----- Original Message ---- From: John Thornton <jthorn65 at sbcglobal.net>
I'm curious how central planning can gauge demand and price. Seems to me markets do that fairly well. I'm not an economist however.
[WS:] Good question, indeed, but loaded with an assumption that "demand" is something that occurs naturally - it just happens to be "out there" and the markets serendipitously "discover it" whereas central planning cannot, because it ah, so bureaucratic.
In reality, demand is for the most part manufactured. Capitalist economies are good at meeting demand not because they harnessed the powers of the invisible hand, but because they became very good at manufacturing demand for the stuff that they are in a position to produce. In other words, they got quite good at convincing people to "need" and demand crap that the industry produces and then delivering that crap. Self-fulfilling prophecy, if you will.
But "markets" are quite bad at distributing goods that may be genuinely needed but that capitalist industry cannot produce very well, because they not very profitable. These are the so-called public goods (anything from fire protection to defence, to health, education and knowledge.) markets are very ineffcient in producing or distributing them, and that is wht they are produced and distriburted by governments. Even in Amerika.
This public goods and market failuyre stuff is really Econ 101, there is hardly any dispute regarding it. A far more delicate point is to seprate "genuine" from "manufactured" demand. However, if we make such a distinction, even if provisionally, the comparison between market and planned economies looks in a very different light.
Planned economies were rather good at meeting the "genuine" demand such as health or education. Much better than the markets. Of course, whe should not comapre planned economies to, say, western Europe or even Amerika because in western European countries (and the US) such goods are not produced by markets either. They are produced by government (or in a substantial part by government in case of the US,) just like in planned economies. We need to comapre them to countries where such goods are indeed produced by the markets i.e. on a fee-for-service basis, e.g. in sub-Saharn Africa.
Markets exceeded planning in the distribution of *manufactured* demand - such as fashion. Have you noticed that almost all the "horror stories" from Russia and EAstern Europe about pertain to the shortage of fashion goods (like fashionable clothing, gadgets, entertainment products etc?) When I was in Russia in the 1960s I saw a bewildering amount of stuff in Moscow's GUM (Centarl Department Store) - but few of them were "cool" in the sence of marketer manufactured cool that characterizes fashion products here (clothing electronic gizmos etc.)
To put things a bit further - markets are quite good at producing and distributing shit that nobody really wants or needs but is bamboozled to demand by relentless marketing. In other qords, it is quite good at polltuting the environment, both natural and social. I do not exactly call that "superiority."
Wojtek