Ludwig von Mises

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https://en.wikipedia.org/wiki/Ludwig_von_Mises

 

Ludwig von Mises
Born	Ludwig Heinrich Edler von Mises 29 September 1881 Lemberg, Galicia and Lodomeria, Austria-Hungary (now Lviv, Ukraine)
Died	10 October 1973 (aged 92) New York City, New York, U.S.
Political party	Fatherland Front
Institution	University of Vienna (1919–1934) Institut Universitaire des Hautes Études Internationales, Geneva, Switzerland (1934–1940) New York University (1945–1969)
Field	Economics, political economy, philosophy of science, epistemology, methodology, rationalism, logic, classical liberalism, libertarianism
School or tradition	Austrian School
Doctoral advisor	Eugen Böhm von Bawerk
Doctoral students	Gottfried Haberler Fritz Machlup Oskar Morgenstern Gerhard Tintner Israel Kirzner Friedrich Hayek
Other notable students	Sennholz · Raico · Liggio · Reisman · Rothbard
Influences	Menger · Böhm-Bawerk · Wieser · Husserl · Fetter · Weber · Say · Kant
Contributions	Economic calculation problem Quantity theory of money Austrian business cycle theory Praxeology Methodological dualism Economic Calculation
Notes
Relatives Richard von Mises (brother) Gitta Sereny (step-daughter)

Ludwig Heinrich Edler von Mises (German: [ˈluːtvɪç fɔn ˈmiːzəs]; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberalism. He is best known for his work on praxeology, a study of human choice and action.

Mises emigrated from Austria to the United States in 1940. Since the mid-20th century, libertarian movements have been strongly influenced by Mises's writings. Mises' student Friedrich Hayek viewed Mises as one of the major figures in the revival of classical liberalism in the post-war era. Hayek's work "The Transmission of the Ideals of Freedom" (1951) pays high tribute to the influence of Mises in the 20th century libertarian movement.

Mises's Private Seminar was a leading group of economists. Many of its alumni, including Friedrich Hayek and Oskar Morgenstern, emigrated from Austria to the United States and Great Britain. Mises has been described as having approximately seventy close students in Austria.

Biography

Early life

Coat of arms of Ludwig von Mises's great-grandfather, Mayer Rachmiel Mises, awarded upon his 1881 ennoblement by Franz Joseph I of Austria

Ludwig von Mises was born to Jewish parents in the city of Lemberg, Galicia, Austria-Hungary (now Lviv, Ukraine). The family of his father, Arthur Edler von Mises, had been elevated to the Austrian nobility in the 19th century (Edler indicates a noble landless family) and they had been involved in financing and constructing railroads. His mother Adele (née Landau) was a niece of Dr. Joachim Landau, a Liberal Party deputy to the Austrian Parliament. Arthur von Mises was stationed in Lemberg as a construction engineer with the Czernowitz railway company.

By the age of 12, Mises spoke fluent German, Polish and French, read Latin and could understand Ukrainian. Mises had a younger brother, Richard von Mises, who became a mathematician and a member of the Vienna Circle, and a probability theorist. When Ludwig and Richard were still children, their family moved back to Vienna.

In 1900, Mises attended the University of Vienna, becoming influenced by the works of Carl Menger. Mises's father died in 1903. Three years later, Mises was awarded his doctorate from the school of law in 1906.

Life in Europe

In the years from 1904 to 1914, Mises attended lectures given by Austrian economist Eugen von Böhm-Bawerk. He graduated in February 1906 (Juris Doctor) and started a career as a civil servant in Austria's financial administration.

After a few months, he left to take a trainee position in a Vienna law firm. During that time, Mises began lecturing on economics and in early 1909 joined the Vienna Chamber of Commerce and Industry. During World War I, Mises served as a front officer in the Austro-Hungarian artillery and as an economic adviser to the War Department.

Mises was chief economist for the Austrian Chamber of Commerce and was an economic adviser of Engelbert Dollfuss, the austrofascist but strongly anti-Nazi Austrian Chancellor. Later, Mises was economic adviser to Otto von Habsburg, the Christian democratic politician and claimant to the throne of Austria (which had been legally abolished in 1918 following the Great War). In 1934, Mises left Austria for Geneva, Switzerland, where he was a professor at the Graduate Institute of International Studies until 1940.

While in Switzerland, Mises married Margit Herzfeld Serény, a former actress and widow of Ferdinand Serény. She was the mother of Gitta Sereny.

Work in the United States

In 1940, Mises and his wife fled the German advance in Europe and emigrated to New York City in the United States. He had come to the United States under a grant by the Rockefeller Foundation. Like many other classical liberal scholars who fled to the United States, he received support by the William Volker Fund to obtain a position in American universities. Mises became a visiting professor at New York University and held this position from 1945 until his retirement in 1969, though he was not salaried by the university. Businessman and libertarian commentator Lawrence Fertig, a member of the New York University Board of Trustees, funded Mises and his work.

For part of this period, Mises studied currency issues for the Pan-Europa movement, which was led by Richard von Coudenhove-Kalergi, a fellow New York University faculty member and Austrian exile. In 1947, Mises became one of the founding members of the Mont Pelerin Society.

In 1962, Mises received the Austrian Decoration for Science and Art for political economy at the Austrian Embassy in Washington, D.C.

