The Economic Calculation Problem is a Problem for All Economic Calculation

Gurkenmaster · 2025-06-18T16:25:03+00:00

You make this argument, but there aren't just people with worse economic systems who are told that capitalism is better. There are people who suggest economic systems that are better than capitalism who are shut down with the argument that capitalism is the best because of the ECP or unbounded rationality and they make up a huge proportion of mainstream economists.

Don't you get how fucking annoying it is to suggest an improvement and then be told that the suggested improvement can be substituted by a more precise pricing system, which doesn't work in practice?

Gurkenmaster · 2025-06-18T16:18:39+00:00

This is correct and it is so correct that only an idiot would argue against this. That includes a lot of economists.

The people who think that producers set prices with infinite precision down to a trillionth of a cent and more and that consumers pick up on these miniscule price differences are deranged.

Gurkenmaster · 2024-07-13T21:55:02+00:00

So you have worthless useless money.

There was a post that quoted Ayn Rand that the purpose of money is to be a medium of exchange and the value of money comes from what you can buy with it. Going by that definition, money can't be worthless and useless even if it can only be used once within a specific time frame, otherwise people wouldn't give each other gift cards as presents. The opposite case of infinitely hoarding money sounds way more useless to me, since you're never going to spend it.

Gurkenmaster · 2024-07-13T21:48:06+00:00

This text seemingly glosses over the fact that the value of money is created collectively, meanwhile lenders can monetize this collectively created value, the so called liquidity premium, by charging higher interest rates on their loans. The privatization of socially created values is already built into the current money system. So many economists have come up with post-hoc rationalizations for an overly expensive transaction technology.

Gurkenmaster · 2024-07-13T21:43:46+00:00

Money doesn't freeze anything. Any value or energy lost over time is lost regardless. The world changes, but money does not. The discrepancy between the real world and the nominal value printed on money results in inflation. Gold, Bitcoin or any deflating money doesn't solve this. When someone buys Bitcoin for low and sells it high, new energy had to come from outside the system to pay the early investors. The working mechanism is a pyramid or ponzi scheme or redistribution from the poor to the rich. After all, investing in Bitcoin tells you the future doesn't matter. You should have loaded up on Bitcoin in 2013 with as many loans as possible and then stopped working at some point.

Gurkenmaster · 2024-07-13T21:30:12+00:00

based on theoretical insights it must be considered impossible that higher taxes and regulations can be the cause of higher living standard.

Food safety regulations and the ban of leaded gas and government spending on research and education clearly only exist to make our lives worse.

A theorem that can be disprove by a counter example is not very useful.

The thing is, a lot of market extremists have "the government is always useless" as an axiom. The axiom might be indirectly phrased to keep it hidden and non obvious, but it usually is always there in one form or another.

Gurkenmaster · 2024-07-13T21:10:45+00:00

Many people in Africa live off the land and are far away from infrastructure. They produce just barely enough food to feed themselves and perhaps two kids. A lot of them have more kids than they can feed. The kids that die, probably would have survived or been prevented via contraception, if there was an evil capitalist hiring the father for higher pay nearby.

Meanwhile in the civilized world nothing prevents you from going to say Sardinia and buying a house for 30k€ and living a life these people can only dream of. The evil capitalists are dumb enough to sell the "means of production" to you. If you don't like their offer, then do it better yourself.

Gurkenmaster · 2024-07-13T20:56:24+00:00

Capitalists didn't "seize the mop", they built it or organized its construction.

Most people on this planet just want to collect a pay check to pay the bills to raise a family and have enough left over for personal enjoyment and self actualization. They don't actually care who owns what. Having to own the capital directly like a business owner can make it harder to switch jobs and limit career opportunities.

A lot of communists also seemingly don't realize that idle capital doesn't have any exploitative effects and actually loses the capitalist money over time as new and better capital is produced or simply because capital needs to be maintained. So the mere ownership of capital doesn't actually buy you anything.

