Gosplan never had anywhere near enough compute power or good data to do that job.
The data problem could have been solved with bar-coding. That's how WalMart got tight control over their inventory. Master Control in Bentonville, Arkansas can see pallet 2345235 leaving warehouse 242 on truck 24343 headed for store 2514. If store 2514 doesn't report arrival of that pallet, questions will be asked and the pallet will be found or somebody will be in big trouble. When the pallet is found, broken down, and product placed on shelves, the items will eventually show up in cash register data. If shelf inventory minus sales is not very close to incoming shipments, the "shrinkage" security people are informed and start looking for theft.
Gosplan had an annual planning cycle and monthly reporting. WalMart has a weekly planning cycle and daily reporting. A year was far too much lag for the system to work well. Although it did for heavy industry, where things take months anyway.
The huge linear programming problem isn't insoluble. It's a sparse matrix; potato chips don't affect steel tubing much. There's probably some way to come close to an optimal solution.[1] Sparse matrix techniques were in their infancy when the USSR was active, though.
> The data problem could have been solved with bar-coding. That's how WalMart got tight control over their inventory. Master Control in Bentonville, Arkansas can see pallet 2345235 leaving warehouse 242 on truck 24343 headed for store 2514. If store 2514 doesn't report arrival of that pallet, questions will be asked and the pallet will be found or somebody will be in big trouble. When the pallet is found, broken down, and product placed on shelves, the items will eventually show up in cash register data. If shelf inventory minus sales is not very close to incoming shipments, the "shrinkage" security people are informed and start looking for theft.
This is really interesting -- I'd never found much on pre-SAAS/internet Wal-Mart's asset tracking system, which I assume this must be a part of. Do you have any links to articles or books I could read to learn more about this?
The USSR had about 12 million types of goods. If you cross them over about 1000 possible locations, that gives you 12 billion variables, which according to Cosma would correspond to an optimization problem that would take a thousand years to solve on a modern desktop computer.
Modern (commercial and open-source) solvers of linear programming (LP) tackle problems of millions of variables in minutes. Most of those 12 billion variables would be cleared out (e.g. fixed to their lower bound, zero) in a pre-processing step.
Problems with variables that are constrained to be integer can take much longer, but they are orders of magnitude more efficient today than a few years ago.
> Problems with variables that are constrained to be integer can take much longer, but they are orders of magnitude more efficient today than a few years ago.
Planned economy is uncompetitive for more reasons than insufficient computing power.
You can't plan innovation. It is hard to plan for knowledge economy in general (material production is increasingly a smaller part of total GDP — something that early Communist theorists failed to predict).
Capitalism is automatic, self-correcting, parallel optimization process. It is asymptotically optimal.
Yes, real question to ask is, why is a good produced?
In a central planned system that is a policy decision based on the knowledge the planners have.
In a market based system that decision is decentralized to the actors in that system and therefore the rate of innovation is based on the sum of the actors distributed knowledge, that sum will always be more than that of a centralized body.
Hayek described that as the Local knowledge problem.
Capitalism has own set of problems like unfair distribution of income, unequal opportunities, patent system that prevents spreading innovation. I think it is used only because we don't have a better system at the moment and because people who benefit from it want to keep the status quo.
For example, in a capitalist economy two people that contribute equal amount of time to work can get different rewards for it. And those who get bigger reward would oppose to changes.
Correct, but he will eventually be replaced by somebody who can produce the same output and ask for less. It makes all business sense. Opposing market pressure is unsustainable in the long term.
The article makes me think that the failure of the planned economy system would probably not have happened if they had modern computers (and computing tools we take for granted today). The author thinks this would only be possible in about 100 years because he considers that everything needs to be considered in the model. However, one could make the case for doing central planning of a limited set of goods which are interdependent, of course.
AI being all the rage in the news these days, and pretty much in fashion, who knows, perhaps automatic optimization of a country's economy will start to be talked about as a Good Thing To Have?
The computational complexity seems to depend on the desire to solve all the problems at once. But how about solving just the warped incentive structures of capitalism?
Simulate perfectly rational economic actors that are only concerned with the next upstream and downstream hops in the market, have them take into account the "taxes" and "credits" of externalities without any of the pesky politics, and distribute in-simulation "purchasing power" to end consumers in whatever way you deem fit. You could even distribute this end-user power to actual consumers, in order to allow them the freedom to input their desires into the system.
