"The differences between the logic of a firm in the private market and a full scale socialist polity, in its simplest form entirely coordinated from the center, are that the former must pay for its inputs a price at which their owners, including its workers, are willing to supply them and that the firm, to stay in business, must be able to produce its output at least as inexpensively as it can be produced through decentralized coordination. The socialist polity does not face those constraints."
This is certainly important, but one other (related) factor is that mismanaged firms can more easily fail. The "gale of creative destruction" works much better in private markets than socialist states. A good example of this problem is public schools. If the worst public schools were allowed to fail, the system would be a lot better off. Of course, that would not involve knocking down the buildings, killing the teachers, and burning the books. The institution -- the current management structure -- would fail and the relevant "assets" -- buildings, teachers, books -- would presumably go to a new school that might be run better.
“makes no distinction between the value of insulin to a diabetic and that of heroin to an addict. Government could intervene to tax or ban the former, permit, perhaps subsidize the latter. “
Subsidizing heroin might make the same point in the (very) abstract, but rhetorically, I would bet that subsidies for insulin was what was actually intended.
“A third criticism is that the only value counted is value to humans. A work of great literature, an animal, an ancient redwood tree counts only to the extent that humans value it.”
Not value to humans, but value to market participants. Humans that never buy anything have as much influence on market outcomes as animals do, which is to say, practically none. Or, in both cases, such non-participants can influence matters indirectly, if actual participants buy things intending to please or benefit the non-participants. This feedback seems likely to be noisier than a more direct connection would be.
Under no imaginable circumstance can a social system connect directly to some platonic ideal of what things are worth. Value is always mediated by the participants' preferences and interpretations. If a philosopher king tries to act on behalf of non-participants, what objective standard is there that allows us to judge his success?
Another typo: "What it meant was economic efficiency, which defines the value or cost of an outcome to an individual as the largest amount he would pay to get it (value) or prevent it (cost)"
The sentence isn't ended. "economic efficiency, which.... Prevent it (cost), (missing the of the sentence"
If I might also suggest that reducing usage of "latter" and "former" would make writing easier to follow.
From the previous post: "There might be situations where market failure on the private market would be so severe and its consequences so dire that it is arguably worth risking government action; the standard example, and the reason most libertarians are not anarchists, is national defense."
This forms part of the concern I have with a completely free market: namely, that it is probably impossible, due to the existence of secret information.
For a defense organization to effectively defend its people (in a stateless society, I might more accurately call them customers), it cannot simply build an hard shell; it costs much less to deploy agents to watch where enemies are planning their attacks and head them off. The way it watches enemies has to be kept secret, to keep enemies from adapting; the defense organization cannot even tell its own customers, because enemies can easily intercept that information.
But that means the organization has to hide a lot - methods, assets, which enemy plans were thwarted, and so on. In that secrecy, entire budgets can hide. Customers cannot accurately assess which defense choice is best, because they cannot know which ones are doing the most efficient or even sufficient job. And if they choose wrong...
On top of this is the possibility that when it comes to defense, you might be competing against offensive forces so powerful that you cannot afford multiple competing defense organizations, possibly with multiple partitions of vital defense information; you have to build one army and maybe also encourage its components to share their secret information internally.
I've asked David about this before; I don't remember if he had an answer (it might be in the latest edition of TMoF, which I haven't gotten around to checking).
At the same time, I think there's a sense in which the ancap argument doesn't need to. I keep noticing that any market failure in ancap seems to exist in any other known alternative to an equal or greater extent. (E.g. ancaps have externalities, but collectivist economies just combine most or all of them into a giant externality, add a little overhead, and give it a different name.) So while ancaps run into the secrecy problem, so do alternatives.
On the other hand, that means the secrecy problem still exists.
Another important difference in firms is that members of a firm are able to switch firms if they don't like the one they're in. Or even form their own.
> The differences between the logic of a firm in the private market and a full scale socialist polity, in its simplest form entirely coordinated from the center, are that the former must pay for its inputs a price at which their owners, including its workers, are willing to supply them and that the firm, to stay in business, must be able to produce its output at least as inexpensively as it can be produced through decentralized coordination. The socialist polity does not face those constraints.
I think that if it allows emigration (and other polities allow immigration), it faces similar constraints. E.g. Lebanon hasn't been able to produce a place where people want to live as well as other polities, and as a result it has lost about two thirds of its market share. (Lebanon is not socialist, but I think the principle is the same.)
