Can a worker owned and managed economy work?

[SpuriusMaximus]

But here's an even scarier thought: the free market is one big genetic optimization algorithm.

People look at what works (be it products, organization schemes, wages, etc) and try to do what works. Obviously. Nobody goes into business to LOSE money. They try to do what looks profitable, and that has a lot to do with learning from the mistakes and successes of others before them. But they end up with their own ideas and flaws in copying that, so they make dozens of slight variations of what worked before. Some will work better. Most will work worse. The worse variations die out, the better ones thrive.

Then the next wave of entrepreneurs try to copy THOSE, and make their variations of THOSE. Again, the better ones win, the worse ones are discarded.

Repeat.

That's a genetic optimization algorithm without computers.

But the thing is, we're getting VERY good at doing genetic algorithms WITH computers. In fact, computers can do them many orders of magnitude faster. And often better than just calculating an optimal result.

It's not even a new thing. You may have heard of the first computers and Konrad Zuse. Well, that's what his computer was doing. Optimizing airplane wings by trying out minute variations.

Now look at what a big problem of the USSR was, and predicted by the west from the start: calculating prices. The west argued that you can't just guess without a free market how many kopeiks to pay for a bundle of pelts. Lenin argued that you can just calculate it or copy the prices from the west. He was awfully wrong. When dealing with thousands of products and hundreds of millions of people on two continents, no, you couldn't really calculate it.

The best the eastern block could do was essentially fix some arbitrary prices, rather than calculate the right ones. And fixing prices never works.

But throw in a super-computer and enough data, plus the ability to react and adjust its model when things don't sell as planned, and you could probably hit a better target than the free market ever could. We're getting there.

Not saying it's a good thing, nor that it's an optimistic thought, but we're getting there one way or another. At some point, that's what will happen no matter if it's owned privately or by a central planning committee. People will eventually figure out that they can just run a better market simulation, rather than guess and react, when it comes to planning production and prices.

 

[caveman1917]

Hmm, if you want to suggest that morality does not exist at all, then it makes sense to be annoyed when someone makes any comment whatsoever regarding morality.

What I mean by braindead moralizing is that your "analysis" has no intellectual substance.

Marx taught that the bourgeoisie are morally corrupt, but the working class is morally noble, so all we need is a violent revolution to take power from the bourgeoisie.

He did no such thing. He wasn't braindead, after all.

 

[caveman1917]

But throw in a super-computer and enough data, plus the ability to react and adjust its model when things don't sell as planned, and you could probably hit a better target than the free market ever could. We're getting there.

A modern day smartphone would do to calculate prices for the Soviet economy in real time.

Not saying it's a good thing, nor that it's an optimistic thought, but we're getting there one way or another. At some point, that's what will happen no matter if it's owned privately or by a central planning committee. People will eventually figure out that they can just run a better market simulation, rather than guess and react, when it comes to planning production and prices.

Why on Earth would you want to run a market simulation? The point about socialism is to optimize the economy so as to efficiently fulfill needs, not to efficiently pander to monied interests as a "free market" does.

 

[SpuriusMaximus]

It's still the same genetic algorithm and on the same space, you know?

 

[caveman1917]

It's still the same genetic algorithm and on the same space, you know?

With a significantly different objective function. For example, under socialism, a homeless person without money would be considered to have needs for shelter and food, whereas under a free market a homeless person with no money is considered not to have any needs.

The similarity is superficial, based on the use of the same word (need) which means completely different things under socialism or a free market. Under socialism needs are intrinsic to people (more aligned with how we'd normally understand the word "need") such as everyone needing food and shelter, whereas under a free market if you have no money then you have no needs. It's why you see people going homeless or even starve in free market economies, having no money they have no needs and hence don't appear on the receiving end of a free market distribution of food and shelter. Whereas in a socialist economy you don't see this (there was no homelessness in the USSR) because a person is still considered to need shelter even if they don't have money.

 

[SpuriusMaximus]

I will grant that the objective function can be different. But that's nothing new for optimization algorithms, and makes no real difference for a genetic algorithm anyway.

