Calculation and Socialism | Joseph T. Salerno

Recorded at the Mises Institute in Auburn, Alabama, on 16 July 2019.

[avppr]

Here we go again, i watch this presentation every year, still a relevant topic as ever was 100 years ago...
Ps. Don´t take that as a criticism but as a compliment :) ...

[randomguy]

Some example of the economic calculation problem in practice (using the Soviet Union as an example):

- Soviet television sets were manufactured so poorly they tended to explode.1* By one estimate, sixty percent of all apartment fires in Moscow were blamed on exploding television sets.

- The construction process suffered from chronically long delays.2* A Soviet source in 1975 reported that the average length of time it takes for construction projects to be built was double the planned norm, and the planned norm was itself double the length of time it takes for construction projects to be completed in other countries. A Soviet critic by the name of Ivanov said of the construction process that “the preparation of the project takes 2-3 years, construction 5-7 years, and the so-called osvoyenie [making it operational] 3-5 years and more. Therefore the new basic capital becomes fully operational 10-15 years after it has been projected, i.e. often the machines are already obsolete”

- The workers who unloaded bricks from a lorry were careless in the process and many of the bricks were smashed, because the planned norm that applied in this case made it more profitable to unload the bricks as quick as possible even if this meant smashing them.3*

- There was an enormous amount of waste in the production process.4* One Soviet critic talks of gas in the production process being "wasted or burnt off", metals being lost during enrichment and processing, and timber being "rotting or burnt and almost unutilized as materials". People in the Soviet Union even had a name for the heaps of unused materials lying around factories and mines: "ores lying on the surface".

- There were widespread shortages of consumer goods. In a survey it was found that about 50% of Soviet citizens surveyed were “very dissatisfied” with the availability of consumer goods.*5

- There were no rational prices for agricultural goods like grain and cotton.6* Even when a team of experts under Stalin's leadership were charged with coming up with prices for agricultural goods they could not come up with anything sensible and their proposal was rejected. There are anecdotes by Gorbachev of pigs being fed bread instead of grain because there were no rational prices for these goods.

All these economic inefficiencies translate into lower living standards. An example of this would be in housing:
According to an estimate from the book "The Strange World of Ivan Ivanov, " published in 1969, 66 percent of urban households lacked running water, 69 percent lacked plumbing, 78 percent lacked central heating, 84 percent lacked gas, 91 lacked a bath, and 98 percent lacked hot water.*7

Sources:

1* Globalsecurity.org, "Soviet TV Set Production"

2* Alec Nove, "The Soviet Economic System", pages 157-158

3* Alec Nove, "The Soviet Economic System", page 107

4* Alec Nove, "The Soviet Economic System", pages 76-77

5* The Free Library, "Money demand and quantity constraints: evidence from the Soviet interview project"

6* Allin Cottrell and Paul Cockshot, "Computers and Economic Democracy", page 4-5

7* G. Warren Nutter, "The Strange World of Ivan Ivanov", as cited by the article "A Much Needed Reminder About Life in the Soviet Union" in the American Institute for Economic Research

[thegeneralist]

Wow. This is the most clear critique of socialism I have ever seen. Well done!

[brandorev]

God, I love Mises. I wish I was there. At MisesU. Such brilliance and elucidation on the the issue of Socialism.

[shanerooney]

9:23 According to *Karl Marx* himself, it is unscientific to try to speed up the arrival of socialism.

[frikkiethirion]

13:00 Read 'Meltdown! Inside the Soviet economy' for a glimpse of the insanity of an economy under socialism. In summary, you could only produce your state quota by buying on the black market, which is illegal. Therefore you're automatically an enemy of the state in fulfilling your production quota. Beautiful checks and balances already build into the system to eliminate anybody at will, "legally".

[VIKDR]

Money is a great way to value production, but this won't be of any matter to a socialist who wants to abolish money. They do not care what the "cost" of that production is, and will simply make people produce, and divide equally. Or at least their goal is to do that. Their goal is to ignore the costs of production and just produce, and then dole out the results whatever they are.

[kimobrien.]

Who do you use for your Christmas cards FedEx and UPS or USPS?

[roymarshall_]

This is always a great talk, but I wish he would get a bit more detailed and spend more time discussing modern rebuttals. I'd especially like to see some time dedicated to rebutting the argument that assumes that the calculation problem can be solved with increased computing power. I haven't finished this one yet so maybe he does, but I doubt it.

[tedarcher]

Where from is his accent?
P.S ah, New Jersey

[fsmoura]

26:42 In Soviet Union, vacation takes you!

[kokofan]

Salerno is wrong about prefabricated houses being more expensive than houses built on site in cities. Houses built on site are just the consumer preference.

[kimobrien.]

The problem is that some problems can not be calculated and therefore determined in a reasonable time. So in those case any choice made can turn out to be god or bad later on. So it doesn't demonstrate the superiority of the pricing system who problems stem from the inability to correctly determine labor value in both time and quality at any given time. One number will always be less descriptive for two or more different measures. This is why people like to look at things like fruit and vegetables before purchase and want regulation of gasoline production.

[JensHove]

If all commies were on a mailing list, I'd send this to it.

GREAT video!!!

[alexandregb]

Here in Brazil, my home, there are some people who argue that Mises and his theory were destroyed by a school from Poland. A Brazilian Marxist called Elias Jabbour claims that it is possible to calculate all economies using an AI. But as we know, it's impossible to figure out the necessity of millions of people and their peculiarities just using A.I. or another similar method.

[peteranon]

I don't believe a bureaucracy can efficiently do anything, and will always continuously add increasing cost, and this is the actual problem with any implementation of socialism, aside from the problem of the original socialist problem of effort vs reward "If you shall not work, you shall not eat" as cited by John Smith in Jamestown.


I'm fairly well against socialism, but I can't stand this man's rhetoric. You can't strawman your opponents and expect the weakest arguments they have to simply evaporate before your awesomeness.

[rebelgusanos]

Imagine if this theory was applied for intra company organisation. Organisations are socialist internally so a lot of misallocation of resources happens

[Lb-djtc]

These examples are all easily solves le with a responsive government and better information flow. Not saying we are there yet, but information flow is getting us closer

[rothbardfreedom]

On top of that, socialism is anti-ethical (vide Hoppe's Argumentative Ethics).

[jamesbuchanan]

Even if we speculate that this new socialist man will exist... How can this new socialist man know what is needed most without a free market price system?