Mises retired from teaching at the age of 87 and died at the age of 92 in New York. He is buried at Ferncliff Cemetery in Hartsdale, New York. Grove City College houses the 20,000-page archive of Mises papers and unpublished works. The personal library of Mises was given to Hillsdale College as bequeathed in his will.

At one time, Mises praised the work of writer Ayn Rand and she generally looked on his work with favor, but the two had a volatile relationship, with strong disagreements for example over the moral basis of capitalism.

Contributions and influence in economics

Mises wrote and lectured extensively on behalf of classical liberalism. In his magnum opus Human Action, Mises adopted praxeology as a general conceptual foundation of the social sciences and set forth his methodological approach to economics.

Mises was for economic non-interventionism and was an anti-imperialist. He referred to the Great War as such a watershed event in human history and wrote that "war has become more fearful and destructive than ever before because it is now waged with all the means of the highly developed technique that the free economy has created. Bourgeois civilization has built railroads and electric power plants, has invented explosives and airplanes, in order to create wealth. Imperialism has placed the tools of peace in the service of destruction. With modern means it would be easy to wipe out humanity at one blow."

In 1920, Mises introduced in an article his Economic Calculation Problem as a critique of socialisms which are based on planned economies and renunciations of the price mechanism. In his first article "Economic Calculation in the Socialist Commonwealth", Mises describes the nature of the price system under capitalism and describes how individual subjective values are translated into the objective information necessary for rational allocation of resources in society. Mises argued that the pricing systems in socialist economies were necessarily deficient because if a public entity owned all the means of production, no rational prices could be obtained for capital goods as they were merely internal transfers of goods and not "objects of exchange", unlike final goods. Therefore, they were unpriced and hence the system would be necessarily irrational, as the central planners would not know how to allocate the available resources efficiently. He wrote that "rational economic activity is impossible in a socialist commonwealth". Mises developed his critique of socialism more completely in his 1922 book Socialism: An Economic and Sociological Analysis, arguing that the market price system is an expression of praxeology and can not be replicated by any form of bureaucracy.

Friends and students of Mises in Europe included Wilhelm Röpke and Alfred Müller-Armack (advisors to German chancellor Ludwig Erhard), Jacques Rueff (monetary advisor to Charles de Gaulle), Gottfried Haberler (later a professor at Harvard), Lionel, Lord Robbins (of the London School of Economics), Italian President Luigi Einaudi, and Leonid Hurwicz, recipient of the 2007 Nobel Memorial Prize in Economic Sciences. Economist and political theorist Friedrich Hayek first came to know Mises while working as his subordinate at a government office dealing with Austria's post-World War I debt. While toasting Mises at a party in 1956, Hayek said: "I came to know him as one of the best educated and informed men I have ever known". Mises's seminars in Vienna fostered lively discussion among established economists there. The meetings were also visited by other important economists who happened to be traveling through Vienna.

At his New York University seminar and at informal meetings at his apartment, Mises attracted college and high school students who had heard of his European reputation. They listened while he gave carefully prepared lectures from notes. Among those who attended his informal seminar over the course of two decades in New York were Israel Kirzner, Hans Sennholz, Ralph Raico, Leonard Liggio, George Reisman and Murray Rothbard. Mises's work also influenced other Americans, including Benjamin Anderson, Leonard Read, Henry Hazlitt, Max Eastman, legal scholar Sylvester J. Petro and novelist Ayn Rand.

Reception

Debates about Mises's arguments

Economic historian Bruce Caldwell wrote that in the mid-20th century, with the ascendance of positivism and Keynesianism, Mises came to be regarded by many as the "archetypal 'unscientific' economist". In a 1957 review of his book The Anti-Capitalistic Mentality, The Economist said of Mises: "Professor von Mises has a splendid analytical mind and an admirable passion for liberty; but as a student of human nature he is worse than null and as a debater he is of Hyde Park standard". Conservative commentator Whittaker Chambers published a similarly negative review of that book in the National Review, stating that Mises's thesis that anti-capitalist sentiment was rooted in "envy" epitomized "know-nothing conservatism" at its "know-nothingest".

Scholar Scott Scheall called economist Terence Hutchison "the most persistent critic of Mises's apriorism", starting in Hutchison's 1938 book The Significance and Basic Postulates of Economic Theory and in later publications such as his 1981 book The Politics and Philosophy of Economics: Marxians, Keynesians, and Austrians. Scheall noted that Friedrich Hayek, later in his life (after Mises died), also expressed reservations about Mises's apriorism, such as in a 1978 interview where Hayek said that he "never could accept the ... almost eighteenth-century rationalism in his [Mises's] argument".

In a 1978 interview, Hayek said about Mises's book Socialism:

At first we all felt he was frightfully exaggerating and even offensive in tone. You see, he hurt all our deepest feelings, but gradually he won us around, although for a long time I had to – I just learned he was usually right in his conclusions, but I was not completely satisfied with his argument.

Economist Milton Friedman considered Mises inflexible in his thinking, but added that Mises' difficult life and lack of acceptance by academia are the likely culprits:

The story I remember best happened at the initial Mont Pelerin meeting when he got up and said, "You're all a bunch of socialists." We were discussing the distribution of income, and whether you should have progressive income taxes. Some of the people there were expressing the view that there could be a justification for it. Another occasion which is equally telling: Fritz Machlup was a student of Mises's, one of his most faithful disciples. At one of the Mont Pelerin meetings, Machlup gave a talk in which I think he questioned the idea of a gold standard; he came out in favor of floating exchange rates. Mises was so mad he wouldn't speak to Machlup for three years. Some people had to come around and bring them together again. It's hard to understand; you can get some understanding of it by taking into account how people like Mises were persecuted in their lives.

