I also find it difficult to believe that there is no incentive to lie in a capitalist enterprises. What does a scandal like S & L scandal show, if not consistent lying about that segment of US business.
Ulhas
----- Original Message ----- From: <JKSCHW at aol.com> To: <lbo-talk at lists.panix.com> Sent: Friday, April 14, 2000 6:35 PM Subject: Re: A not Unminor problem for the Left
> You miss my point, and also Hayek's. My point was that Hayek calls out
> attention, emphatically, to reasons to care about costs and waste in realw
> orld term, wothout the unrealistic assumptions of Walrasian economics
about
> perfect information and cotsless transactions. You can accept that even if
> you think that compters make planning possible. It is a point Marx missed
> with his idea that economic relations under communism would be transparent
> and his idea taht the unleasing of the forces of production would overcome
> scarcity under communism.
>
> You also miss Heyek's point about planning, which, as you say, is
pragmatic
> and not logical. Hayek was aware of linear programming and he didn't die
so
> long ago. But he would say (did say) this: no matter how powerful your
> computers are, even if they can do the whole input/output matrix for an
> economy in a microsecond, the output is only as good as the input, and
there
> is no way to get the input accurate in the matrix in a purely planned
system.
>
> That is in part because each unit in the planning system has an incentive
to
> lie, to say that it has less resources and capability than it does,a nd
that
> it needs more resources and capability than it does. This is in part
because
> the planning system rewards unbits for meeting targets, and the best way
to
> make sure you meet your target is to say you need more than you in fact do
to
> meet a target you say is lower than the one you can in fact meet. So the
> whole system encourges inaccurate information, promoting shortages and
> bottlenecks, which in turn amplies the effect just described. As the
> programmer's say, garbage in, garbage out.
>
> Hayek calls attention to incentives to gather accurate information. It is
not
> raw compuing power that concerns hiim. It is incentives to get the costs
> right. Market systems create those incentives because individuals profit
by
> accurate information about particular things. Planning systems do
> not--everyone is better off if the information is accurate, but since each
> individual bebefits if it si not, we have a classical n-pesron prisoner's
> dilemma or collective goods problem.
>
> This should be obvious. but it doesn't seem to be, at least it isn't
> understood on the left. I have been waiting for 20 years for someone to
face
> thsi directly and I am still waiting. Maybe you, DD?
>
> --jks
>