Acemoglu suggested technology makes Hayek's knowledge problem outdated. Forget supercomputers and AI. Markets use little information for any computational abilities.
Your iPhone example undermines your story because, as Mariana Mazzucato has clearly demonstrated, is using technology developed by a form of central planning - the moon mission primarily.
I think the point Brian made about roads is worth considering - that solutions to market wants could not occur without a foundation of central planning innovation isn’t quite reasonable. That the tech/solution from NASA was the only possible path of innovation allowing for development of the iPhone (or alternative substitute) doesn’t often play out in other areas of material tech.
You could say that the moon mission stood on the knowledge and work of independent researchers - begging whether the central planning innovation could gave occurred without the private effort.
Interesting read! I do think that we already underestimate how much central planning actually occurs on a smaller scale. For example, grocery stores are extremely AI central planned - to which store and when goods are delivered. Famously in the UK, Saintsbury's software failed to deliver bread many times to stores, resulting in losing customers. Moreover, we have a ton of Just-in-time systems which are also centrally planned (and failed during the pandemic). And even shipping companies are fully central planned to the extent that they minimize the number of left turns. Not meant as a defense of central planning, but I think we underestimate how much it already is with us.
Regarding desires - I think that's the issue. But how do supermarkets deal with it ( that have their central planning computer systems)? I assume they trial run certain products at supermarkets and see what happens. The toughest problem to allocate would be services - like movies or other entertainment.
I agree that maybe my examples are not entirely central planning - more of a thought experiment I'm considering.
In cases of stores, it's more of a stock management system (I don't know if the software adapts prices at stores). But we can also imagine this stock system going further - with 'smart' fridges, a central system would know if you just ran out of milk. Then you wake up in the morning and you have a milk carton outside your door. This could be a subscription program (kind of like the cooking boxes), which would resemble a tax from society's perspective. So it becomes a question - what is then exactly central planning, especially in the goods sector.
Your iPhone example undermines your story because, as Mariana Mazzucato has clearly demonstrated, is using technology developed by a form of central planning - the moon mission primarily.
That’s not the claim at all. Entrepreneurs clearly rely on technology that comes before. I’m sorry I wasn’t clear.
I think the point Brian made about roads is worth considering - that solutions to market wants could not occur without a foundation of central planning innovation isn’t quite reasonable. That the tech/solution from NASA was the only possible path of innovation allowing for development of the iPhone (or alternative substitute) doesn’t often play out in other areas of material tech.
You could say that the moon mission stood on the knowledge and work of independent researchers - begging whether the central planning innovation could gave occurred without the private effort.
Interesting read! I do think that we already underestimate how much central planning actually occurs on a smaller scale. For example, grocery stores are extremely AI central planned - to which store and when goods are delivered. Famously in the UK, Saintsbury's software failed to deliver bread many times to stores, resulting in losing customers. Moreover, we have a ton of Just-in-time systems which are also centrally planned (and failed during the pandemic). And even shipping companies are fully central planned to the extent that they minimize the number of left turns. Not meant as a defense of central planning, but I think we underestimate how much it already is with us.
Regarding desires - I think that's the issue. But how do supermarkets deal with it ( that have their central planning computer systems)? I assume they trial run certain products at supermarkets and see what happens. The toughest problem to allocate would be services - like movies or other entertainment.
It's a good question. This formulation collapses the firm's decisions to just the same as an individual consumer. So that's all avoided.
You’ve gotta roll Coase into this as a followup! You’ll make it both illuminating and entertaining. Thanks again for the post!
Is that really central planning, since planning at the firm level relies on external prices to coordinate decisions?
I agree that maybe my examples are not entirely central planning - more of a thought experiment I'm considering.
In cases of stores, it's more of a stock management system (I don't know if the software adapts prices at stores). But we can also imagine this stock system going further - with 'smart' fridges, a central system would know if you just ran out of milk. Then you wake up in the morning and you have a milk carton outside your door. This could be a subscription program (kind of like the cooking boxes), which would resemble a tax from society's perspective. So it becomes a question - what is then exactly central planning, especially in the goods sector.
Yes, it's still central planning of how the firm should use its resources, although some firms have experimented with internal markets.