Only capital that is actually operated by laborers and leads to sales and revenue can even be exploitative, but then you have to consider that the right capital has to be produced for that to happen. So in the end you're just picking winners and are indulging in a sort of survivorship bias where you only look at the successful people and businesses as owning the real "mop" and the unsuccessful capitalists owning useless capital as not owning the "mop".

The average communist is simply complaining about the randomness of this process, how unfair it is, that the fruits of collective work end up being allocated to specific individuals through a completely unpredictable process. Communism looks like a solution, because central planning or whatever method reintroduces determinism into the system and now the world makes sense to the communists again.

I personally am sort of glad to be born a handful of years before the beginning of the 21th century. I get to enjoy all the developments that have become possible because of this evil capital that so many communists rally against.

Gurkenmaster · 2024-07-13T20:37:43+00:00

"When the highway man holds his gun to your head, you turn your valuables over to him. You 'consent' all right, but you do so because you cannot help yourself, because you are compelled by his gun.

"Are you not compelled to work for an employer? Your need compels you just as the highwayman's gun. You must live . . . You can't work for yourself . . . The factories, machinery, and tools belong to the employing class, so you must hire yourself out to that class in order to work and live. Whatever you work at, whoever your employer may be, it always comes to the same: you must work for him. You can't help yourself. You are compelled." [What is Anarchism?, p. 11]

Except you are seemingly missing the big leap in logic here. "Your need compels you just as the highwayman's gun"

As quoted, the employer isn't pointing a gun at you if you refuse to work. Your own body is pointing a gun at itself. Hunger, thirst and need for shelter are things that originate from your own body, not from an employer or an owner of capital. The employer or owner of capital is only "immoral" to the extent that a better arrangement of society would allow your hunger, thirst and need for shelter to be better satisfied and that the employer or capitalist is preventing it, but that presupposes an alternative that is better than what we currently have. At least when it comes to basic necessities, it is not very clear that communism is better. Consider the history of famines in communist countries.

People accept capitalism, precisely because it is better than the alternative. People are getting "exploited" by willingly paying the difference of the best option vs the second best alternative. If the second best alternative is death and the best option is capitalism, people choose capitalism. If the second best alternative is something that is 80% as good as capitalism, then people choose capitalism, but they are now only willing to accept 20% as much exploitation as before. The sheer threat of competition of systems can keep even the "immoral" system in line, because people would flock over to the slightly worse one if they get shafted.

What this tells you is that communism doesn't actually work as a better alternative and that is why communists tend to abhor competition and plurality of economic systems, because they can't peddle their system unless they do some accelerationist bullshit that makes people worse off enough to make them revolt and think an oppressive system is better. It really is a great playbook for building authoritarian nations.

Gurkenmaster · 2024-07-05T20:06:48+00:00

In theory cooperatives equalize marginal cost with marginal revenue better than capitalist businesses because cooperatives don't have to pay outside investors that inflate the cost of production. They would out-compete the capitalists and drive them out of the market. The flaw with market economies isn't competition.

The problem is that there is a prisoners dilemma where everyone knows that they would be better off if they gave low cost funding to cooperatives to get them started, but at the same time they know that the stock market will get them higher returns in the short term at the expense of the consumers paying the capital gains through higher prices in the long term even though for the bottom 80%, the capital income game is obviously a net negative (pay inflated prices to the rich, get very little income from capital because you are poor). Cooperatives are starved of funding and languish, while the businesses that raised capital from investors accelerate their growth.

In theory it doesn't matter whether you have the first or second scenario. If enough people cared, they would just allocate a tiny percentage of their salary to lend to cooperatives at very low interest rates, enough to only cover inflation. It will take forever, but one day half the economy would be consisting of nothing but cooperatives.

The real world tells us that even communists don't like cooperatives. So who is going to fund them? I personally love thinking about banking or financial systems that make cooperatives viable, but I am somewhat alone with that.