Basically, remove the capitalists from the capitalist system; or, just use the computational model of capitalism without actually giving power to the computational nodes.
But you're not getting rid of the warped incentive structures, you're just simulating them! Assuming you actually get your data and everything perfect you just get capitalism-world, warts and all.
If you just want to be able to digitally assign more symbolic purchasing power to the agents dispossessed by the current system, the government already has the power and infrastructure to do that. Adding another level of computer abstraction to the already symbolic computerized money system doesn't do anything.
There are a factions in the strong AI community whose members espouse the idea that a planned economy would become feasible given greater computational capacity and better software.
I have to think that the major objection to this is that the complexity of a socioeconomy also scales with computational capacity. Planning an economy is quite likely always beyond the capacity of any portion of entities within that economy, for the same knowledge problem.
Running up a rigorous approach to proof/disproof of that would be an interesting exercise, of course.
But it is an interesting example of the point that AI has a way of being all things to all people, when rigorous testing of ideas is not applied. For the would-be communists and socialists it is a road to a perfect planned technocracy, regardless of the fact that this looks less than feasible.
> There are a factions in the strong AI community whose members espouse the idea that a planned economy would become feasible given greater computational capacity and better software.
The calculation problem with central planning isn't really a calculation problem, it's a missing input problem. You can't optimize utility without a good input on utility.
Capitalism has significant problems by being forced to treat money as equivalent to utility, when it manifestly suffers decreasing marginal utility like everything else. This means people with access to more of it are likely to give up more for the same utility, which means capitalism overweights the preferences of the rich, and this gets worse the more effective capitalism is at optimizing by the one utility measure it has. But centrally-planned systems have even worse utility inputs, which no measure of computational power can correct; it's a GIGO problem.
The experiences derived from that basic problem are (one of several reasons) why market socialism is much more common in socialist circles than state socialism these days (market socialism has been competing with state socialism—which many market socialists have referred to as state capitalism on the view that, in it, the state becomes one big capitalist enterprise—the whole time, but the Bolsheviks managed to fix most popular attention on their particular form of state socialism, and capitalists found it convenient to ignore other socialist viewpoints in their attempts to demonize socialism.)
>The calculation problem with central planning isn't really a calculation problem, it's a missing input problem. You can't optimize utility without a good input on utility.
Historically that has been true, but couldn't technology help? Like, issuing everyone a smartphone and having them register all demand and make all purchases through it. The rest is a problem of keeping capital from aggregating at the top.
"In soviet union, optimization problem solves YOU!"
(The article includes a link to an article with such name, a good read for an in-depth discussion / comment trail regarding optimization in the USSR / CCCP:)
Readit News
The data problem could have been solved with bar-coding. That's how WalMart got tight control over their inventory. Master Control in Bentonville, Arkansas can see pallet 2345235 leaving warehouse 242 on truck 24343 headed for store 2514. If store 2514 doesn't report arrival of that pallet, questions will be asked and the pallet will be found or somebody will be in big trouble. When the pallet is found, broken down, and product placed on shelves, the items will eventually show up in cash register data. If shelf inventory minus sales is not very close to incoming shipments, the "shrinkage" security people are informed and start looking for theft.
Gosplan had an annual planning cycle and monthly reporting. WalMart has a weekly planning cycle and daily reporting. A year was far too much lag for the system to work well. Although it did for heavy industry, where things take months anyway.
The huge linear programming problem isn't insoluble. It's a sparse matrix; potato chips don't affect steel tubing much. There's probably some way to come close to an optimal solution.[1] Sparse matrix techniques were in their infancy when the USSR was active, though.
[1] http://www.gurobi.com/resources/getting-started/lp-basics
This is really interesting -- I'd never found much on pre-SAAS/internet Wal-Mart's asset tracking system, which I assume this must be a part of. Do you have any links to articles or books I could read to learn more about this?
Wal-Mart has achieved a level of control over suppliers that Gosplan could only dream about. They're going for even more control.[2]
[1] http://www.pbs.org/wgbh/pages/frontline/shows/walmart/secret... [2] http://www.supermarketnews.com/walmart/vendors-skeptical-wal...
Modern (commercial and open-source) solvers of linear programming (LP) tackle problems of millions of variables in minutes. Most of those 12 billion variables would be cleared out (e.g. fixed to their lower bound, zero) in a pre-processing step.
