Calculation, complexity and planning: the socialist calculation debate once again

Abstract

This paper offers a reassessment of the socialist calculation debate, and examines the extent to which the conclusions of that debate must be modified in the light of the subsequent development of the theory and technology of computation. Following an introduction to the two main perspectives on the debate which have been offered to date, we examine the classic case mounted by von Mises against the possibility of rational economic calculation under socialism. We discuss the response given by Oskar Lange, along with the counter-arguments to Lange from the Austrian point of view. Finally we present what we call the 'absent response', namely a re-assertion of the classic Marxian argument for economic calculation in terms of labour time. We argue that labour-time calculation is defensible as a rational procedure, when supplemented by algorithms which allow consumer choice to guide the allocation of resources, and that such calculation is now technically feasible with the type of computing machinery currently available in the West and with a careful choice of efficient algorithms. Our argument cuts against recent discussions of economic planning which continue to assert that the task is of hopeless complexity.

Thinking impossible things: A review essay

“…One can no longer answer Hayek (1935) and von Mises (1920), who argued that "rational" economic planning under socialism is impossible, by appealing to modern computers as have Lange (1967) and Cottrell and Cockshott (1993). Doing so turns out to be another example of magical thinking.…”

The People-Nature Relation and the Historical Significance of the Labour Theory of Value

“…It becomes law, there, to an even higher degree. However, this is essentially different from a measurement of exchange values …by labour time' (see also Engels, 1972: 337-38;Bettelheim, 1975: ch.1;Cottrell and Cockshott, 1993). What is minimised in this case is concrete and not some kind of 'abstract' labour, as the quintessence of value.…”

“…Insofar as production will be tied to use-values and consumer as well as production demand, the distribution of labour and natural resources to meet all these needs and the relevant decisionmaking process will be considerably complex. Contrary to an overstatement of this social complexity (see Nove, 1983: 18), the development in information technology makes this task arguably more attainable (Cottrell and Cockshott, 1993). An efficient distribution and use of resources could possibly be implemented through a process of social participation and planning, without the mediating role of any market mechanism.…”

Hayek on complexity, uncertainty and pandemic response

“…It should be noted that none of these arguments are undermined by technological innovations such as for example the development of artificial intelligence or ‘big data’ gathering techniques which it is often suggested might allow for the replacement of market processes (for example Cottrell and Cockshott 1993 ; Phillips and Rozworski 2019 – for a critique see Hodgson 1998 ). On the one hand, these innovations increase the scope for decentralised agents -whether individuals, firms, or voluntary organisations, to increase the complexity of their own decision-making.…”