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Source link: http://archive.mises.org/7968/allendes-central-planning-machine/

Allende’s Central Planning Machine

March 30, 2008 by

Oskar Lange famously believed that the development of high-speed computers would render Mises’s and Hayek’s critiques of socialism obsolete. “Were I to rewrite my [1936] essay today,” he wrote in 1967, “my task would be much simpler. My answer to Hayek and Robbins would be: So what’s the trouble? Let us put the simultaneous equations on an electronic computer and we shall obtain the solution in less than a second. The market process with its cumbersome tâtonnements appears old fashioned. Indeed, it may be considered as a computing device of the pre-electronic age.”

Lange was only a little ahead of his time. Just before Augusto Pinochet’s 1973 coup put him out of business Chilean socialist leader Salvador Allende had installed a central planning machine, called Cybersyn, intended to plan the Chilean economy. As the New York Times reports:

The project . . . was the brainchild of A. Stafford Beer, a visionary Briton who employed his “cybernetic” concepts to help Mr. Allende find an alternative to the planned economies of Cuba and the Soviet Union. . . .

A Star Trek-like chair with controls in the armrests was a replica of those in a prototype operations room. Mr. Beer planned for the room to receive computer reports based on data flowing from telex machines connected to factories up and down this 2,700-mile-long country. Managers were to sit in seven of the contoured chairs and make critical decisions about the reports displayed on projection screens.

While the operations room never became fully operational, Cybersyn gained stature within the Allende government for helping to outmaneuver striking workers in October 1972. That helped planners realize — as the pioneers of the modern-day Internet did — that the communications network was more important than computing power, which Chile did not have much of, anyway. A single I.B.M. 360/50 mainframe, which had less storage capacity than most flash drives today, processed the factories’ data, with a Burroughs 3500 later filling in.

The Times’s reporter pokes gentle fun at the clunky and primitive Cybersyn but doesn’t seem to grasp that computing power has nothing to do with the problem. Even today, Mises’s 1920 essay is little understood.

{ 14 comments }

newson March 31, 2008 at 3:02 am

ok, there are no droogs in the picture, but that chair looks like something from the korova milk-bar.

they might have needed an upgrade had allende not been toppled. already in ’72 and ’73 there had been over 80 strikes by copper miners alone, and inflation over 300%.

allende is only revered because of his unique status as a democratically elected marxist with 36% of the vote.

George Gaskell March 31, 2008 at 8:41 am

computing power has nothing to do with the problem

A first-year introduction to the world of combinatorics should be enough to dispel the idea that a computer program can analyze, predict and optimize something as complex as an economy. There aren’t enough molecules in the universe to make a computer capable of describing the interactions of even a small, self-contained group of people, much less a country of millions of people who constantly interact with the outside world.

Plus, all of the critical information needed to make such decisions isn’t even knowable ex ante. People don’t know their preferences until they are required to make a choice from among existing alternatives. Everything we know about the economy we learn after the fact.

Fephisto March 31, 2008 at 9:33 am

I tried to make an economics game once. That was when I learned what Mises was talking about.

You can’t calculate the economy, because you can’t calculate people (and if you do figure a way to calculate people, give me a call, I’d like to talk about a specie known as ‘women’).

f March 31, 2008 at 9:42 am

Multivac anyone?

George Gaskell March 31, 2008 at 10:02 am

The connection to Star Trek goes beyond the aesthetics of the chair.

There was an episode in the original series where Kirk and Co. discover a planet of people who behave like robots.

Except for an occasional Maenadian frenzy (called the “red hour”), the natives of this planet do what they are told by a reclusive dictator. Kirk and Spock discover that the unseen master of this society is actually a computer.

The episode basically consists of Kirk arguing with the computer until it overloads itself or self-destructs, then leaving.

That episode first aired in 1967, which appears to have been right about the time that Allende’s socialist-planning computer project would have been started.

Yancey Ward March 31, 2008 at 3:44 pm

The problem is that people take as an axiom that they know what everyone else wants and needs. With that input assumed, you can calculate an economy on a single piece of paper.

Ricardo Flores March 31, 2008 at 6:14 pm

The central planners in here (Venezuela) are also designing a software that will “arrange needs and production”. Our Seceretary of Planning is a software engineer

F April 1, 2008 at 5:30 am

Hi Ricardo,
How are you guys coping with inflation?
Is e-gold taking off yet?

newson April 1, 2008 at 10:44 am

to ricardo:
for all their undoubted planning, skill chavez & co. haven’t done much good with petroleos de venezuela. capitalistas may be asquerosos, but they are obviously better oil-men.

Michael A. Clem April 2, 2008 at 10:03 pm

Plus, all of the critical information needed to make such decisions isn’t even knowable ex ante. People don’t know their preferences until they are required to make a choice from among existing alternatives. Everything we know about the economy we learn after the fact.
Excellent point, and so very Austrian! I’ve often had trouble imagining this “unknowable” information that the market provides, but this really puts it into perspective.

Sebastián July 16, 2011 at 2:34 pm

Ok, a little late, I know…

But the problem isn’t if computerized planning (which needn’t be “central”, nowadays) can be perfectly efficient, what Mises can’t show capitalism to be. It just has to be AS efficient as capitalism.

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