Economist Murray Rothbard, who studied under Mises, agreed he was uncompromising, but disputes reports of his abrasiveness. In his words, Mises was "unbelievably sweet, constantly finding research projects for students to do, unfailingly courteous, and never bitter" about the discrimination he received at the hands of the economic establishment of his time.

After Mises died, his widow Margit quoted a passage that he had written about Benjamin Anderson. She said it best described Mises's own personality:

His most eminent qualities were his inflexible honesty, his unhesitating sincerity. He never yielded. He always freely enunciated what he considered to be true. If he had been prepared to suppress or only to soften his criticisms of popular, but irresponsible, policies, the most influential positions and offices would have been offered him. But he never compromised.

Debates about fascism

Marxists Herbert Marcuse and Perry Anderson as well as German writer Claus-Dieter Krohn criticized Mises for writing approvingly of Italian fascism, especially for its suppression of leftist elements, in his 1927 book Liberalism. In 2009, economist J. Bradford DeLong and sociologist Richard Seymour repeated the criticism.

Mises, in his 1927 book Liberalism, wrote:

It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history. But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error.

Mises biographer Jörg Guido Hülsmann says that critics who suggest that Mises supported fascism are "absurd" as he notes that the full quote describes fascism as dangerous. He notes that Mises thought it was a "fatal error" to think that it was more than an "emergency makeshift" against the looming threat of communism and socialism as exemplified by the Bolsheviks in Russia and the surging communists of Germany. Nevertheless, Hülsmann does mention briefly in Mises: The Last Knight of Liberalism that Mises had been a card-carrying member of the Fatherland Front (Austria) fascist party but, as Hülsmann uses the word "probably", it's not exactly clear whether membership was mandatory for public officials and civil servants.

Collectivist anarchism

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Collectivist_anarchism 

Collectivist anarchism, also referred to as anarchist collectivism and anarcho-collectivism, is a revolutionary socialist doctrine and anarchist school of thought that advocates the abolition of both the state and private ownership of the means of production as it envisions in its place the means of production being owned collectively whilst controlled and self-managed by the producers and workers themselves. Notwithstanding the name, collectivism anarchism is seen as a blend of individualism and collectivism.

For the collectivization of the means of production, collectivist anarchism originally envisaged that workers will revolt and forcibly collectivize the means of production. Once collectivization takes place, money would be abolished to be replaced with labour notes and workers' salaries would be determined in democratic organizations of voluntary membership based on job difficulty and the amount of time they contributed to production. These salaries would be used to purchase goods in a communal market.

Collectivist anarchism is contrasted with anarcho-communism, where wages would be abolished and where individuals would take freely from a storehouse of goods "to each according to his need". It is most commonly associated with Mikhail Bakunin, the anti-authoritarian sections of the International Workingmen's Association and the early Spanish anarchist movement.

Collectivist anarchism was the dominant tendency of anarchism in the 19th century until anarcho-communism took its place. As part of the social anarchist tradition, collectivist anarchism believes that "human beings are human animals, better suited to working together for the common good than striving for individual self-interest", supporting mutual aid. While individualist anarchists advocate a libertarian socialist form of free-market anarchism and support mutualist property rights, seeing state interventions as distorting free competition, collectivist anarchists see such interventions as "merely prop up" for a "system of class exploitation", giving capitalism "a human face". However despite this criticism, social anarchists including collectivist anarchists still regard the individualist anarchists as socialists due to their opposition to capitalist profit, interest, and absentee rent. 

First International

Main article: International Workingmen's Association

Collectivist anarchist Mikhail Bakunin, whose anti-authoritarian majority created their own International

Giuseppe Fanelli met Bakunin at Ischia in 1866. In October 1868, Bakunin sponsored Fanelli to travel to Barcelona to share his libertarian visions and recruit revolutionists to the International. Fanelli's trip and the meeting he organised during his travels provided the catalyst for the Spanish exiles, the largest workers' and peasants' movement in modern Spain and the largest anarchist movement in modern Europe. Fanelli's tour took him first to Barcelona, where he met and stayed with Elie Recluse. Recluse and Fanelli were at odds over Recluse's friendships with Spanish republicans and Fanelli soon left Barcelona for Madrid. Fanelli stayed in Madrid until the end of January 1869, conducting meetings to introduce Spanish workers, including Anselmo Lorenzo, to the First National. In February 1869, Fanelli left Madrid, journeying home via Barcelona. He met with painter Josep Lluís Pellicer and his cousin Rafael Farga i Pellicer, along with others who were to play an important role establishing the International in Barcelona as well as the Alliance section.

In 1870, Bakunin led a failed uprising in Lyon on the principles later exemplified by the Paris Commune, calling for a general uprising in response to the collapse of the French government during the Franco-Prussian War, seeking to transform an imperialist conflict into social revolution, or what Vladimir Lenin later termed revolutionary defeatism. In his Letters to A Frenchman on the Present Crisis, Bakunin also argued for a revolutionary alliance between the working class and the peasantry, advocated a system of militias with elected officers as part of a system of self-governing communes and workplaces and argued the time was ripe for revolutionary action, saying that "we must spread our principles, not with words but with deeds, for this is the most popular, the most potent, and the most irresistible form of propaganda.

