'*. It may be happening in obscure corners, but it feels as though they are a different and slightly larger set of obscure corners than before the Crash of 2008. It’s a shame, however, that there is, as yet anyway, only a relatively minor intersection between these obscure corners and the directly politically active left, as you acidly point out re the SSP’s prices policy.

(* This idea for a comic book collaboration with your cartoonist bro’ is freely contributed….)

P.S. Geoff Hodgson is still around, although he now describes his political position thus:
"I favour a mixed economy with state intervention, including fiscal redistributory measures and a strong welfare state. In such a system, markets and other commodity exchanges exist alongside elements of organisation and planning. Within appropriate limits, I also favour a feasible extension of democratic participation and popular involvement in decision making."

He has published critiques of both the Cockshott and Cottrell line, and the (parecon tinged) proposals of Pat Devine. You can find the links to these critiques on the 'Debates' page of Hodgson's website under the socialism section.

One difference with the Parecon proposal is that it pays careful attention to incentive compatability, meaning there is the same incentive to tap "tacit" knowledge as there is in markets. It addresses both the Von Mises and the Hayekian critiques.

Again, I think the Cockshott and Cottrell plan requires not only belief in the labor theory of value, but belief that *at the micro level* measure the direct and labor and natural resource inputs into a good or service measures use vaule. There are all sorts of reasons that it seems at least the latter can't be true. The labor theory of value if true at all must be true at the Macro level.

BTW, I don't know why blogger insists on putting an old joke alias I once used "Typo Boy" which I have not use in years rather than my name Gar Lipow

I ordered Red Plenty last week, when I noticed the CT posts. I first read about it on this blog, and was waiting for the paperback edition. I have Schweickart's book but have only read the first half. It is clear and instructive. I hope to finish it soon.

So how do we convince the Left that markets are too useful to be left to the Capitalists? That the end game of revolution is not the abolition of the market? That you can be as "bolshie" as they come -- and yet be market friendly?

After reading 'Red Plenty' I want to see a contra-factual history that has Bukharin prevailing and the NEP rolling along.

Wonder idea...

In your
sunshine I
can see an
intention full
of happiness
and there, in
the light of
this candle,
a delicate
thought calling
the future.

Francesco Sinibaldi

Yup, "...prices would be frozen" leaves me stricken. Mind you, "Profits would be frozen/limited" seems perfectly reasonable.

NEP would have continued if it hadn't led to the "scissors crisis." Wanting Bukharin et al. to "win" means wanting Russian dependence upon foreign capital to compensate for the consequent extremely low economic development.

Reintegration into world economy would massively increase social inequality, which in the context of the decline of soviet institutions would have produced an extremely rigid government. The government, like the Chinese government of today, would have harshly repressed industrial workers in particular, slowly revised itself into congeries of corruption and increasingly lost all ability to fight the ever increasing inequality, having thrown away its major powers, and consigned others into semiprivate hands.

The end result would have been a politically weak government, with a large mass of politically and economically oppressed, a variable sized "middle class" of economically liberated but politically repressed" and hostile cliques at the top, clueless about meaningful policy, increasingly paralyzed by their market worship.

Then there'd be Hitler.

I suppose how attractive this is depends very much on what kinds of illusions you have about the People's Republic of China. My guess is that you want a "democratic revolution" in China. To be consistent you should think there should have been one in early USSR, or even that the Bolshevik Revolution was an historic crime.

#20 But that's a bit 'just so' don't you think? If Soviet History hadn't been as it actually turned out - if,say, Bukharin, not Stalin, had won the inner party battles of the 1920s - then it would be China instead. Well, perhaps. Or perhaps something infinitely more different from our actual history might have occurred. (I'm not saying 'better' necessarily, just different).

But it seems no one speculates on this very much. I've just spent sometime poking around the vast 'alternative history' list at Uchronia. It's very, very striking quite how many visions of alternative history deal with military alternatives - classically, of course, the yawn inspiring* 'What if the Nazis Had Won? question - but how very, very few deal with the USSR in any way except as the potential military victor in a Hot ending to the Cold War. No one seems to cover the idea of any kind of emergence of a non military Soviet victory; a perestroika and glasnost that worked, let alone any kind of market socialism or some cyber driven non market version.

I'd be curious to know what Ken - or any other passing sci-fi buff - made of a alternative that is so unimaginable that even the sci-fi/alternative history writers don't cover it.

*Yawn inspiring after you've read Man in the High Castle of course. It's been done.

There's always John Ross ... He's a sort-of Trotskyist who agrees with Deng Xiaoping's economic policies, and argues that the Right and Left Opposition converged on a similar policy for Russia in the 30s.

You can find the links at Socialist Action (UK) on my sidebar.

No no no, we do not identify labour value with use value, where on earth did you get that idea.

Paul Cockshott

Your iterative process measures labor value. That is what you use to set prices for consumers and business inputs alike. Are those prices not in fact representing use value? Are those prices not determined by labor value?

Let's look at what you do. You start by looking at direct labor across the economy. Then you use those direct labor values to measure first degree of indirect labor. And so on until you have captured full labor value. You allow for classes of labor - not a lot , but some hours of labor are worth more than others. So is this number not labor value?

Is this not the same number you use as prices and thus for exchange value? If labor value and exchange value are identical, does that not mean use value is too?

I probably got it wrong. After all it is your system. But hopefully the above will show you exactly what my misunderstanding is and enable you to correct it.

Had some correspondence with Paul. OK though his system starts by pricing goods at labor value, it ends up adjusting according to supply and demand if shortages or surpluses begin to develop.

There are other points, but not worth pursuing in a comments section. But the system is NOT simply pricing things at labor value, thought that is the starting point.

I thought that was the solution, but I'm glad you've got it sorted out so authoritatively!

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