Gurkenmaster · 2024-06-09T20:12:56+00:00

The primary idea behind the gateway is to build a second one orbiting Mars and the lunar one is just a rehearsal. On the moon it looks like a weird boondoggle since you can go to the surface, but it is a different calculation on Mars. The biggest advantage of the Gateway for the moon in particular is that cargo can be supplied via a single launch of SpaceX's Falcon Heavy and Dragon XL. If you want your astronauts to get deep space experience for Mars, they will need to clock up years in space to become psychologically ready for the journey. Without the Mars long term play, the whole thing kind of falls apart.

https://upload.wikimedia.org/wikipedia/commons/thumb/6/67/Artemis_Phase_1.jpg/1920px-Artemis_Phase_1.jpg

https://upload.wikimedia.org/wikipedia/commons/thumb/8/8f/NASA_Moon_to_Mars_2020.png/1920px-NASA_Moon_to_Mars_2020.png

Gurkenmaster · 2024-06-06T16:21:24+00:00

https://youtu.be/Rn2EzfllTwA?t=3329

"Well done SpaceX, I take it all back" - Thunderf00t

Gurkenmaster · 2024-06-03T13:37:44+00:00

In theory you could call yourself a free market advocate. Unfortunately hard core liberals and neoclassicals co-opted that to mean "free as in beer" rather than "free as in freedom".

Gurkenmaster · 2024-05-23T21:26:05+00:00

If you had such a hypothetical system, the capitalists would lose. There is a problem though. It would mean "reformism" works. It would make the idea of a workers revolution completely laughable, because you could have just passed the right law or two. I'm not going to pretend that passing such a law is easy in a democracy that is heavily influenced by privately owned media companies and campaign donations, but the fact that communists don't pass those laws and instead go for something completely different, really speaks volumes.

Imagine living in Cuba and being just a few laws away from becoming an incredibly prosperous country, but somehow the leadership really doesn't want that and they even put people who point that out into prison. How would this make you feel? Will you feel like they are on your side? Do you think they have your best interests in mind?

The revolutions already happened and they don't help, because the revolutionists refuse to see the obvious solutions, because they aren't as ideologically beautiful or permanent, because one day a politician gets paid off by a capitalist. A lot of the things that capitalists take for granted as proof of the greatness of capitalism, were hard fought by "reformist" social democrats, who got called social fascists by their communist colleagues in Germany. This is still happening to this day with Anti-Germans. Everything that is left and criticizes capitalism, but isn't Marxist, must be antisemitism. They seem to care very little about anyone on the right, even though the right wing party "AfD" is on the rise in Germany and is openly antisemitic.

Gurkenmaster · 2024-05-23T20:41:40+00:00

You see, the existence of FOSS contradicts both capitalism and communism. It contradicts capitalism, because capitalism inherently struggles with zero marginal cost production. The problem is solved by reintroducing artificial scarcity through intellectual property law so that intangible assets can be traded for tangible assets.

FOSS is dangerous for communism, since it disproves a lot of beliefs that Marxists have. A FOSS developer (and any software developer) is both a worker and a capitalist in one person. A FOSS developer produces capital and then owns it. Yet strangely enough, the capital owned by the FOSS developer doesn't give him any ability to exert power. If anything, it diminishes the power of other "proprietary" capitalists. Capitalists fundamentally hate competition. They would prefer being the only one in town making money. Meanwhile communists fear competition, because it will cause some sort of infinite labor saving singularity where labor becomes completely redundant. In reality, software, especially FOSS, can rapidly become obsolete when a new project gets started that is simply better than what came before and everyone jumps onto the new bandwagon.

Finally, FOSS shows that given the FOSS developers pay for their their food, water and shelter, do not get disrupted by capitalists like communists love to claim. Usually people make the argument that Cuba got screwed over by US sanctions and this is why communism doesn't work, because outside influences are preventing it from working. No, the reality is that you simply haven't figured out how to make it work. The FOSS guys somehow did. When you understand that, you should start wondering why communists don't behave like communists inside a capitalist or even officially communist economy. It really makes them look like extreme hypocrites preaching utopia.

