The original blog is posted here. I suggest reading it first as I will not post it in it’s entirety.
The economic calculation problem is at the core of debate between free market advocates and socialists. And because a Resource Based Economy suggests distribution of resources to people absent a price tag we find ourselves not only being labeled socialists, but the same arguments being leveled at us that are leveled at socialists.
While it is true I think that this system is a new flavor of anarcho-syndicalist (which is ‘voluntary’ socialism) this is irrelevant. To give you an understanding of the debate at the time Mises wrote the article, there were 2 camps. The crazy Utopian Socialists (name given by Marx after he realized these guys were getting clobbered by the classical economists) and ‘Scientific Socialism’ which would be latter called Communism. The issue Mises had was not because communism and socialism was ‘evil’ and was afraid of ‘sharing.’ It was the ideas proposed by them that you also share; central planning of an economy and no money. The reason we bring this up is not because you said ‘share’ and we heard ‘SOCIALISM! PINKO COMMIES!’ No, we heard ‘managing all the worlds resources and distributing them for free,’ the very problem with communist and socialist systems.
The idea behind the price mechanism is that in in the market resources will be given a value by the market. This value would be calculated based on the cost of production which includes resources expended and labor. And then finally consumer demand. The theory is that if a producer of a given product charges too much for that item then no one will buy it. Hence forcing the producer to lower the cost. Competitive forces also play a part here as rival producers of a given product will vie for dominance in the market by offering competitive prices.
So breaking this down into an analogy:
Bob produces widgets. Bob calculates a price based on the cost of the resources that were used in making his widgets, including how much he had to pay his employees at the widget factory. He of course wants to make a profit so he charges a price that is above and beyond the costs involved in production. If he gets too greedy then people instead may buy a rival product that has a lower price.
No, that’s not it. The price system does do that, but that’s not all it does. Price also allows entrepreneurs to make decisions based on the collective subjective demands in an objective price system and the time, energy, resources, it would take to produce it. It would be impossible to know whether or not a fashioning a particular good is the best way to utilize them versus using it add or subtract features or even making something else entirely.
Bob produces widgets. Based on this system, Bob can predict that his widget would cost 100 dollars if he adds features x, y, and z. If he leaves out feature y and places a new feature he developed that’s called ‘a’ that’s more efficient than ‘y’ but it would cost 10 more dollars in production. He could use prices to forecast how much people would pay to see if producing it with a over ‘y’ is a good idea, and the market will either embrace ‘a’ and pay a higher cost, or just settle for y. This does NOT mean that if ‘a’ is better, that anyone still producing ‘y’ will become bankrupt. The market will reflect that ‘a’ is more preferable, but not everyone should get ‘a’ if ‘y’ will suffice at a lower cost. Since there is only enough resources to allow a few people to have this widget at a given time, the price system gives people the necessary information to calculate it’s utility. If you need ‘a’ because you need it for work or whatever, you will value it’s utility more than someone who just wants ‘a’ for fun when ‘y’ would suffice.
This is why scientific efficiency differs from economic efficiency. It may be scientifically efficient to make a widget with x, y, z, a, b, and g but it couldn’t tell you who will utilize it to their peak economic efficiency. Only economics will determine if people need all those features, and who should get it.
Neil, let me stop you there. With all the videos, books and articles we gave you that explains this, you go with Wikipedia? Are you trying to be dishonest or are you just that stupid to think Wikipedia is an un-biased objective source of information? Look no further than The Venus Project’s entry for reliability of Wikipedia. That whole article is ripped right off The Venus Project’s website verbatim. No criticism section, not so much of a hint that people may object to this.
But what about the inefficiencies in the price system? Just how good of a job does it actually do when it comes to efficiently distributing resources? Lets take a look.
Stop right there again, Mises never said this system can work with government owned fiat money system. He agrees with you this system does not work, and states so. Mises says that you need ‘sound money’ which is something that cannot be printed out of thin air. So you’re arguing his point home, thanks.
First of all, lets talk about advertising. Advertising has evolved over the years into what amounts to outright brainwashing. They specialize in ensuring that consumers have irrational desires for products that they do not even need. Or are even harmful to them! The work of Edward Bernays in assisting the cigarette companies in their quest to give women the irrational desire to smoke is an example I have frequently brought up on V-RADIO. Documentaries such as “Psywar” and “Consuming kids” really dig deep into the very dark reality of advertising and it’s ability to target our minds in a way that causes us to feel “needs” for objects that have no rational purpose.
