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A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, participatory or Soviet-type forms of economic planning. The level of centralization or decentralization in decision-making and participation depends on the specific type of planning mechanism employed.
The economic calculation problem (ECP) is a criticism of using central economic planning as a substitute for market-based allocation of the factors of production. It was first proposed by Ludwig von Mises in his 1920 article "Economic Calculation in the Socialist Commonwealth" and later expanded upon by Friedrich Hayek.
Friedrich August von Hayek, often referred to by his initials F. A. Hayek, was an Austrian-born British academic who contributed to political economy, political philosophy and intellectual history. Hayek shared the 1974 Nobel Memorial Prize in Economic Sciences with Gunnar Myrdal for work on money and economic fluctuations, and the interdependence of economic, social and institutional phenomena. His account of how prices communicate information is widely regarded as an important contribution to economics that led to him receiving the prize. He was a major contributor to the Austrian school of economics.
Dispersed knowledge in economics is the notion that no single agent has information as to all of the factors which influence prices and production throughout the system. The term has been both expanded upon and popularized by American economist Thomas Sowell.
Oskar Ryszard Lange was a Polish economist and diplomat. He is best known for advocating the use of market pricing tools in socialist systems and providing a model of market socialism. He responded to the economic calculation problem proposed by Ludwig von Mises and Friedrich Hayek by claiming that managers in a centrally-planned economy would be able to monitor supply and demand through increases and declines in inventories of goods, and advocated the nationalization of major industries. During his stay in the United States, Lange was an academic teacher and researcher in mathematical economics. Later in socialist Poland, he was a member of the Central Committee of the Polish United Workers' Party.
The Road to Serfdom is a book by the Austrian-British economist and philosopher Friedrich Hayek. In the book, Hayek "[warns] of the danger of tyranny that inevitably results from government control of economic decision-making through central planning." He further argues that the abandonment of individualism and classical liberalism inevitably leads to a loss of freedom, the creation of an oppressive society, the tyranny of a dictator, and the serfdom of the individual. Hayek challenged the view, popular among British Marxists, that fascism was a capitalist reaction against socialism. He argued that fascism, Nazism, and state-socialism had common roots in central economic planning and empowering the state over the individual.
Spontaneous order, also named self-organization in the hard sciences, is the spontaneous emergence of order out of seeming chaos. The term "self-organization" is more often used for physical changes and biological processes, while "spontaneous order" is typically used to describe the emergence of various kinds of social orders in human social networks from the behavior of a combination of self-interested individuals who are not intentionally trying to create order through planning. Proposed examples of systems which evolved through spontaneous order or self-organization include the evolution of life on Earth, language, crystal structure, the Internet, Wikipedia, and free market economy.
In economics, a price system is a system through which the valuations of any forms of property are determined. All societies use price systems in the allocation and exchange of resources as a consequence of scarcity. Even in a barter system with no money, price systems are still utilized in the determination of exchange ratios between the properties being exchanged.
Criticism of socialism is any critique of socialist economics and socialist models of organization and their feasibility, as well as the political and social implications of adopting such a system. Some critiques are not necessarily directed toward socialism as a system but rather toward the socialist movement, parties, or existing states. Some critics consider socialism to be a purely theoretical concept that should be criticized on theoretical grounds, such as in the economic calculation problem and the socialist calculation debate, while others hold that certain historical examples exist and that they can be criticized on practical grounds. Because there are many types of socialism, most critiques are focused on a specific type of socialism, that of the command economy and the experience of Soviet-type economies that may not apply to all forms of socialism as different models of socialism conflict with each other over questions of property ownership, economic coordination and how socialism is to be achieved. Critics of specific models of socialism might be advocates of a different type of socialism.
Peter Joseph Boettke is an American economist of the Austrian school. He is currently a professor of economics and philosophy at George Mason University; the BB&T Professor for the Study of Capitalism, vice president for research, and director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University.
Economic planning is a resource allocation mechanism based on a computational procedure for solving a constrained maximization problem with an iterative process for obtaining its solution. Planning is a mechanism for the allocation of resources between and within organizations contrasted with the market mechanism. As an allocation mechanism for socialism, economic planning replaces factor markets with a procedure for direct allocations of resources within an interconnected group of socially owned organizations which together comprise the productive apparatus of the economy.
