[sudosysgen]

Central planning is 100% an engineering problem. Mises didn't call it the "Calculation Problem" for nothing. As long as economic complexity grows slower than processing power, there will be a point where central planning will be doable.

Of course, there is also the problem of incentives, but in the Soviet Union the problem of incentives was really only relevant as far as higher-ups reporting data, Soviet workers worked as hard and as well as any.

That is not to say that central planning directed by a centralized Leninist state is something that I think is desirable (or even something that would be theoretically desirable), but massive computing power is a quantum shift in the possibility of centralized and decentralized planning. The fact that it worked as well as it did in the USSR through pencil and paper is stunning.

[valuearb]

Computers can’t determine economic priorities. In a free market demand does. In a planned economy politics does.

Computers are essentially useless for a planned economy. All they can do is provide quicker orders for factories to produce the wrong things in the wrong quantities.

[sudosysgen]

The free market does not determine economic priorities. People, making choices with limited resources and having to priorities, determine economic priorities. The free market is then able to compute, using billions of people making operation to optimize in exchange for profit, what is the most optimal way of organizing production, which actualizes prices, which allows consumers to actualize demand. This process is prone to massive inefficiencies such as the business cycle, and has a cost to the consumer which is profit. If one was able to reproduce it without recessions and depressions, and with a rate of profit of zero, the economy would have much higher efficiency and growth.

In a planned economy, consumers, be it governmental consumers or average workers, make choices with limited monetary resources about what should be purchased. If there is too much demand, then you end up with a shortage, until the next 5 year plan in which the central planners of the politburo look over the shortage and surplus, do some predictions, and re-allocate supply as well as actualize prices. This is an issue, because there is a 5 year updating period, and planners are prone to error as well as erroneous information.

If your planners had accurate real-time information, and were able to re-calculate the economy every day or so, then the issues of over-supply or under-supply, "orders for factories to produce the wrong things in the wrong quantities" would be fixed.

Maybe this stems from a misconception according to which, in a planned economy, there is no money or no consumer, no buyers and sellers. It is not so. Planned economies have money, they have sellers and buyers, and so on. What is being replaced is the role of the investor and capitalist, which decides where to allocate resources. Therefore, the issue is not in calculation of end-consumer demand, that is the same as in capitalism, the issue is in organization of production. A Marxist would formulate it by saying that the Soviet economy has not abolished the commodity form.

If the Soviets were able to make a 5-year plan every day, and had instant and perfectly accurate supply information, the vast majority of economic inefficiencies would have disappeared. Or, in other words, the factories would have quickly updated orders to produce the things the people want in exactly the quantity they want it.

[archibaldJ]

Very intriguing! Thanks for putting these ideas in such neat words. I somehow felt enlightened reading them. It is as if what you are describing is not just economy but the whole notion of "cost structure" in the philosophical sense and how the universe and all living things come to be. Wow.