Well why are people so susceptible to this but you and I are not? You said so yourself you’re desires are suppressed now that you are aware of marketing’s influence. How did you do this? You educated yourself about it. So if this parasitic consumer culture can be changed though education, then let’s look at who is currently education our kids? Seems to be that the vast majority of education in America is by government schools. Wait…. Government owns the schools, owns the money system, and allows corporations to side step rules everyone else has to follow. Hummmm… there’s a conspiracy theory to play with.
In all seriousness, however, public schools have disincentives to teach any real values. You teach them anything that gives them any kind of rational reasoning, history, science…etc. there will be an angry mob with pitchforks asking for heads to roll. If people got to keep all of the money they earned and could use the money they pay though taxes for expensive public schools, and had a wide range of education to choose from there would be intensives to offer all kinds of values. Also if people can change not to be consumer whores, why the fuck bother having an R.B.E. to begin with?
One such industry is the fashion industry. A never ending cycle of convincing people that unless they wear certain clothing, (and more specifically are willing to pay a higher price for it) they are worth less as a human being. The $3,000 hand bags mentioned in “Zeitgeist: Moving Forward” are just one of many absurd fashions that resources are devoted to. A company named Louis Vuitton will also be happy to sell you a shoulder bag for $8,000. A pair of sneakers for $1,000. Or a belt for $3,000! The price mechanism has attached to it elements of social stratification. This brings us back to the reason that Air Jordan shoes that were purchased at Foot Locker were somehow more valuable then those purchased at K-Mart. Solely because the person could afford to pay the price. It was therefore more fashionable.
I just wear skate shoes, Dickie’s work pants, and button up shirts. I have a couple suits for business, a fedora for fun, and that’s about it. Funny how both you and I can avoid this particular pitfall with our monkey brains, and no one else can. Please, Neil.
The price system is subject to corruption in other ways. Planned obsolescence and perceived obsolescence of goods is also built into this system to ensure that people are forever in stores moving inventory. Products are made to break down or to not be easily fixable intentionally for the sake of profit. The price to fix a given product is set in such a way to artificially make it more expensive to simply repair an item then it is to buy an entirely new item. The price system creates the motivation to do all of this contradictory to the ecological and environmental impact of such wanton production. Because it is a system for an economy with profit as the motivator producers of given products are encouraged to find as many ways to cut corners as much possible when it comes to ecological safety of their products. Products are made without recycling in mind because a product that is easy to take apart to be recycled is in many cases easy to repair. This would allow the consumer to simply repair their products rather then buying new ones.
Planned obsolescence was explained to you 500 times why it’s false, but you continue to repeat this line like a creationists keeps repeating the tired debunked line about evolution defying the laws of physics.
(starts at 4:07)
Again, even if this was true in the system today, it’s not possible in a system without government creating barriers to entry that would prevent another company that could make something last indefinitely.
The price system because it is based solely on the whims of consumers also permits the production of goods completely irrespective of the long term effects of using up given resources. The consumer at the counter of a store does not consider, nor are they encouraged to consider the long term implications of their purchases. What will buying all these plastic products do to the environment? What if this useless junk I am purchasing has resources in it that will be required for mankind’s survival? What impact will the fact that I purchase a new I-Pod every year have on my grand children? Or their children? None of this is taken into account in the price system.
You know what else the price system doesn’t do? Tell you how to get dressed in the morning. Yea, fuck money.
No, wait. People don’t need a price system that also includes environmental impact. People demand already to seek eco-friendly options by buying them when they come out. Entrepreneurs see this and start building more eco-friendly products for this emerging damand. We see this today, and Zeitgeisters play a role in all this new eco-friendly technology we see today by voting with their dollar. I have yet to see a Zetgiester rolling around in a Hummer. So, yea. Stupid. If someone could come up with a price system that also gave all kinds of information about how to use it and how it was made, awesome. No one is saying it does or should. That’s up to us as consumers.
Because you want to be able to offer your goods at the lowest possible prices the price system also encourages worker exploitation. Wal-Mart’s goods made in sweat shop factories can be offered at a far lower price then products produced locally. And the profit motivated price system will only serve to perpetuate this. Outsourcing to more and more desperate economies where people are willing to accept a lifestyle no better then conventional slavery.