Ludwig Heinrich Edler von Mises was an Austrian-American economist, logician, sociologist and philosopher of economics of the Austrian school. Mises wrote and lectured extensively on the societal contributions of classical liberalism and the power of consumers. He is best known for his work in praxeology, particularly for studies comparing communism and capitalism, as well as for being a defender of classical liberalism in the face of rising illiberalism and authoritarianism throughout much of Europe during the 20th century.
This is the chronological list of books by the Austrian school economist and philosopher Friedrich Hayek. The dates in brackets are the original year of publication of the book.
Cybernetics is the transdisciplinary study of circular causal processes such as feedback and recursion, where the effects of a system's actions return as inputs to that system, influencing subsequent action. It is concerned with general principles that are relevant across multiple contexts, including in ecological, technological, economic, biological, cognitive and social systems and also in practical activities such as designing, learning, and managing. Cybernetics' transdisciplinary character has meant that it intersects with a number of other fields, leading to it having both wide influence and diverse interpretations.
Economic Calculation in the Socialist Commonwealth is an article by Austrian School economist Ludwig von Mises. Its critique against economic calculation in a centrally planned economy triggered the decades-long economic calculation debate.
William Paul Cockshott is a Scottish academic in the fields of computer science and Marxist economics. He is a Reader at the University of Glasgow. Since 1993 he has authored multiple works in the tradition of scientific socialism, most notably Towards a New Socialism and How the World Works.
Project Cybersyn was a Chilean project from 1971 to 1973 during the presidency of Salvador Allende aimed at constructing a distributed decision support system to aid in the management of the national economy. The project consisted of 4 modules: an economic simulator, custom software to check factory performance, an operations room, and a national network of telex machines that were linked to one mainframe computer.
The socialist calculation debate, sometimes known as the economic calculation debate, was a discourse on the subject of how a socialist economy would perform economic calculation given the absence of the law of value, money, financial prices for capital goods and private ownership of the means of production. More specifically, the debate was centered on the application of economic planning for the allocation of the means of production as a substitute for capital markets and whether or not such an arrangement would be superior to capitalism in terms of efficiency and productivity.
Towards a New Socialism is a 1993 non-fiction book written by Scottish computer scientist Paul Cockshott, co-authored by Scottish economics professor Allin F. Cottrell. The book outlines in detail a proposal for a complex planned socialist economy, taking inspiration from cybernetics, the works of Karl Marx, and British operations research scientist Stafford Beer's 1973 model of a distributed decision support system dubbed Project Cybersyn. Aspects of a socialist society such as direct democracy, foreign trade and property relations are also explored. The book is, in the authors' words, "our attempt to answer the idea that socialism is dead and buried after the demise of the Soviet Union."
References
- ↑ "Economic Cybernetics". TheFreeDictionary.com. The Great Soviet Encyclopedia. Retrieved 29 December 2020.
- ↑ Maonescu, Manea (1 January 2001). "Basic problems of economic cybernetics". Kybernetes. 30 (9/10): 1080–1086. doi:10.1108/EUM0000000006546. ISSN 0368-492X . Retrieved 29 December 2020.
- ↑ Feinstein, C.H. (September 1969). Socialism, Capitalism and Economic Growth: Essays Presented to Maurice Dobb . Cambridge University Press. p. 175. ISBN 978-0521049870.
At some future date it may appear as a joke of history that socialist countries learned at long last to overcome their prejudices and to dismantle clumsy planning mechanisms in favour of more effective market elements just at a time when the rise of computers and of cybernetics laid the foundation for greater opportunities in comprehensive planning.
- ↑ Hayek, Friedrich (1998). Law, Legislation and Liberty: Volume 1: Rules and Order. London: Routledge. p. 37.
- ↑ Hayek, Friedrich (1967). Studies in Philosophy, Politics and Economics. London: Routledge. p. 26.
- ↑ Hayek, Friedrich (Fall 2002). "Competition as a discovery procedure". The Quarterly Journal of Austrian Economics. 5: 12.
- 1 2 Hayek, Friedrich (1990). New studies in philosophy, politics, economics and the history of ideas. London: Routledge. p. 34.
- 1 2 Hayek, Friedrich (1998). Law, Legislation and Liberty: Volume 3: Political Order of a Free People. London: Routledge. p. 158.
- ↑ Allin Cottrell & W.Paul Cockshott, Towards a new socialism (Nottingham, England: Spokesman, 1993). Retrieved: 17 March 2012.
