Both agreement and disagreement here. Need to separate: a) critiques of central planning per se
from b) critiques of Stalin's version of it. The Soviet Union for most of its life worked on the basis of Stalin's version of a command economy, whereby, as Carrol puts it, production decisions were made politically. So the critique of planning based on incentives is orthogonal to the case of the Soviet Union, as it only tells us about a certain class of problem one would have in trying to optimise production in a command economy. Since Stalinist Russia didn't care about optimising its output (Stalin was extremely suspicious of people who tried to optimise production, referring to them as "cyberneticians"), this critique isn't really all that relevant. After all, you can't get lost if you're not going anywhere. On the other hand, Kantorovich and Novozhilov, the two greatest members of the cybernetician school of Soviet economics, did tend toward the opinion that market signals were needed in order to formulate an optimal plan (note that we're referring to *goods* markets here, not capital markets). I don't think it's really necessary to take the incentives critique too seriously; after all, if it were true, we would expect organisations like BP and the US Army to be significantly less efficient than they in fact are. The problem with the Soviet Union was that it specifically, intentionally and for political reasons, decided that it was ideologically unsound to make plans for the world as it was rather than the world as Stalin wanted it to be. dd >Any social formation faces the need to allocate resources (including >labour) here rather than there. We've tried command economies and found >that, sans market signals, it couldn't be done where and when it was >tried - or at least, that it was so wasteful and inequitable that it >couldn't survive as a system in the world of the time. If we take away >the hostile external environment, WW2 (which wiped out a generation in >the SU), and poor calculation technology (computing power exists today >that did not exist then), we're still left with one of the central >planks of economic science: the balance of incentives. As I see it, the >misprojections, untrue inventory reports, uncoordinated transport >systems, ridiculous quotas etc were a function of poorly coordinated >incentive systems (there was fear, currying of favour and such). ___________________________________________________ Email Disclaimer This communication is for the attention of the named recipient only and should not be passed on to any other person. Information relating to any company or security, is for information purposes only and should not be interpreted as a solicitation or offer to buy or sell any security. The information on which this communication is based has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy or completeness. All expressions of opinion are subject to change without notice. All e-mail messages, and associated attachments, are subject to interception and monitoring for lawful business purposes. ___________________________________________________
