A Discussion of Planned Economies that Began on the Google Group America 2.0

1.  What I mean by a planned economy

I'm afraid I should not have referred to my version of a natural economy as a "planned economy".  Perhaps, the term "decentralized privately planned economy" almost tells the story, except what I mean by "privately" is a little odd.  I believe I have constructed a sort of syndicalism.  Regrettably, though, I have not looked at the definition of every type of non-market economy. The only role for government in this sort of natural economy is to administer the rule that each consumer use no more than 1/Nth of the total sustainable dividend of the economy (measured in emergy units) where N is the number of consumers and reproduce himself only, pass on his reproductive rights to another, or not reproduce. 

Ethan Nagler at America 2.0 wrote:

Just read up a little on the "calculation problem" defined by the Austrian
economists. As far as I understand it, their argument is not dependent on
their flawed conceptions of human nature.

It's impossible for a small number of people, no matter how intelligent, to
calculate, without price, the wants/needs/desires of millions of people
across vast distances. That's why planned economies always end up in
famine. Until you can prove that you have an algorithm for calculating
everyone's needs 100% of the time, then any other arguments for a planned
economy are futile, in my opinion.

My answer:  

I believe the Austrian economists are right; but, their result does not apply to my version of the natural economy:  

From http://www.dematerialism.net/wiki.htm#_Toc170283591

A Natural Political Economy

In Chapter 5 of On the Preservation of Species, Wayburn describes a society that has abandoned materialism, that is, a society in which Dematerialism has already taken place.  This might be tested in an intentional community despite the obstacles presented by the materialistic society in which it is embedded or throughout which it is distributed.  The community would have the following features:

1.      A give-away economy with no monetary system^[1]. Each economic actor^[2] notifies directly the enterprises that supply his genuine needs, which, in turn, tell him when the item or items can be picked up or will be delivered depending upon which mode has the lower emergy costs.  Clearly, delivery syndicates will need to minimize emergy by solving optimization problems – possibly of combinatorial complexity – by computer, if computers are available in the wake of Peak Oil.  Otherwise, emergy consumption is not likely to be minimized, although it may be acceptably low.  Being too poor to afford a computer for each economic actor is another case of the poor communities getting poorer; but, even in the worst case, it will not be accompanied by the rich getting richer to exacerbate the situation.  These enterprises also report the emergy values of the item or items to each economic actor and to a public servant if the community deems this necessary until people have learned the lesson of minimizing their consumption.  Thus, the economy is consumer-planned subject only to the consumer's responsibility (a) to use no more than 1/Nth of the total sustainable dividend of the economy (measured in emergy units) where N is the number of consumers and (b) to reproduce himself only, to pass on his reproductive rights to another, or not to reproduce.  Life can be made discouragingly difficult for cheaters.

   Note 10.25.2018:  An economy that can afford to have consumers take what they need might be instituted when the notion of restrained consumption and sustainability is well understood and universally accepted, that is, ingrained.  There is no need to go into details of the distribution process other that to say that consumers should deal directly with producers.  It is not such a great compromise to provide all economic actors with a sort of debit card linked to land, fresh water, emergy, and human effort upon which they can draw up to 1/Nth of the sustainable supply.

2.      Local economic enterprises owned by workers in the sense of custodianship.  Decisions are made by direct vote – one worker, one vote.  It is important that worker ownership not extend beyond the premises of the plant where the work is done.  Decentralization not incorporation.  Each enterprise integrates the plans of its consumers into a total economic plan for the enterprise and notifies its suppliers accordingly.  This must be achieved with negligible energy costs, probably with a computer.  The economic actor might organize his or her personal emergy budget well in advance, also with a computer.

