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Maximizing Economic Output With Linear Programming...and Communism (medium.com)
Slashdot reader mkwan writes: Economies are just a collection of processes that convert raw materials and labour into useful goods and services. By representing these processes as a series of equations and solving a humongous linear programming problem, it should be possible to maximize an economy's GDP. The catch? The economy needs to go communist.
"[P]oorest members would receive a basic income that gradually increases as the economy becomes more efficient, plateauing at a level where they can afford everything they want to consume," argues the article, while "The middle classes wouldn't see much change. They would continue to work in a regular job for a regular -- but steadily increasing -- wage... Without the ability to own real-estate, companies, or intellectual property, it would be almost impossible to become rich, especially since the only legal source of income would be from a government job."
"[P]oorest members would receive a basic income that gradually increases as the economy becomes more efficient, plateauing at a level where they can afford everything they want to consume," argues the article, while "The middle classes wouldn't see much change. They would continue to work in a regular job for a regular -- but steadily increasing -- wage... Without the ability to own real-estate, companies, or intellectual property, it would be almost impossible to become rich, especially since the only legal source of income would be from a government job."
This isn't a new idea. Kantorovich (one of the inventors of linear programming) considered this venue of economic optimization himself, but the technology of the day wasn't up to the task and the bureaucracy didn't want to be displaced either. Some of his suggestions inspired the reforms that later got implemented by Kosygin, but the Soviet economy was rather distorted by subsidies at that point, so a lot of those reforms got rolled back.
There was also the fear that linear programming, with its shadow prices, would covertly smuggle capitalism into communism. See also Red Plenty for a half-fictionalized account of Kantorovich's attempts (or the Crooked Timber post, In Soviet Union, Optimization Problem Solves You).
Beyond that, there's Towards a New Socialism which is an idea/plan of how to run a socialist centrally planned society with modern technology. It uses sparse linear programming for the plan construction part and is based on sortition for government to diminish the inevitable corruption that comes with concentrating economic power like any CPE does. Would it work? Who knows? It may be interesting in the utopian sense anyway.
Tangentially related (speaking of scientific communism/socialism), there's also Project Cybersyn, the project to use cybernetics to run socialist Chile. That wasn't based on linear programming, though. If linear programming is the neat route, Cybersyn would be the scruffy route. Again, who knows whether it would have worked; if Medina's Cybernetic Revolutionaries is anything to go by, a considerable part of the problem was that of bureaucracy and what the people were used to. Managers didn't use the system because it felt cumbersome to do so, etc.
I am an economist. Economists have already extensively studied this kind of approach. It's called an Input/Output Model. Communist countries used it in their approach to central planning during the 1970's. It failed miserably for two reasons:
1) It assumes zero substitutability between inputs. E.g., to make a car you need exactly 1.35 tons of steel, 52.7 kg of rubber, 217 kg of glass, 1.73 KW of electricity, 29.4 hours of labor, etc. No other formula is possible, you can't use more energy and less labor, for instance. For reference, the production function is known as a Leontief production function. To be fair, adding any kind of substitutability between inputs results in a completely intractable problem. However, without substitutability this is a lousy way to actually model an economy.
2) It assumes perfect information on the part of the central planner. While this is an oft-used simplification in economic models, it's a lousy reflection of reality. It's simply impossible for a central planner to gather and correlate sufficient information to make it work.
Yet another piece-of-crap opinion article written by someone who couldn't be bothered to do an hour's research on Wikipedia.
At the start of the 20th century, most of the United States' population was agricultural peasants. In the same time span, our society became urbanized, better educated than the USSR's and enjoyed a vastly higher median standard of living.
Moderating "-1, Disagree" is simple censorship. Have the guts to post your opinion.
No centralized, planned economy has ever outperformed a free market, capitalist one. Ever.
You would be wrong. There are several examples of this happening. One case would be the War Communism period of the USSR. They had double digit growth rates that outperformed every other economy in the world. How else do you think a country which was known for most of its population being indentured serfs not so long ago came go to being the power that produced the most tanks in WWII even while it was being bombed in the process?
The WWII example is completely invalid from a military history perspective. See "Feeding the Bear" by Van Tuyll for an introduction.
Truly staggering amounts of military and industrial aid were provided to the USSR during the war. This was very carefully planned in close coordination with Soviet officials: the Soviets had good weapon designs in many basic categories, so a major concern was to support Soviet manufacturing of those weapons: this allowed the Soviets to shut down many peacetime production processes, and convert others over to weapons. Huge amounts of goods were shipped via the Arctic convoys, and directly from the USA to the Soviet Union on Soviet flag ships (the USSR and Japan had a treaty that permitted this, but only for "nonmilitary" goods). Any single Arctic convoy would be typically carrying a billion dollars (in today's money) worth of aid. Over 20k US citizens were sent to the Middle East to build a railroad from Iran to the Soviet Union allowing additional goods to be shipped to the Indian Ocean and then transported by rail to the Soviets (this was for military goods that could not be shipped directly: it allowed the extremely dangerous Arctic route to be avoided).
It is estimated that 90-95% of certain critical goods used by Soviet Industry in the war, such as ball bearings, were provided to the Soviet Union from imports. Ball bearings are used in every piece of rotating machinery, including many places in tanks, artillery, aircraft, not to mention the machine tools used to make these and the ammunition they use, plus a wide variety of other industrial processing and fabrication equipment. Huge amounts of machine tools were shipped as well, and since many of the Soviet factories had been designed by US engineers prior to the war, this equipment could be used directly: it was already familiar. It is also estimated that 90% of Soviet aviation fuel for high performance aircraft was processed using US made equipment and chemical additives.
It's worth noting that both Britain and Germany actually needed to import much of their ball bearing production (the Germans imported from Sweden). Standard machine tools can't easily produce round objects, so producing these in large numbers is hard, and while the British attempted to build new assembly lines to produce these, they had lots of problems and production was never sufficient. Ball bearings were such critical components that major air raids were attempted to attack German production.
In addition, hundreds of thousands of vehicles were shipped to the Soviet Union. The vast majority of these were non-combat vehicles: they played a critical role in the logistics required to support modern warfare, not to mention manufacturing logistics. See Martin van Creveld's book for a general introduction to the logistics issues of warfare: basically in modern war attrition of equipment and supplies is huge, yet at the same time a wide variety of parts, fuels, lubricants, and other chemicals is required. This in turn means a nation needs a solid train network to get equipment near the front, and huge numbers of trunks to get equipment from the train depots to the units (both are also required to get goods to factories for refining and assembling). The Soviets were under-equipped with trucks to begin with, and most of these were lost in the first few months. As another example, the Soviets only produced 92 locomotives between 1942 and 1945: they r