So basically you are, of course, right. It just makes no difference for what I was saying.

 

[JJM 777]

> ... just run a better market simulation, rather than guess and react, when it comes to planning production and prices.

Why on Earth would you want to run a market simulation? The point about socialism is to optimize the economy so as to efficiently fulfill needs, not to efficiently pander to monied interests as a "free market" does.

Market simulation, with prices (or other measuring units for materials, energy and working time "cost") helps to calculate the total sum of what is possible to produce. Divide that with the population, you get the average possible production per person. Then people can stop daydreaming about a standard of living which is not achievable, and we can plan what is possible to do. Then we can do it.

Even if you focus on people's "needs", it is possible that you cannot meet them. You need to calculate the materials, energy and working time. Unless you really want to believe in laissez-faire production: factories will produce _something_, and somehow without a careful plan the electricity in circulation will suffice, and the raw materials will suffice, and the working time of labour force will suffice.

 

[caveman1917]

I will grant that the objective function can be different. But that's nothing new for optimization algorithms, and makes no real difference for a genetic algorithm anyway.

So basically you are, of course, right. It just makes no difference for what I was saying.

But at some level you can view almost all human activity (not just economical) as a genetic algorithm for some objective function. Whereas a genetic algorithm is a really good general coarse parameter optimization method, I don't think it's very useful as a framework of understanding for the economy at large. For one, being parameter optimization, a genetic algorithm still requires a model (with some free parameters) to work with.

 

[caveman1917]

Market simulation, with prices (or other measuring units for materials, energy and working time "cost") helps to calculate the total sum of what is possible to produce. Divide that with the population, you get the average possible production per person. Then people can stop daydreaming about a standard of living which is not achievable, and we can plan what is possible to do. Then we can do it.

Even if you focus on people's "needs", it is possible that you cannot meet them. You need to calculate the materials, energy and working time. Unless you really want to believe in laissez-faire production: factories will produce _something_, and somehow without a careful plan the electricity in circulation will suffice, and the raw materials will suffice, and the working time of labour force will suffice.

There's more than enough being produced to fulfill everyone's basic needs (food, shelter, electricity, water, ...). People seem to have this weird idea about a so-called "free market" being "good" as a distribution mechanism. But the only reason a free market can be considered to efficiently fulfill needs is by some highly misleading use of the term "need" - much more accurate would be to say that a free market distributes goods so as to efficiently pander to monied interests.

Hence why a house will get distributed as a second or third home to some rich person while another person is still homeless without even a first home. As far as the free market is concerned the rich person does have a need for that second home (because they back up their demand with money) whereas the homeless person has no need for a home (no money implies no need). That's not how people normally understand the term "need".

 

[SpuriusMaximus]

But at some level you can view almost all human activity (not just economical) as a genetic algorithm for some objective function. Whereas a genetic algorithm is a really good general coarse parameter optimization method, I don't think it's very useful as a framework of understanding for the economy at large. For one, being parameter optimization, a genetic algorithm still requires a model (with some free parameters) to work with.

Well, I never said that it doesn't need a model, nor that it was the model. Just that once you have a model and some data, the algorithm can tell you how many people you need to dig up coal, or whether you should allocate more to car production or to furniture production. At which point the problem of planned economies vanishes.

 

[Craig B]

It wasn't well known to Karl Marx. If the working class all humans formed a universal collective, which is managed with direct democracy, then individual interests would get cancelled out, and the collective would serve "general interest". But such collectives don't exist.

I didn't refer to a universal collective, but to the general interest of members of a trade union or a political party. Such bodies do in fact exist, and can pursue policies based on collective decisions. I am saying that this is, at least in theory, more democratic than personal decisions made by powerful individuals. That is not the same as "all humans forming a universal collective".

Marx taught that the bourgeoisie are morally corrupt, but the working class is morally noble

Can you illustrate this teaching of Marx by citing the words from his writings that you have in mind?

 

[Darat]

I will grant that the objective function can be different. But that's nothing new for optimization algorithms, and makes no real difference for a genetic algorithm anyway.

So basically you are, of course, right. It just makes no difference for what I was saying.