3.      Public servants chosen quasi-randomly, somewhat as jurors are chosen, for limited terms that cannot be followed by another such appointment.  Recall is by direct vote of all members of the community whom I call citizens for lack of a better term.  The term fractal government denotes a system of small communities wherein every citizen belongs to a local parliament that is tied in a loose federation with other such communities in similar parliaments that are tied in loose federations to other parliaments of parliaments.  This is similar to fractal structures, except that a loose federation of the world can have only a finite number of sub-levels, as does every representation of a fractal in the real world.  Among a very small number of public servants are the members of local communities who sit in the parliaments that determine public policy for the community’s eco-region, which randomly selects members of itself who make policy for a collection of eco-regions.  And so on.  Every one of these “members of parliament” is subject to immediate recall by the direct vote of the body that chose him or her.  Thus, the only permanent members of the government are the people themselves who share political power at the community level in the sense of one-person-one-vote.  Naturally, some people will have more influence than others if they are widely respected; but, they cannot convert this influence to greater wealth.  Ultimately, this arrangement should evolve into no government at all.

  

Figure 1.  Fractal

Figure 2.  Fractal Political Structure

4.      The Fundamental Principle of Neighborliness in dealing with neighboring communities, so that the dependence of economic well-being on geography is minimized.  (Wealth flows always from richer communities to poorer communities or not at all.)

5.      Defense by citizen militias if necessary.  The decision to bear arms is up to the citizens.

6.      It is recognized that the federal government is likely to suppress any effort to form an intentional community (or reform an existing community) along egalitarian lines,  i. e., with a Natural Economy, unless collapse has already commenced, in which case the federal government will no longer be able to function because the most powerful people in government will have given up in despair and will be trying to save themselves - at least Dmitry Orlov has made a good case for this in “Closing the Collapse Gap”, which compares the collapse of the Soviet Empire with the very likely collapse of the United States American Empire.

Wayburn writes, “I regret very much employing the expression ‘natural economy’ because, if you google ‘natural economy’, you get 136,000 hits, and most of them do not agree with my definition.  My paper ‘Energy in a Natural Economy’ doesn't show up until the second page.  Fortunately, the first google hit is from the article in the Wikipedia where we read, ‘Natural economy refers to a type of economy in which money is not used in the transfer of resources among people’ and ‘German economists have invented the term Naturalwirtschaft, natural economy, to describe the period prior to the invention of money.’  The definition by Karl Marx is included too, which argues against a modern capitalist interpretation – as does the article under discussion.”

There is a slightly better description in Energy in a Natural Economy, which is listed in the hyperlinked table of contents at http://dematerialism.net/demise.htm#NaturalEconomy.  It just begins to describe the Earth as a Garden as I envision it in a post-industrial, decentralized, eco-community with a steady-state economy in the wake of Peak Oil.  Such an economy should not be based on buying and selling; and, although people might still compete for importance or the recognition of their own importance by the rest of the community, they would not compete for status.  I take “status” to refer to resource dominance or the acquisition of power over other people the purpose of which is to increase personal wealth.  One could convert fame to personal wealth too, but that needn’t be the case.  I take “importance” and “recognition” to refer to the sort of fame and influence over people that most of us would like – perhaps even seek, but we do not want them for the money.  I picture a community where one can compete in a hierarchy of personal importance but not in one of personal wealth or power.  This accounts for so-called human nature, which may or may not be universal and immutable.

In a Natural Economy good citizens are trying to minimize their personal consumption.  They might even take personal pride in doing so.  Ultimately, they might welcome the animal kingdom back into the Garden, which will have become much more hospitable to nearly every species.  Some readers might find The Parable of the Shipwrecked Brothers illuminating.

The Earth as a Garden should have a number of easily-identified necessary characteristics:

1.         As in Erewhon, Samuel Butler’s version of Utopia, the manufacture of energy intensive inventions of the Twentieth and Twenty-First Centuries should not be permitted.  This does not apply to energy-saving inventions that replace inventions of earlier centuries and are immune to Jevons Paradox.  This follows from Item A of Addendum 2 of “On Capitalism”.  “Every technological ‘improvement’ results in the exchange of one set of nuisances for another.”

2.         Banking, finance, fiduciary instruments of every sort including stocks, bonds, options, and money, in short monetary systems themselves, must be rigorously excluded.  Otherwise, the economy will grow and will not be sustainable as shown in Items B and D.

