There are dozens of reasons. Free markets have deduplication of labour, concepts like patents and IP that are inefficient are necessary, there are economic crises that wreck compound growth in the long term, there are issues of inequality, humans may be lazy and not attempt to allocate their capital in the most appropriate way (see index funds), socially useful endeavors may not be profitable, etc...
But central planning is insanely hard, so it's not easy.
That said, the USSR which literally used pen and paper for planning was the #2 economy in the world, so it clearly has some potential.
Now there can be other reasons to not want planning.
> There are dozens of reasons. Free markets have deduplication of labour, concepts like patents and IP that are inefficient are necessary, there are economic crises that wreck compound growth in the long term, there are issues of inequality, humans may be lazy and not attempt to allocate their capital in the most appropriate way (see index funds), socially useful endeavors may not be profitable, etc...
There's no reason to think that economic crises and inequality would be absent in a planned economy.
The USSR didn't have the great depression, but they did have the HoloDomor or terror famine of Ukraine between 1932 and 1933 and the wider Soviet Famine of that period.
The history of the famine later went on to inspire the book Animal Farm and were a pure artifact of the central planning economy forcing the export of the very food required to feed millions of people.
Calling the famine an issue of erroneous data does a disservice to the victims. Millions of people don't starve while having their food confiscated at gun point due to an accounting error.
It’s worth looking at primary sources for “Holodomor”, a depressing amount are from Ukrainian fascists.
The consensus among historians is that there was indeed a famine, one of the periodic environmental ones in the region. Planning was indeed slow to react to the famine and the sabotage by landlords, so food aid arrived late.
It was also the last famine in the region. The landlords that destroyed food were expropriated, land was collectivised and agriculture was industrialised. Talk to any older Ukrainians and they’ll tell you there was plenty of food throughout their lifetimes until the 90s after the USSR was defeated.
Wasn't the Great Famine in 1932 and 1933 a direct result of central (mis-)planning? PS: also I wonder if you actually experienced living in a centrally planned economy, the East German economy for instance stumbled from one crisis into the next, not as bad as the Soviet Union under Stalin obviously (as in: people didn't starve to death), but a healthy economy is pretty much the opposite of the "real socialist" economies of the Eastern Bloc.
There had been periodic environmental famines in Eastern Europe for centuries. The one in the 30s in Ukraine was exacerbated by landlords (kulaks) refusing to sell food to the state for lower prices and even destroying grain and cattle in an effort to raise prices. Incomplete information meant central planning was slow to react to both of these problems and many did starve, but of course capitalist countries also exaggerated the numbers.
My parents and extended family lived in România before 89, they describe quickly improving conditions, in some ways better than today. Guaranteed homes, education and jobs went a long way, for example.
All of the Eastern European economies also started off semi-feudal with little industry when compared to Western Europe. They were also under constant attack and blockade from the capitalist countries, that’s what the Cold War was about.
Regardless of all that, it’s a fact that the Soviet economy was unaffected by the Great Depression, which was the whole point on planned economies.
Doesn't it have more to do with the fact that they didn't even recover yet from the 1st World War? Also don't forget Holodomor. It literally happened after the Great Depression yet unlike Western Nations, 3.5 million people died from disease or starvation. Unlike in said Western countries that just had an economic collapse.
Of course there are. If you have good knowledge of the economy and of production mechanisms you can simply not do anything that could cause a crash. The issue is getting the knowledge to behind with, obviously.
Inequality is necessary to some level but empirically it's possible to make it much smaller.
Empirically the USSR had a single economic crisis without exogenous cause which was caused by incorrect accounting of agricultural production at its heart.
> If you have good knowledge of the economy and of production mechanisms you can simply not do anything that could cause a crash
But we don't have that knowledge. Economists disagree on many foundational questions. At some point, economics shades into psychology and we certainly don't have theories that predict human behavior.
I don't discount the possibility that knowledge can help economies run more smoothly but you're understating the difficulty here.
> Empirically the USSR had a single economic crisis without exogenous cause which was caused by incorrect accounting of agricultural production at its heart.
The idea that the USSR had one economic crisis is a bizarre joke. The only way you can justify this comment is to ignore all the shortages and poverty and make some tortured semantic argument about what constitutes a "crisis".
Empirically speaking, free markets trounced centrally planned economies in the 20th century. If you can't recognize that, I'm not sure why anyone would take you seriously.
I mean knowledge of the real economy. What materials there are and what is done with it. That's all you need in a planned economy to avoid crises.
I said that the USSR had one economic crisis that wasn't due to exogenous circumstances. Which is true.
I agree that free markets outperformed them. I'm saying there is clearly potential for improvement since the USSR was so dysfunctional and was planned with pen and paper.
There is no way to gain accurate, detailed knowledge of the real economy. It has always been impossible. That's one of several reasons why economic central planning is stupid.
In absolute numbers. But planning economies becomes so much more difficult at scale, though if we looked at the communist country with the highest per capita economy we would still see numbers that are middle of the pack.
The USSR never published a GDP figure. It couldn't, because GDP makes no sense without a market.
But yes, the USSR as a whole had a third of the US's average GDP. I agree, it was less than the US. The thing that is surprising is that they got there by planning an economy with pen and paper, which is insane to me.
A central planning economy requires calculating desired outputs and required inputs through multiple layers of a supply chain. The resultant outputs through each layer of the economy, exports, and imports have a direct value that was in fact measured in the soviet currency of Ruble's - these Ruble's could be exchanged for dollars and provide a useful GDP figure in any desired currency. The basket of goods a given amount of these Ruble's could buy internally vs. their dollar equivalent elsewhere also provides a reasonable measure of Purchasing Power Parity.
One can also bypass the production component and measure GDP in terms of the incomes in Ruble's paid to Soviet workers in combination with the export/import figures to arrive at a reasonable estimate.
There are potentially plausible reasons such as that a free economy system could take longer to achieve an efficient market equilibrium compared to a centrally planned system.
So long as a monopolistic centrally planned company acts on a free market do you consider your point unchallenged, or does the fact that the free markets tend to become dominated by large centrally planned corporations cause some tension?
There's no reason to think a free market economy is the single best solution we could ever hope to stumble upon. We keep evolving, we will evolve out of the "free" market economy as well.
The central planning will always produce better results, but only if you know the optimal strategy. Since it's impossible to know the optimal strategy a free market is a better solution in practice. Until a sufficiently strong AI arrives.
But central planning is insanely hard, so it's not easy.
That said, the USSR which literally used pen and paper for planning was the #2 economy in the world, so it clearly has some potential.
Now there can be other reasons to not want planning.