These ideas corresponded strikingly close with the program of the Paris Commune in 1871, much of which was developed by followers of Pierre-Joseph Proudhon as Marxists were almost entirely absent from the Commune. Bakunin was a strong supporter of the Paris Commune, which was brutally suppressed by the French government. He saw the Paris Commune as above all a "rebellion against the State" and commended the Communards for rejecting not only the state, but also revolutionary dictatorship. In a series of powerful pamphlets, he defended the Paris Commune and the International against the Italian nationalist Giuseppe Mazzini, thereby winning over many Italian republicans to the International and the cause of revolutionary socialism. The collectivist anarchists at first used the term collectivism to distinguish themselves from the mutualism of the followers of Proudhon and the state socialists associated with Karl Marx. In his 1867 essay "Federalism, Socialism, and Anti-Theologism", Bakunin wrote that "we shall always protest against anything that may in any way resemble communism or state socialism" which Bakunin regarded as fundamentally authoritarian.

Bakunin speaking to members of the IWA at the Basel Congress in 1869

Bakunin's disagreements with Marx which led to the attempt by the Marx party to expel him at the Hague Congress in 1872 illustrated the growing divergence between the anti-authoritarian sections of the International, which advocated the direct revolutionary action and organization of the workers and peasants in order to abolish the state and capitalism; and the sections allied with Marx, which advocated the conquest of political power by the working class. Bakunin was "Marx's flamboyant chief opponent" and "presciently warned against the emergence of a communist authoritarianism that would take power over working people".

The anti-authoritarian majority, which included most sections of the International, created their own International at the 1872 St. Imier Congress, adopted a revolutionary anarchist program and repudiated the Hague resolutions, rescinding Bakunin's alleged expulsion. Although Bakunin accepted elements of Marx's class analysis and theories regarding capitalism, acknowledging "Marx's genius", he thought Marx's analysis was one-sided and that Marx's methods would compromise the social revolution. More importantly, Bakunin criticized authoritarian socialism which he associated with Marxism and the concept of dictatorship of the proletariat which he adamantly refused. Indeed, Bakunin's maxim was that "[i]f you took the most ardent revolutionary, vested him in absolute power, within a year he would be worse than the Tsar himself.

The anti-authoritarian sections of the International proclaimed at the St. Imier Congress (1872) that "the aspirations of the proletariat can have no purpose other than the establishment of an absolutely free economic organization and federation, founded upon the labour and equality of all and absolutely independent of all political government" in which each worker will have the "right to the enjoyment of the gross product of his labours and thereby the means of developing his full intellectual, material and moral powers in a collective setting". This revolutionary transformation could "only be the outcome of the spontaneous action of the proletariat itself, its trades bodies and the autonomous communes". A similar position was adopted by the Workers' Federation of the Spanish Region in 1882 as articulated by an anarchist veteran of the International Jose Llunas Pujols in his essay "Collectivism".

By the early 1880s, most of the European anarchist movement had adopted an anarcho-communist position, advocating the abolition of wage labour and distribution according to need. Ironically, the collectivist label then became more commonly associated with nominally state socialists such as Marxists–Leninists who advocated the retention of some sort of wage system during the transition to full communism. The anarcho-communist Peter Kropotkin attacked this position in his essay "The Collectivist Wages System" which was reprinted in his book The Conquest of Bread in 1892.

Theory

Bakunin's libertarian socialism was known as collectivist anarchism, where "socially: it seeks the confirmation of political equality by economic equality. This is not the removal of natural individual differences, but equality in the social rights of every individual from birth; in particular, equal means of subsistence, support, education and opportunity for every child, boy or girl, until maturity and equal resources, and facilities in adulthood to create his own well-being by his own labor".

Collectivist anarchism advocates the abolition of both the state and private ownership of the means of production. It instead envisions the means of production being owned collectively and controlled and managed by the producers themselves. For the collectivization of the means of production, it was originally envisaged that workers will revolt and forcibly collectivize the means of production. Once collectivization takes place, money would be abolished to be replaced with labour notes and workers' salaries would be determined in democratic organizations based on job difficulty and the amount of time they contributed to production. These salaries would be used to purchase goods in a communal market.

Critique of Marxism

Main article: Marxism and anarchism

Statism and Anarchy by Bakunin, Russian first print (1873)

The dispute between Bakunin and Marx highlighted the differences between anarchism and Marxism. Bakunin argued—against certain ideas of a number of Marxists—that not all revolutions need to be violent. He also strongly rejected Marx's concept of the dictatorship of the proletariat, a concept that vanguardist socialism such as Marxist–Leninism would use to justify one-party rule from above by a party representing the proletariat.

For instance, Bakunin stated the following in Statism and Anarchy about this Marxist concept:

[The Marxists] maintain that only a dictatorship—their dictatorship, of course—can create the will of the people, while our answer to this is: No dictatorship can have any other aim but that of self-perpetuation, and it can beget only slavery in the people tolerating it; freedom can be created only by freedom, that is, by a universal rebellion on the part of the people and free organization of the toiling masses from the bottom up".

