Re: The Five Stages of Collapse

[David Farber <dave () farber net>]

Begin forwarded message:

From: Vadim Antonov <avg () kotovnik com>
Date: December 26, 2008 8:22:13 PM EST
To: David Farber <dave () farber net>
Cc: ip <ip () v2 listbox com>
Subject: Re: [IP] The Five Stages of Collapse


David - the comment for IP list, if you wish.

> From: dewayne () warpspeed com (Dewayne Hendricks)
>
> The collapse of the Soviet Union was not something that "Just
> happened" but was instead engineered by the master strategists of the
> Reagan Administration.

This is a persistent myth which has nothing to do with reality.  
Politicans
are apt to take credit for good things which happened without their help
(and often in spite of their interference).

The reasons for Soviet Union collapse were purely internal, and these  
same
reasons are behind collapses (or near collapses) of all socialist
economies. In fact, the collapse of the USSR was accurately predicted  
and
explained as early as 1922 by the outstanding economist Ludwig von Mises
(see "Socialism: An Economic and Sociological Analysis", the online
version is available at
http://www.mises.org/books/socialism/contents.aspx).

In short, socialist economies inevitably collapse because any form of
central planning suppresses ability of economic actors to generate
information about their subjective utilities (the human utility  
functions
are hidden and cannot be directly measured or observed - so the only way
to discover what and how strongly people value is to observe their
voluntary transactions).  Lacking this information, the central planners
can only use their own ideas about what other people may want (which  
would
be simplistic and wildly inaccurate) or rely on the previous year's
figures to plan the production and distribution (this is what they did  
in
practice).  (These previous figures can be typically traced back to the
pre-socialist society in the past - for example, all Soviet production
figures were provided with reference to 1913 levels - or can be  
exogenous,
abstracted from statistics of outside capitalist economies, which USSR
government tried to do, unsuccessfully, - but which was translated into
the "Catch Up and Overtake" campaigns in 60s and 70s, before the  
apathy of
80s settled in).

Using the previous figures works for a while, especially if the  
society is
static, but technological, environmental, and global societal changes
inevitably cause divergence between the interpolation based solely on
history and the reality - causing bigger and bigger misallocation of
resources, until the economy is totally out of whack (this process was
obvious to anyone who lived in the late USSR - there was a lot of junk
produced which nobody wanted, while some pretty basic things were
lacking).  It was even worse in planning the production of non-consumer
goods - so bad, in fact, that the whole Soviet economy was totally
dependent on the shadowy profession of "snabzhentsy", people who were
semi-officially engaged in industrial barter, criss-crossing the country
and forging unofficial deals between different and nominally completely
planned factories.

The so-called economic calculation problem is alone sufficient to kill  
any
socialist economy.  The concentration of political power needed for the
total control inherent in central planning causes infinite opportunites
for corruption and abuse of that political power also contributes to the
self-destruction of the socialist utopias.

--vadim





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