In terms of what is possible no but in terms of what we want the output to be yes.

For most of us i.e. those that do not own the capital today don't want profit to be the end goal because of course that only will affect us as a by-product of the system, we might get lucky we might not. If we don't have our "needs" as the goal of optimisation than all that will happen is the few rich become richer and their numbers decrease.

Don't agree much with caveman1917 but on this he is right, the "free market" serves those that currently hold capital not those that don't.

Trickle down economics is exactly that - the non capital holding population have to exist on a trickle!

 

[caveman1917]

Well, I never said that it doesn't need a model, nor that it was the model. Just that once you have a model and some data, the algorithm can tell you how many people you need to dig up coal, or whether you should allocate more to car production or to furniture production.

There are already algorithms for that, it's called linear programming, you don't need genetic algorithms for that.

At which point the problem of planned economies vanishes.

There never was a "problem of planned economies". Well, there are obviously problems with pretty much everything, but not a specific problem of a planned economy wrt a free market economy. The planned economy of the USSR is only less efficient than a free market economy by a capitalist measure[*] of "efficiency" - by a socialist measure[**] of efficiency they were much more efficient than the free market economies.

* ie how profitable the entire operation is to the richest layer of society. Letting 100 people go homeless so that a rich guy can have his third massive mansion is considered "efficient" by a capitalist measure.

** ie how well the entire operation succeeds in fulfilling everyone's needs. In the USSR there was no homelessness, poverty, unemployment, etc. This was considered "efficient" by a socialist measure.

 

[lupus_in_fabula]

A modern day smartphone would do to calculate prices for the Soviet economy in real time.

Given 12 million variables (in 1983 the USSR had just that) and a thousand, or more, locations to consider, a mere smartphone might not be sufficient.

Cosma Shalizi wrote a nice peace about this over at Crooked Timber: In Soviet Union, Optimization Problem Solves You

A thousand locations would be very conservative, but even that factor would get us into the regime where it would take us a thousand years to work through a single plan. With 12 million kinds of goods and only a thousand locations, to have the plan ready in less than a year would need computers a thousand times faster.

…

Computing optimal prices turns out to have the same complexity as computing the optimal plan itself. It is (so far as I know) conceivable that there is some short-cut to computing prices alone, but we have no tractable way of doing that yet. Anyone who wants to advocate this needs to show that it is possible, not just hope piously.

 

[caveman1917]

Given 12 million variables (in 1983 the USSR had just that) and a thousand, or more, locations to consider, a mere smartphone might not be sufficient.

Cosma Shalizi wrote a nice peace about this over at Crooked Timber: In Soviet Union, Optimization Problem Solves You

I know, I read it. It's erroneous in its inclusion of locations and time as required factors in the primary planning mechanism. Locations and time can be decided as a second, more precise, step in the planning process. When the plan spits out, say, demand for 100 tractors and a bunch of stuff so as to produce the tractors, then the people at the tractor factories can arrange among themselves for the specific plan of supplies to be delivered from the people at the tractor-supplies factories. A smartphone would do for the 80's USSR.

 

[lupus_in_fabula]

For most of us i.e. those that do not own the capital today don't want profit to be the end goal because of course that only will affect us as a by-product of the system, we might get lucky we might not. If we don't have our "needs" as the goal of optimisation than all that will happen is the few rich become richer and their numbers decrease.

Don't agree much with caveman1917 but on this he is right, the "free market" serves those that currently hold capital not those that don't.

Trickle down economics is exactly that - the non capital holding population have to exist on a trickle!

Indeed. From a planning perspective "profit" does not seem like a sensible objective function, especially when measured in money… which essentially is claims on economic resources.

 

[lupus_in_fabula]

I know, I read it. It's erroneous in its inclusion of locations and time as required factors in the primary planning mechanism. Locations and time can be decided as a second, more precise, step in the planning process. When the plan spits out, say, demand for 100 tractors and a bunch of stuff so as to produce the tractors, then the people at the tractor factories can arrange among themselves for the specific plan of supplies to be delivered from the people at the tractor-supplies factories. A smartphone would do for the 80's USSR.