Bakunin insisted that revolutions must be led by the people directly while any "enlightened elite" must only exert influence by remaining "invisible [...] not imposed on anyone [...] [and] deprived of all official rights and significance". He held that the state should be immediately abolished because all forms of government eventually lead to oppression. While both anarchists and Marxists share the same final goal, the creation of a free, egalitarian society without social classes and government, they strongly disagree on how to achieve this goal. Anarchists, especially social anarchists, believe that the classless, stateless society should be established by the direct action of the masses, culminating in social revolution and refusing any intermediate stage such as the dictatorship of the proletariat on the basis that such a dictatorship will become a self-perpetuating fundament. However, libertarian Marxists argue that Marx used the phrase to mean that the worker control at the point of production and not a party would still be a state until society is reorganized according to socialist principles. For Bakunin, the fundamental contradiction is that for the Marxists "anarchism or freedom is the aim, while the state and dictatorship is the means, and so, in order to free the masses, they have first to be enslaved". Bakunin also wrote of meeting Marx in 1844 as such:

As far as learning was concerned, Marx was, and still is, incomparably more advanced than I. I knew nothing at that time of political economy, I had not yet rid myself of my metaphysical observations. [...] He called me a sentimental idealist and he was right; I called him a vain man, perfidious and crafty, and I also was right.

Bakunin found Marx's economic analysis very useful and began the job of translating Das Kapital into Russian. In turn, Marx wrote of the rebels in the Dresden insurrection of 1848 that "[i]n the Russian refugee Michael Bakunin they found a capable and cool headed leader". Marx wrote to Friedrich Engels of meeting Bakunin in 1864 after his escape to Siberia, saying: "On the whole he is one of the few people whom I find not to have retrogressed after 16 years, but to have developed further".

Bakunin has sometimes been called the first theorist of the "new class", meaning that a class of intellectuals and bureaucrats running the state in the name of the people or the proletariat—but in reality in their own interests alone. Bakunin argued that the "[s]tate has always been the patrimony of some privileged class: a priestly class, an aristocratic class, a bourgeois class. And finally, when all the other classes have exhausted themselves, the State then becomes the patrimony of the bureaucratic class and then falls—or, if you will, rises—to the position of a machine".

Bakunin also had a different view as compared to Marx's on the revolutionary potential of the lumpenproletariat and the proletariat. As such, "[b]oth agreed that the proletariat would play a key role, but for Marx the proletariat was the exclusive, leading revolutionary agent while Bakunin entertained the possibility that the peasants and even the lumpenproletariat (the unemployed, common criminals, etc.) could rise to the occasion". Bakunin "considers workers' integration in capital as destructive of more primary revolutionary forces. For Bakunin, the revolutionary archetype is found in a peasant milieu (which is presented as having longstanding insurrectionary traditions, as well as a communist archetype in its current social form—the peasant commune) and amongst educated unemployed youth, assorted marginals from all classes, brigands, robbers, the impoverished masses, and those on the margins of society who have escaped, been excluded from, or not yet subsumed in the discipline of emerging industrial work. [...] [I]n short, all those whom Marx sought to include in the category of the lumpenproletariat".

Comparison with anarcho-communism

An example of a collective cooperative market which collectivist anarchists seek to create

The difference between collectivist anarchism and anarcho-communism is that under the former a wage system is retained based on the amount of labor performed. Like collectivist anarchism, anarcho-communism also advocates for the socialization of production, but the distribution of goods as well. Instead of "to each according to his labor", in anarcho-communism the community would supply the subsistence requirements to each member free of charge according to the maxim "to each according to his needs".

Collectivist anarchism stresses collective ownership of productive, subsistence and distributary property while anarcho-communism negates the concept of ownership in favor of usage or possession with productive means being a possession not owned by any individual or particular group. Anarcho-communists believe that subsistence, productive and distributive property should be common or social possessions while personal property should be private possessions. Collectivist anarchists agree with this, but disagree on the subject of remuneration as some collectivist anarchists such as Bakunin believe in the remuneration of labor while anarcho-communists such as Peter Kropotkin believe that such remuneration would lead to the recreation of currency and that this would need a state. Thus, it could be said that collectivist anarchists believe in freedom through collective ownership of production and a communal market of sorts to distribute goods and services and compensate workers in the form of remuneration. Collectivist anarchism could also be seen as a combination of communism and mutualism.

Collectivist anarchists are not necessarily opposed to the use of currency, but some—while opposing the retaining of money—propose the adoption of labour vouchers or "personal credit" (such as participatory economists). Most collectivist anarchists see their philosophy as a carryover to anarcho-communist, but some see the system and the use of a labour voucher system as permanent rather than a transition. Collectivist anarchist James Guillaume argued that such a society would "guarantee the mutual use of the tools of production which are the property of each of these groups and which will by a reciprocal contract become the collective property of the whole [...] federation. In this way, the federation of groups will be able to [...] regulate the rate of production to meet the fluctuating needs of society". They argue for workplace autonomy and self-management, saying that "the workers in the various factories have not the slightest intention of handing over their hard-won control of the tools of production to a superior power calling itself the 'corporation'". An Anarchist FAQ compares and contrasts collectivist anarchism with anarcho-communism this way:

The major difference between collectivists and communists is over the question of "money" after a revolution. Anarcho-communists consider the abolition of money to be essential, while anarcho-collectivists consider the end of private ownership of the means of production to be the key. As Kropotkin noted, "[collectivist anarchism] express[es] a state of things in which all necessaries for production are owned in common by the labour groups and the free communes, while the ways of retribution [i.e. distribution] of labour, communist or otherwise, would be settled by each group for itself." Thus, while communism and collectivism both organise production in common via producers' associations, they differ in how the goods produced will be distributed. Communism is based on free consumption of all while collectivism is more likely to be based on the distribution of goods according to the labour contributed. However, most anarcho-collectivists think that, over time, as productivity increases and the sense of community becomes stronger, money will disappear.