"The differences between the logic of a firm in the private market and a full scale socialist polity, in its simplest form entirely coordinated from the center, are that the former must pay for its inputs a price at which their owners, including its workers, are willing to supply them and that the firm, to stay in business, must be able to produce its output at least as inexpensively as it can be produced through decentralized coordination. The socialist polity does not face those constraints."
This is certainly important, but one other (related) factor is that mismanaged firms can more easily fail. The "gale of creative destruction" works much better in private markets than socialist states. A good example of this problem is public schools. If the worst public schools were allowed to fail, the system would be a lot better off. Of course, that would not involve knocking down the buildings, killing the teachers, and burning the books. The institution -- the current management structure -- would fail and the relevant "assets" -- buildings, teachers, books -- would presumably go to a new school that might be run better.
He does in fact say this:
> the firm, to stay in business, must be able to produce its output at least as inexpensively as it can be produced through decentralized coordination
Typo?
“makes no distinction between the value of insulin to a diabetic and that of heroin to an addict. Government could intervene to tax or ban the former, permit, perhaps subsidize the latter. “
Subsidizing heroin might make the same point in the (very) abstract, but rhetorically, I would bet that subsidies for insulin was what was actually intended.
“A third criticism is that the only value counted is value to humans. A work of great literature, an animal, an ancient redwood tree counts only to the extent that humans value it.”
Not value to humans, but value to market participants. Humans that never buy anything have as much influence on market outcomes as animals do, which is to say, practically none. Or, in both cases, such non-participants can influence matters indirectly, if actual participants buy things intending to please or benefit the non-participants. This feedback seems likely to be noisier than a more direct connection would be.
Under no imaginable circumstance can a social system connect directly to some platonic ideal of what things are worth. Value is always mediated by the participants' preferences and interpretations. If a philosopher king tries to act on behalf of non-participants, what objective standard is there that allows us to judge his success?
Typo fixed. Thanks.
Another typo: "What it meant was economic efficiency, which defines the value or cost of an outcome to an individual as the largest amount he would pay to get it (value) or prevent it (cost)"
The sentence isn't ended. "economic efficiency, which.... Prevent it (cost), (missing the of the sentence"
If I might also suggest that reducing usage of "latter" and "former" would make writing easier to follow.
It ends with a semicolon, followed by the rest of the sentence and a period.
From the previous post: "There might be situations where market failure on the private market would be so severe and its consequences so dire that it is arguably worth risking government action; the standard example, and the reason most libertarians are not anarchists, is national defense."
This forms part of the concern I have with a completely free market: namely, that it is probably impossible, due to the existence of secret information.
For a defense organization to effectively defend its people (in a stateless society, I might more accurately call them customers), it cannot simply build an hard shell; it costs much less to deploy agents to watch where enemies are planning their attacks and head them off. The way it watches enemies has to be kept secret, to keep enemies from adapting; the defense organization cannot even tell its own customers, because enemies can easily intercept that information.
But that means the organization has to hide a lot - methods, assets, which enemy plans were thwarted, and so on. In that secrecy, entire budgets can hide. Customers cannot accurately assess which defense choice is best, because they cannot know which ones are doing the most efficient or even sufficient job. And if they choose wrong...
On top of this is the possibility that when it comes to defense, you might be competing against offensive forces so powerful that you cannot afford multiple competing defense organizations, possibly with multiple partitions of vital defense information; you have to build one army and maybe also encourage its components to share their secret information internally.
I've asked David about this before; I don't remember if he had an answer (it might be in the latest edition of TMoF, which I haven't gotten around to checking).
At the same time, I think there's a sense in which the ancap argument doesn't need to. I keep noticing that any market failure in ancap seems to exist in any other known alternative to an equal or greater extent. (E.g. ancaps have externalities, but collectivist economies just combine most or all of them into a giant externality, add a little overhead, and give it a different name.) So while ancaps run into the secrecy problem, so do alternatives.
On the other hand, that means the secrecy problem still exists.
Another important difference in firms is that members of a firm are able to switch firms if they don't like the one they're in. Or even form their own.
> The differences between the logic of a firm in the private market and a full scale socialist polity, in its simplest form entirely coordinated from the center, are that the former must pay for its inputs a price at which their owners, including its workers, are willing to supply them and that the firm, to stay in business, must be able to produce its output at least as inexpensively as it can be produced through decentralized coordination. The socialist polity does not face those constraints.
I think that if it allows emigration (and other polities allow immigration), it faces similar constraints. E.g. Lebanon hasn't been able to produce a place where people want to live as well as other polities, and as a result it has lost about two thirds of its market share. (Lebanon is not socialist, but I think the principle is the same.)