Wouldn't that still mean a new round of calculations for all industries in relation to the transportation sector? And thus, a new round of calculations for anything relating to industries relating to the transportation sector… and so forth (considering the whole input-output matrix).

So, what does "optimal prices" mean if they give rise to (real/physical) bottlenecks in production and deliveries?

I'm not sure prices even are a sensible target for optimization in a planned economy?

 

[caveman1917]

Wouldn't that still mean a new round of calculations for all industries in relation to the transportation sector? And thus, a new round of calculations for anything relating to industries relating to the transportation sector… and so forth (considering the whole input-output matrix).

Yes and no. The central plan is for gross production targets, including transportation. So the plan could spit out a need for trains and trucks (and fuel etc).

Those new rounds of calculations would be for assigning the production targets to specific factories and specific transportation requirements. Those are mostly independent subproblems, the tractor factory only needs to concern itself with the few factories that provide its own inputs. It's really no different from a factory now needing supplies, contacting the supply factory, and contacting the transportation company to get those supplies to them. The calculations don't cascade, they're not calculations on the production matrix, they don't change production - they merely assign it to specific factories and transportation providers.

So, what does "optimal prices" mean if they give rise to (real/physical) bottlenecks in production and deliveries?

There will always be bottlenecks in any production chain, since a bottleneck is just the element in the chain with the least throughput capacity - there will always be such an element.

I'm not sure prices even are a sensible target for optimization in a planned economy?

I'd expect a socialist planned economy to minimize labour time as an optimization target.

 

[SpuriusMaximus]

@Darat
Well, as I was saying, I'm just saying that it's possible, not that it has to have the same objective function. The goal of any optimization algorithm is to maximize (or minimize, same idea) SOMETHING. That something is given as a function. You want a different thing maximized, you use another function there.

I'm not particularly fixated on the free market (though I kinda like it). It's more like its proponents make it sound like some magical thing without which nothing works. Kinda like the divine Logos (word) in John. Well, I'm saying it's just a genetic algorithm without computers. We're quickly approaching the point were we can do the same optimization in software. Or, yes, optimize for a completely other objective, if that's more your thing.

@caveman1917
Well, I never said that genetic algorithms were necessarily the best for a given problem. Just that ultimately that's what the free market is: a rather inefficient genetic algorithm, using people instead of transistors. So even in the worst case scenario, we can do just that with a computer.

But, of course, there's nothing to say you can't apply another optimization method instead, if you have a better one.

The point I was trying to make -- apparently not very clearly or successfully -- is not "genetic optimization is teh bestest!!!111eleventeen" not "free market is the bestest!!!111eleventeen", but rather just that the free market (or any other market) is not as special and unique as some proponents make it sound. It's just a way to optimize a certain thing by trial and error. And, worst case scenario, we can just run the same algorithm on a computer.

 

[caveman1917]

I'm not particularly fixated on the free market (though I kinda like it).

I like the idea but only if everyone starts off relatively equally (ie with equal money). Because that seems to me the only way to bring its definition of "need" in line with what I'd consider the term "need" to mean.

It's inherently a good method of resource distribution, since it is based on self-reported needs. The problem is its use of presented money as a substitute for self-reported need. If a homeless guy has 1$ and presents it saying "I need shelter" and a rich guy has 1 million $ and presents it saying "I need a 10th house" then the house will go to the rich guy, because it is more efficient to fulfill a 1 million $ need than a 1$ need with the same resources - he needs it 999,999$ more after all.

But, of course, there's nothing to say you can't apply another optimization method instead, if you have a better one.

The point I was trying to make -- apparently not very clearly or successfully -- is not "genetic optimization is teh bestest!!!111eleventeen" not "free market is the bestest!!!111eleventeen", but rather just that the free market (or any other market) is not as special and unique as some proponents make it sound. It's just a way to optimize a certain thing by trial and error. And, worst case scenario, we can just run the same algorithm on a computer.

If I were to design such a planning program I'd use GA as well, with a lower-dimensional LP as a "sanity check", so it's not a bad idea. My point was mostly that there was already research into this and methods developed through it.