aquaticko comments on On Walmart, And Who Bears Responsibility For the Poor - LessWrong

13 Post author: ChrisHallquist 27 November 2013 05:08AM

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Comment author: aquaticko 03 December 2013 12:18:20AM -2 points [-]

I've responded to this specific request in another response on this thread, but my definition of socialism is public ownership of the means of production, operated for public good (however that ends up being defined). Again, if you have time, read that last comment on the post I linked to if you'd like to see more about how market socialism might work.

What I believe has caused the fall of socialism in the past is that most economies which operate socialistically are guided by central planning (typically by a national government). This means that production is allocated according to whatever a central planner believes it ought to be; this is obviously problematic because no one person (or committee of people which represents but a sample of a population) has sufficient information to make socially-optimal decisions on production. Therefore, socialism has been seen to fail at what it (in my understanding) has been its only real goal--production of public good; I believe that these failures demonstrate the inadequacy of planning, not socialism.

Free markets, by contrast, aggregate information from millions of people, dramatically improving their efficiency, when compared to central planning, at producing goods. This is where I believe socialism should come in. Using markets, as opposed to planning, for socialist means, i.e. production of social good, ought to significantly improve both macroeconomic efficiency by decentralizing economic power, and social welfare simply by making it the priority.

Comment author: Lumifer 03 December 2013 12:58:51AM *  0 points [-]

my definition of socialism is public ownership of the means of production, operated for public good (however that ends up being defined)

OK, so the USSR, Cuba, North Korea, and China until twenty years ago or so -- all were/are socialist countries, right? On the other hand, countries like Sweden or France were never socialist -- correct?

its only real goal--production of public good

The expression "public goods" has specific meaning in econospeak, I assume you're not using that but just talking about goods for public consumption.

But I'm still confused. The (more or less free) markets do indeed signal to the producers what to produce. The mechanism by which they do that is price. Desireable goods command high prices and so create the incentive to make more, while goods not in demand are not sold and their manufacturers either switch production or go out of business.

Given the state ownership of the means of production and the absence of the profit motive I wonder how will the market mechanism operate. After all in USSR and similar countries the "market" existed -- people bought things in stores and paid money for what they bought. It's just that the signals from this market were ignored -- nobody cared about them.

What exactly would make state-owned companies with no profit motive care about prices or demand?