Performance

Application of many collectivist anarchists projects have been successful as sources during the Spanish Revolution noted in the Catalan region:

In distribution the collectives' co-operatives eliminated middlemen, small merchants, wholesalers, and profiteers, thus greatly reducing consumer prices. The collectives eliminated most of the parasitic elements from rural life, and would have wiped them out altogether if they were not protected by corrupt officials and by the political parties. Non-collectivised areas benefited indirectly from the lower prices as well as from free services often rendered by the collectives (laundries, cinemas, schools, barber and beauty parlours, etc.)

Tom Wetzel describes another collectivization:

Another industry that was totally re-organized was hair-cutting. Before July 19th, there had been 1,100 hairdressing parlors in Barcelona, most of them extremely marginal. The 5,000 assistant hairdressers were among the lowest-paid workers in Barcelona. The Generalitat had decreed a 40-hour week and 15 percent wage increase after July 19th—one of the Esquerra’s attempts to woo worker support. This spelled ruin for many hairdressing shops. A general assembly was held and it was agreed to shut down all the unprofitable shops. The 1,100 shops were replaced by a network of 235 neighborhood haircutting centers, with better equipment and lighting than the old shops. Due to the efficiencies gained, it was possible to raise wages by 40 percent. The entire network was run through assemblies of the CNT barber’s union. The former owners became members of the union.

Planned economy

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Planned_economy 

A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, participatory or Soviet-type forms of economic planning.The level of centralization or decentralization in decision-making and participation depends on the specific type of planning mechanism employed.

Socialist states based on the Soviet model have used central planning, although a minority such as the former Socialist Federal Republic of Yugoslavia have adopted some degree of market socialism. Market abolitionist socialism replaces factor markets with direct calculation as the means to coordinate the activities of the various socially-owned economic enterprises that make up the economy. More recent approaches to socialist planning and allocation have come from some economists and computer scientists proposing planning mechanisms based on advances in computer science and information technology.

Planned economies contrast with unplanned economies, specifically market economies, where autonomous firms operating in markets make decisions about production, distribution, pricing and investment. Market economies that use indicative planning are variously referred to as planned market economies, mixed economies and mixed market economies. A command economy follows an administrative-command system and uses Soviet-type economic planning which was characteristic of the former Soviet Union and Eastern Bloc before most of these countries converted to market economies. This highlights the central role of hierarchical administration and public ownership of production in guiding the allocation of resources in these economic systems.

Overview

In the Hellenistic and post-Hellenistic world, "compulsory state planning was the most characteristic trade condition for the Egyptian countryside, for Hellenistic India, and to a lesser degree the more barbaric regions of the Seleucid, the Pergamenian, the southern Arabian, and the Parthian empires". Scholars have argued that the Incan economy was a flexible type of command economy, centered around the movement and utilization of labor instead of goods. One view of mercantilism sees it as involving planned economies.

The Soviet-style planned economy in Soviet Russia evolved in the wake of a continuing existing World War I war-economy as well as other policies, known as war communism (1918-1921), shaped to the requirements of the Russian Civil War of 1917-1923. These policies began their formal consolidation under an official organ of government in 1921, when the Soviet government founded Gosplan. However, the period of the New Economic Policy (c.  1921 to c.  1928 intervened before the planned system of regular five-year plans started in 1928.

Nazi Germany's so-called Four Year Plan of 1936 onwards involved elements of state planning in the Reich economy.

After World War II (1939-1945) France and Great Britain practised dirigisme - government direction of the economy through non-coercive means. The Swedish government planned public-housing models in a similar fashion as urban planning in a project called Million Programme, implemented from 1965 to 1974. Some decentralised participation in economic planning occurred across Revolutionary Spain, most notably in Catalonia, during the Spanish Revolution of 1936.

Relationship with socialism

While socialism is not equivalent to economic planning or to the concept of a planned economy, an influential conception of socialism involves the replacement of capital markets with some form of economic planning in order to achieve ex-ante coordination of the economy. The goal of such an economic system would be to achieve conscious control over the economy by the population, specifically so that the use of the surplus product is controlled by the producers. The specific forms of planning proposed for socialism and their feasibility are subjects of the socialist calculation debate.

Computational economic planning

Further information: Government by algorithm

In 1959 Anatoly Kitov proposed a distributed computing system (Project "Red Book", Russian: Красная книга) with a focus on the management of the Soviet economy. Opposition from the Defence Ministry killed Kitov's plan.

In 1971 the socialist Allende administration of Chile launched Project Cybersyn to install a telex machine in every corporation and organisation in the economy for the communication of economic data between firms and the government. The data was also fed into a computer-simulated economy for forecasting. A control room was built for real-time observation and management of the overall economy. The prototype-stage of the project showed promise when it was used to redirect supplies around a trucker's strike, but after CIA-backed Augusto Pinochet led a coup in 1973 that established a military dictatorship under his rule the program was abolished and Pinochet moved Chile towards a more liberalized market economy.