Well if we weren’t taxed to hell, having our money inflated, and had to have 2 working people in a household just for ends meat, we could afford to pay twice as much for a hat. If you don’t want to support companies outsourcing, then don’t fucking shop at Wal-Mart! It’s not the companies that are forcing people out of work and out of business and outsourcing, it’s the consumers who demand lower prices and support their business practices by buying those goods. There are thousands of companies that successfully compete with Wal-Mart, some of whom offer those goods in sweatshop-free factories. Don’t blame Wal-Mart for fulfilling the wishes of their customers, blame the customers.
Another example of corruption of the price model is when businesses collude to sell a vital product at an ever increasing price. Take the oil industry. The oil companies formed a cartel to cooperate on what the price of gasoline should be. They agreed to compete by no more then a few cents at the pump. The benefit of this is that profits in all of the oil companies collectively went up to record heights. It was to the benefit of everyone in the cartel to see this happen. And because gasoline is not an optional commodity they were able to get away with it. It was not as if the consumers could simply choose not to drive to work.
Stefan already showed you why this is bullshit, but I will go further.
FUN FACTS ABOUT THE OIL INDUSTRY:
- The government enacts regulations that seem they are for ‘protecting’ people from bad corporate practices, but are in fact designed my big oil lobbyists to prevent new companies from entering the market place!
- Oil companies collude with government help to set oil prices though a private agency known as OPEC. OPEC sets the prices of oil arbitrarily. If one company dips below the price, they will be violating many national and international laws.
- Oil companies (and other companies) hire lobbyists to suppress competition in alternate energies by allowing for area monopolies to power companies and barring competition from the market place.
A further proof of the price mechanism’s failure is that outside of the stores that sell these products there are often homeless people lying on the street. People who could feed themselves for MONTHS if they had even a quarter of the money spent on a single item purchased at the prices above. When it comes to a system of allocating resources the billions of people starving on this planet are a testament to the absolute failure of the market system to give any option to these people. There is no mechanism in the market or the price system that will distribute resources to these people despite the fact that technologically we could provide for them.
I’m sure this is true in that failed facio-socialist paradise in Michigan, but not so much elsewhere in our failing system. Again, Detroit is hardly a free market anything.
When attacking any centrally planned system, the Austrian economists point to examples such as the various instances of mass starvation supposedly created by centrally planned economies. They point to death camps and gulags as the inevitable solutions of failed centrally planned economies.
Bullshit. We know you won’t have gulags and concentration camps, thats not what we’re saying. We’re pointing out people dying as a result of famines and miss allocation of other resources that caused people to flee the cities and build anarcho-primitivist communes. NOT BECAUSE OF BRUTAL PSYCHOTIC DICATORS!
Mises and his disciples stated that centrally planned economies fail due to the fact that the resources would be distributed according to the “whims” of bureaucrats.
So whims of scientists and their computers? Science can’t tell you who deserves cars over scooters.
Disciples? Are we really going back to this bullshit argument of yours that we are religious and dogmatically accept everything he said? Normally I would over look this, but being that you have in the past said this, I think you are using the religious definition of disciples.
Mises laid out an argument that has shown to be correct that pro-central planning people have yet to show is incorrect. By me asking for you to address this as your solution fits the requirements for failure, does not mean I fixed a portion of my closet as a shrine I religiously pray too. If you want to talk about sucking off idols’ dicks, let’s talk about how you eat up every fucking thing that comes out of Fresco’s and Merola’s pie hole and defend everything they say even if it means distorting your opposition’s position to do it. So much in fact, that you gamble your children’s lives off this thing taking off so you can milk enough donations to feed them.
I’m going stop here and I know I’m going to sound like a total Zeitard for saying this but it’s true. This is all straw mans and a false dichotomy: We advocate the current system which fails, the only choice now is R.B.E.
So the rest of this misleading article I say the following;
That’s still not addressing the argument Mises proposed, it’s a strawman. Mises never said it could work with fiat money or government intervention in the market place, you’re just affirming his thesis. Even still, this doesn’t mean your system is the only possible solution.
If you want to have a real debate with me, you now need to take my challenge and abide to a new set of rules just for you:
- You can only talk about the current system if that sector is fairly unhampered (No oil, pharmaceuticals, coal, agrocorps,…etc. If they have a powerful lobby is a good indicator you’re not dealing with anything ‘free’)
- We can’t use the words: Dogma, dogmatic, dogmatically, disciples, apostles, religious, religiously, cult, ..etc. It doesn’t matter if RBE or Free-Market Economics are dogmatic or a cult, if in their assessments are right they are right.
- “The price system has no place for people who cannot find ways to be useful to people who have more.” is the threshold of stupidity. Moronic statements like this only tell me I am wasting my time arguing with fools.