3.         The necessity of reasonable equality in wealth in a steady-state economy follows from Item C.

Notes

Note 1.          In case a monetary system is required – perhaps just to determine what an equal share is – I have written a regrettably long document despite my best attempt at brevity:  See http://dematerialism.net/cc3.htm .

Note 2.         An economic actor is a member of a community who makes decisions regarding consumption for herself and any dependents.

2.  Answers to the question: Can you name a planned economy that was not a dismal failure?

          a.  Can you name one successful economy of any description?

         

          b.  Even discounting the complaints about the limited amount of consumer goods and the handling of the criminal class, that is, private profiteers, probably, planned economies have not done well; however, …

                   i.   there have not been very many,

                   ii.  most of them tried to solve the economic calculation problem mentioned by Ethan Nagler,

                   iii.  almost none of them attempted to achieve equality in a straightforward way,

                   iv.  none of them were pure democracies in the sense of Aristotle,

                   v.  none of them had a rational monetary system, that is, a method for determining economic equality,

                   vi.  none of them embraced degrowth,

                   vii.  not every form of planned economy has been tried.                                     

3.  The advisability – if  not necessity - of devising an economy without markets.  By referring to Bureau of Labor Statistics data from a time when the United States produced everything it needed domestically, I determined an upper bound on the fraction of energy that cannot be saved by eliminating markets.  See “Energy in a Natural Economy”.  This thesis is strongly supported by “On the Conservation-within-Capitalism Scenario” and “Energy in a Mark II Economy”.

4.   What I expect from serious people who wish to make the best of a very bad situation:  Don’t waste your time arguing that a planned economy won’t work; get busy devising economies that will work.

5.  Schumacher’s famous list (and diagram)

Many people believe that communism is pure totalitarianism and capitalism is pure freedom and that we must choose one or the other.  The notion is sweeping the world that, since planned economies have failed, market economies represent the only hope and, indeed, the only possibility.  These are very dangerous beliefs as far as the preservation of Earth’s remaining species is concerned.  It rules out every idea that has a chance to work and makes the extinction of life on earth very likely.  No one will escape to outer space for a number of reasons chiefly related to those who won’t have that option.

If, following E. F. Schumacher [1], the famous economist, we make strict binary choices between (i) freedom and totalitarianism, (ii) market economy and planned economy, (iii) private ownership and collective or state ownership, we get, not two only, but 2 to the 3rd power or 8 pure political-economic systems.  I reject totalitarianism on humanistic, utilitarian, and aesthetic grounds and I have already shown why I reject market economies.  This leaves two pure systems: freedom-planning-private and freedom-planning-state.

Table 12-1.  Schumacher’s Chart
FREEDOM MARKET ECONOMY PRIVATE  OWNERSHIP	TOTALITARIANISM MARKET ECONOMY PRIVATE  OWNERSHIP
FREEDOM PLANNING PRIVATE OWNERSHIP	TOTALITARIANISM PLANNING PRIVATE  OWNERSHIP
FREEDOM MARKET  ECONOMY STATE  OWNERSHIP	TOTALITARIANISM MARKET  ECONOMY STATE  OWNERSHIP
FREEDOM PLANNING STATE  OWNERSHIP	TOTALITARIANISM PLANNING STATE  OWNERSHIP

I believe we are in a position, now, to reject state ownership because it leads to the concentration of power into the hands of a large, inefficient, corrupt, and tyrannical bureaucracy that appropriates an unfair portion of the wealth to itself, which, in turn, demoralizes everyone else.  The last thing a bureaucracy has in mind is to “wither away”.  I believe that the means of producing goods and providing services, including services we normally think of as government services, should be owned by the people as private individuals – but in the sense of custodianship.  Workers would own the enterprises for which they work.  One worker – one share; one share – one vote.  This sort of combination of private and collective ownership differs from ordinary ownership in that it cannot be transferred by sale; moreover, it must be forfeited by individuals who voluntarily abandon the enterprise.  Due to these and other complications we shall refer to capital as generalized private property.  [Note in proof:  As of October 3, 1993, it appears that Russia is headed toward totalitarianism, a market economy, and private ownership.]

Now, in 2014, I might want to alter the above slightly; but, I think I’ll let it stand.