In their book Towards a New Socialism (1993), the computer scientist Paul Cockshott from the University of Glasgow and the economist Allin Cottrell from the Wake Forest University claim to demonstrate how a democratically planned economy built on modern computer technology is possible and drives the thesis that it would be both economically more stable than the free-market economies and also morally desirable.

Cybernetics

The use of computers to coordinate production in an optimal fashion has been variously proposed for socialist economies. The Polish economist Oskar Lange (1904-1965) argued that the computer is more efficient than the market process at solving the multitude of simultaneous equations required for allocating economic inputs efficiently (either in terms of physical quantities or monetary prices).

Salvador Allende's socialist government pioneered the 1970 Chilean distributed decision support system Project Cybersyn in an attempt to move towards a decentralised planned economy with the experimental viable system model of computed organisational structure of autonomous operative units though an algedonic feedback setting and bottom-up participative decision-making in the form of participative democracy by the Cyberfolk component.

Fictional portrayals

The 1888 novel Looking Backward by Edward Bellamy depicts a fictional planned economy in a United States around the year 2000 which has become a socialist utopia.

The World State in Aldous Huxley's Brave New World (1932) and Airstrip One in George Orwell's Nineteen Eighty-Four (1949) provide fictional depictions of command economies, albeit with diametrically opposed aims. The former is a consumer economy designed to engender productivity while the latter is a shortage economy designed as an agent of totalitarian social control. Airstrip One is organized by the euphemistically named Ministry of Plenty.

Other literary portrayals of planned economies include Yevgeny Zamyatin's We (1924), which influenced Orwell's work. Like Nineteen Eighty-Four, Ayn Rand's dystopian 1938 story Anthem offered an artistic portrayal of a command economy that was influenced by We. The difference is that it was a primitivist planned economy as opposed to the advanced technology of We or Brave New World.

Central planning

Advantages

The government can harness land, labour, and capital to serve the economic objectives of the state. Consumer demand can be restrained in favor of greater capital investment for economic development in a desired pattern. In international comparisons, state-socialist nations compared favorably with capitalist nations in health indicators such as infant mortality and life expectancy. However, the reality of this, at least in regards to infant mortality, varied depending on whether official Soviet statistics or WHO definitions were used. In Socialist China under Mao China's growth in life expectancy between 1950 and 1980 ranks as among the most rapid sustained increases in documented global history.

The state can begin building massive heavy industries at once in an underdeveloped economy without waiting years for capital to accumulate through the expansion of light industry and without reliance on external financing. This is what happened in the Soviet Union during the 1930s when the government forced the share of gross national income dedicated to private consumption down from 80% to 50%. As a result of this development, the Soviet Union experienced massive growth in heavy industry, with a concurrent massive contraction of its agricultural sector due to the labour shortage.

Disadvantages

Economic instability

Studies of command economies of the Eastern Bloc in the 1950s and 1960s by both American and Eastern European economists found that contrary to the expectations of both groups they showed greater fluctuations in output than market economies during the same period.

Inefficient resource distribution

Critics of planned economies argue that planners cannot detect consumer preferences, shortages and surpluses with sufficient accuracy and therefore cannot efficiently co-ordinate production (in a market economy, a free price system is intended to serve this purpose). This difficulty was notably written about by economists Ludwig von Mises and Friedrich Hayek, who referred to subtly distinct aspects of the problem as the economic calculation problem and local knowledge problem, respectively.

Whereas the former stressed the theoretical underpinnings of a market economy to subjective value theory while attacking the labor theory of value, the latter argued that the only way to satisfy individuals who have a constantly changing hierarchy of needs and are the only ones to possess their particular individual's circumstances is by allowing those with the most knowledge of their needs to have it in their power to use their resources in a competing marketplace to meet the needs of the most consumers most efficiently. This phenomenon is recognized as spontaneous order. Additionally, misallocation of resources would naturally ensue by redirecting capital away from individuals with direct knowledge and circumventing it into markets where a coercive monopoly influences behavior, ignoring market signals. According to Tibor Machan, "[w]ithout a market in which allocations can be made in obedience to the law of supply and demand, it is difficult or impossible to funnel resources with respect to actual human preferences and goals".

Suppression of economic democracy and self-management

Economist Robin Hahnel, who supports participatory economics, a form of socialist decentralized planned economy, notes that even if central planning overcame its inherent inhibitions of incentives and innovation, it would nevertheless be unable to maximize economic democracy and self-management, which he believes are concepts that are more intellectually coherent, consistent and just than mainstream notions of economic freedom. Furthermore, Hahnel states:

Combined with a more democratic political system, and redone to closer approximate a best case version, centrally planned economies no doubt would have performed better. But they could never have delivered economic self-management, they would always have been slow to innovate as apathy and frustration took their inevitable toll, and they would always have been susceptible to growing inequities and inefficiencies as the effects of differential economic power grew. Under central planning neither planners, managers, nor workers had incentives to promote the social economic interest. Nor did impeding markets for final goods to the planning system enfranchise consumers in meaningful ways. But central planning would have been incompatible with economic democracy even if it had overcome its information and incentive liabilities. And the truth is that it survived as long as it did only because it was propped up by unprecedented totalitarian political power.