Problems with variables that are constrained to be integer can take much longer, but they are orders of magnitude more efficient today than a few years ago.
Yet, they are still NP-complete.
Spufford also wrote The Backroom Boys (https://www.amazon.com/Backroom-Boys-Secret-Return-British/d...) about British tech after WWII, definitely worth a read even if Red Plenty remains unsurpassed.
I'll also add the Wayback Machine for the (now defunct) website created by the author for Red Plenty: https://web.archive.org/web/20160713031430/http://www.redple...
You can't plan innovation. It is hard to plan for knowledge economy in general (material production is increasingly a smaller part of total GDP — something that early Communist theorists failed to predict).
Capitalism is automatic, self-correcting, parallel optimization process. It is asymptotically optimal.
In a central planned system that is a policy decision based on the knowledge the planners have.
In a market based system that decision is decentralized to the actors in that system and therefore the rate of innovation is based on the sum of the actors distributed knowledge, that sum will always be more than that of a centralized body.
Hayek described that as the Local knowledge problem.
https://en.wikipedia.org/wiki/Local_knowledge_problem
For example, in a capitalist economy two people that contribute equal amount of time to work can get different rewards for it. And those who get bigger reward would oppose to changes.
This. And by the end of the century technological gap between capitalist countries and USSR was enormous.
The article makes me think that the failure of the planned economy system would probably not have happened if they had modern computers (and computing tools we take for granted today). The author thinks this would only be possible in about 100 years because he considers that everything needs to be considered in the model. However, one could make the case for doing central planning of a limited set of goods which are interdependent, of course.
AI being all the rage in the news these days, and pretty much in fashion, who knows, perhaps automatic optimization of a country's economy will start to be talked about as a Good Thing To Have?
<start dancing, comrade...>
Simulate perfectly rational economic actors that are only concerned with the next upstream and downstream hops in the market, have them take into account the "taxes" and "credits" of externalities without any of the pesky politics, and distribute in-simulation "purchasing power" to end consumers in whatever way you deem fit. You could even distribute this end-user power to actual consumers, in order to allow them the freedom to input their desires into the system.
Basically, remove the capitalists from the capitalist system; or, just use the computational model of capitalism without actually giving power to the computational nodes.
If you just want to be able to digitally assign more symbolic purchasing power to the agents dispossessed by the current system, the government already has the power and infrastructure to do that. Adding another level of computer abstraction to the already symbolic computerized money system doesn't do anything.
I have to think that the major objection to this is that the complexity of a socioeconomy also scales with computational capacity. Planning an economy is quite likely always beyond the capacity of any portion of entities within that economy, for the same knowledge problem.
Running up a rigorous approach to proof/disproof of that would be an interesting exercise, of course.
But it is an interesting example of the point that AI has a way of being all things to all people, when rigorous testing of ideas is not applied. For the would-be communists and socialists it is a road to a perfect planned technocracy, regardless of the fact that this looks less than feasible.
The calculation problem with central planning isn't really a calculation problem, it's a missing input problem. You can't optimize utility without a good input on utility.
Capitalism has significant problems by being forced to treat money as equivalent to utility, when it manifestly suffers decreasing marginal utility like everything else. This means people with access to more of it are likely to give up more for the same utility, which means capitalism overweights the preferences of the rich, and this gets worse the more effective capitalism is at optimizing by the one utility measure it has. But centrally-planned systems have even worse utility inputs, which no measure of computational power can correct; it's a GIGO problem.
The experiences derived from that basic problem are (one of several reasons) why market socialism is much more common in socialist circles than state socialism these days (market socialism has been competing with state socialism—which many market socialists have referred to as state capitalism on the view that, in it, the state becomes one big capitalist enterprise—the whole time, but the Bolsheviks managed to fix most popular attention on their particular form of state socialism, and capitalists found it convenient to ignore other socialist viewpoints in their attempts to demonize socialism.)
Historically that has been true, but couldn't technology help? Like, issuing everyone a smartphone and having them register all demand and make all purchases through it. The rest is a problem of keeping capital from aggregating at the top.
(The article includes a link to an article with such name, a good read for an in-depth discussion / comment trail regarding optimization in the USSR / CCCP:)
http://crookedtimber.org/2012/05/30/in-soviet-union-optimiza...