There was a big discourse called the "socialist calculation debate" that basically revolved around whether a planned economy could ever "beat" a market economy. To summarize a big complicated thing in a nutshell, a market system is pretty neat because market forces are determine the price (a reflection of the value) of goods and services in an unplanned manner. It's a system that takes in information, and the various actors in the system respond accordingly. It's never 100% accurate, but given enough time and stability, it's usually pretty close.
However, a pure free-market systems is always a reaction to information, so there's a lag in whether the price accurately reflects the value of a good or service. At the worst of times, prices can suddenly skyrocket and/or plunge, and if this ripples out, this creates the familiar boom and bust cycles in capitalism.
In the socialist calculation debate, proponents of a planned economy say it should be possible to determine the accurate prices of things faster than the market can. Opponents say that the economy is simply too complicated to ever take in enough information to calculate such things.
This discourse was all occurring well before computers and the Internet were common. The most recent serious attempt at a socialist planned economy was in Chile under Allende, who saw the potential of using technology to gather and organize such information. Chile in the 70s effectively built a proto-Internet to send information from manufacturers to a centralized location, where macro-economic decisions could be made based on the information (google "Project Cybersyn"). It would have been a really interesting test of the idea, but unfortunately the United States could not allow a democratically elected socialist leader to stand, and the CIA backed a coup to overthrow Allende. The US then installed Pinochet in his a place, a brutal dictator :(
I'm of the opinion that with widespread computer and Internet adoption, such calculations are not only possible but happening all the time. However, such "planned economies" exist to serve capitalist corporations such as Wal-Mart and Amazon rather than the economy at-large. A book called "The People's Republic of Wal-Mart" is a good discussion on that topic:
https://en.wikipedia.org/wiki/The_People%27s_Republic_of_Wal...
If you calculate the true price of an item faster than the market can you would make billions of the stock market.
Some of the world's brightest minds, an entire industry has worked on the problem and can still barely beat the S&P 500. So I dont think we can or have the capability right to do such a thing.
The process involves collecting and sharing information in a cooperative (not competitive) way. In a capitalist system, one of the roles of government at best is to regulate industries to encourage competition. Under capitalism, sharing information cooperatively usually looks like collusion or corruption, so we necessarily need laws preventing that.
A planned economy just doesn't make sense at all within a capitalist system, so there probably would be no stock markets, and no one would make billions.
You need material non-public information to do that accurately. It turns out that when you do have material non public information, it's really quite easy to beat the S&P 500, but we have to put people in jail for that because it would destroy capital markets otherwise.
This assertion is based on a rational market, which it's pretty clear we don't have. I think it's possible to 'outcalculate' a rational market. I don't think it's possible to consistently predict the circus we have instead.
> To summarize a big complicated thing in a nutshell, a market system is pretty neat because market forces are determine the price (a reflection of the value) of goods and services in an unplanned manner. It's a system that takes in information, and the various actors in the system respond accordingly. It's never 100% accurate, but given enough time and stability, it's usually pretty close.
No. A massive majority of the prices of things in the US are distorted by the government or the Federal Reserve. Agriculture is propped up by the government, the prices of healthcare are distorted by capitalist interests, landlords have benefited from lax government oversight, the railway workers strike was made illegal by Biden.
The list goes on and the prices are a reflection of these distortions. To say prices reflect reality is to be delusional to the political situation.
I'm sorry that wasn't captured in my nutshell explanation. A pure, "free" market would not have any such distortions, at least in theory. A pure free market would also not have any government services, such as roads, landfills, or the military/police, so that would affect market prices. I would also argue that such a pure "free" market system would still not collect all the information needed to accurately determine the "cost" of a thing, as certain costs are often not naturally captured in the price without some kind of government intervention (for example, a factory dumping toxic waste into a river for free without any government environmental oversight to say that is not allowed).
So yeah, I don't think there's a pure free market system in the United States.
https://en.wikipedia.org/wiki/Socialist_calculation_debate
However, a pure free-market systems is always a reaction to information, so there's a lag in whether the price accurately reflects the value of a good or service. At the worst of times, prices can suddenly skyrocket and/or plunge, and if this ripples out, this creates the familiar boom and bust cycles in capitalism.
In the socialist calculation debate, proponents of a planned economy say it should be possible to determine the accurate prices of things faster than the market can. Opponents say that the economy is simply too complicated to ever take in enough information to calculate such things.
This discourse was all occurring well before computers and the Internet were common. The most recent serious attempt at a socialist planned economy was in Chile under Allende, who saw the potential of using technology to gather and organize such information. Chile in the 70s effectively built a proto-Internet to send information from manufacturers to a centralized location, where macro-economic decisions could be made based on the information (google "Project Cybersyn"). It would have been a really interesting test of the idea, but unfortunately the United States could not allow a democratically elected socialist leader to stand, and the CIA backed a coup to overthrow Allende. The US then installed Pinochet in his a place, a brutal dictator :(
https://en.wikipedia.org/wiki/Project_Cybersyn
I'm of the opinion that with widespread computer and Internet adoption, such calculations are not only possible but happening all the time. However, such "planned economies" exist to serve capitalist corporations such as Wal-Mart and Amazon rather than the economy at-large. A book called "The People's Republic of Wal-Mart" is a good discussion on that topic: https://en.wikipedia.org/wiki/The_People%27s_Republic_of_Wal...