Command economy

Planned economies contrast with command economies in that a planned economy is "an economic system in which the government controls and regulates production, distribution, prices, etc." whereas a command economy necessarily has substantial public ownership of industry while also having this type of regulation. In command economies, important allocation decisions are made by government authorities and are imposed by law.

Command, Planned, Mixed, and Market Economies

	Decentralized Planning	Centralized Planning
Private Ownership	Market	Planned
State Ownership		Command

This goes against the Marxist understanding of conscious planning. Decentralized planning has been proposed as a basis for socialism and has been variously advocated by anarchists, council communists, libertarian Marxists and other democratic and libertarian socialists who advocate a non-market form of socialism, in total rejection of the type of planning adopted in the economy of the Soviet Union.

Most of a command economy is organized in a top-down administrative model by a central authority, where decisions regarding investment and production output requirements are decided upon at the top in the chain of command, with little input from lower levels. Advocates of economic planning have sometimes been staunch critics of these command economies. Leon Trotsky believed that those at the top of the chain of command, regardless of their intellectual capacity, operated without the input and participation of the millions of people who participate in the economy and who understand/respond to local conditions and changes in the economy. Therefore, they would be unable to effectively coordinate all economic activity.

Historians have associated planned economies with Marxist–Leninist states and the Soviet economic model. Since the 1980s, it was recognized that the Soviet economic model did not actually constitute a planned economy in that a comprehensive and binding plan did not guide production and investment. The further distinction of an administrative-command system emerged as a new designation in some academic circles for the economic system that existed in the former Soviet Union and Eastern Bloc, highlighting the role of centralized hierarchical decision-making in the absence of popular control over the economy. The possibility of a digital planned economy was explored in Chile between 1971 and 1973 with the development of Project Cybersyn and by Aleksandr Aleksandrovich Kharkevich, head of the Department of Technical Physics in Kiev in 1962.

While both economic planning and a planned economy can be either authoritarian or democratic and participatory, democratic socialist critics argue that command economies have been authoritarian or undemocratic in practice. Indicative planning is a form of economic planning in market economies that directs the economy through incentive-based methods. Economic planning can be practiced in a decentralized manner through different government authorities. In some predominantly market-oriented and Western mixed economies, the state utilizes economic planning in strategic industries such as the aerospace industry. Mixed economies usually employ macroeconomic planning while micro-economic affairs are left to the market and price system.

Decentralized planning

A decentralized-planned economy, occasionally called horizontally-planned economy due to its horizontalism, is a type of planned economy in which the investment and allocation of consumer and capital goods is explicated accordingly to an economy-wide plan built and operatively coordinated through a distributed network of disparate economic agents or even production units itself. Decentralized planning is usually held in contrast to centralized planning, in particular the Soviet-type economic planning of the Soviet Union's command economy, where economic information is aggregated and used to formulate a plan for production, investment and resource allocation by a single central authority. Decentralized planning can take shape both in the context of a mixed economy as well as in a post-capitalist economic system. This form of economic planning implies some process of democratic and participatory decision-making within the economy and within firms itself in the form of industrial democracy. Computer-based forms of democratic economic planning and coordination between economic enterprises have also been proposed by various computer scientists and radical economists. Proponents present decentralized and participatory economic planning as an alternative to market socialism for a post-capitalist society.

Decentralized planning has been a feature of anarchist and other socialist economics. Variations of decentralized planning such as economic democracy, industrial democracy and participatory economics have been promoted by various political groups, most notably anarchists, democratic socialists, guild socialists, libertarian Marxists, libertarian socialists, revolutionary syndicalists and Trotskyists. During the Spanish Revolution, some areas where anarchist and libertarian socialist influence through the CNT and UGT was extensive, particularly rural regions, were run on the basis of decentralized planning resembling the principles laid out by anarcho-syndicalist Diego Abad de Santillan in the book After the Revolution.

Models

Negotiated coordination

Economist Pat Devine has created a model of decentralized economic planning called "negotiated coordination" which is based upon social ownership of the means of production by those affected by the use of the assets involved, with the allocation of consumer and capital goods made through a participatory form of decision-making by those at the most localized level of production. Moreover, organizations that utilize modularity in their production processes may distribute problem solving and decision making.

Participatory planning

See also: Participatory economics

The planning structure of a decentralized planned economy is generally based on a consumers council and producer council (or jointly, a distributive cooperative) which is sometimes called a consumers' cooperative. Producers and consumers, or their representatives, negotiate the quality and quantity of what is to be produced. This structure is central to guild socialism, participatory economics and the economic theories related to anarchism.

Practice

Kerala

Main article: People's Planning in Kerala

See also: District planning in India

Some decentralised participation in economic planning has been implemented in various regions and states in India, most notably in Kerala. Local level planning agencies assess the needs of people who are able to give their direct input through the Gram Sabhas (village-based institutions) and the planners subsequently seek to plan accordingly.

Revolutionary Catalonia

Main article: Collectivist anarchism

See also: Revolutionary Catalonia

Some decentralised participation in economic planning has been implemented across Revolutionary Spain, most notably in Catalonia, during the Spanish Revolution of 1936.

Similar concepts in practice

Community participatory planning

Main article: Participatory planning

The United Nations has developed local projects that promote participatory planning on a community level. Members of communities take decisions regarding community development directly.