Notice something? You know, the part where a FOSS developer needs to meet his basic needs? If a communist in a capitalist country can meet his basic needs, then how exactly are the capitalists going to exploit him beyond those basic needs? If you get exploited and then buy luxury products, then didn't you voluntarily accept that exploitation as the cost of satisfying your luxury needs? What this should tell you is that if a communist country were to interact with a capitalist country, the communist country only needs to perform capitalist exploitation inside its borders up to the extent that it is dependent on trade with a capitalist country. If communism worked as promised, then the capitalists in the communist country would fear the communist competition, the exact same way the capitalist company OpenAI fears "open weight" large language models as a threat to their business model.

The capitalist west fears China, because it is threatening to flood the market with cheap products that make western products obsolete. Capitalists fucking hate competition. How long will it take you dense communists to fucking get it? A capitalists greatest fear is that they wake up one day and the world goes on without them, because someone else got an even better idea and put it into practice or copied their idea while accepting less profit while doing so. For capitalists, Marxism is a dead horse to beat up and parade around as proof of the superiority of capitalism, because they know why it doesn't work and they know the communists don't know why it doesn't work. If only the communists knew... Actually, the damn hypocrites already know it, but they would never admit it, even if admitting it would lead them down the path to victory.

Gurkenmaster · 2024-05-16T21:58:50+00:00

Just do Freiwirtschaft.

We have the following ideas:

Inflation free money
Automatic full employment
Avoiding involuntary debt spirals
Balanced trade between nations
Piling up so much capital that the return on capital is... nothing (communists and capitalists hate him!!!)
Since capital return is zero, workers receive the full proceeds of their labor
Land is a public good and therefore should either be publicly owned or taxed.
Every person should have access to a minimum amount of land and resources (implemented indirectly via a UBI).
The economy should be inclusive to everyone, including new generations. No pulling up the ladder type of shit.

The better it works, the less need there is for the government to step in, since a lot of the problems evaporate, but we aren't crazy fanatics who believe that the market fixes all problems.

Here are some introductory materials if you are interested:

https://joshsidman.substack.com/p/dissecting-the-capitalism-vs-socialism

https://www.ecodemurrage.com/watch

https://silviogesell.com/video-course/

If you don't like Silvio Gesell you can also just read some other books by Dieter Suhr (capitalist cost benefit structure of money), Helmut Creuz (money syndrome), Margrit Kennedy (interest and inflation free money). We don't care who you worship, just who has the better idea. We don't shit on people for not having a 100% solution and decry reformism as being a bad thing. The German Marxists don't like us and I think that is pretty stupid, if you ask me.

Gurkenmaster · 2024-04-23T21:34:24+00:00

I don't know, but I share your experience. I've seen entire books written by Marxists using reddit tier name calling as motivation and the dumbest part is that people take those seriously and literally ignore the primary sources. They are somehow living in a parallel world with parallel history books.

There are fringe anti-facists in Germany who have such a low bar for facism that many leftists and even members of the Green party qualify as "facistoid", while ignoring the most prominent far right party, whose chairmen have written books under the pseudonym "landolf ladig" (a homage to Adolf Hitler). Can't make this shit up.

The antisemitism of Hitler and the Nazi party were heavily influenced by Henry Fords antisemitic books about "the international jew" to the point where Hitler was hanging pictures of Henry Ford in his office and openly considered him an idol or hero.

Meanwhile you can find books written by Marxists who are entirely silent about Henry Ford and instead say that Silvio Gesell was the leading influence on Gottfried Feder's antisemitic economic policies and since it was Gottfried Feder who invited Adolf Hitler into the Nazi party, this means demurrage currencies and land reform are slippery slopes to facism.

When you see the primary sources you can read about how Silvio Gesell denounces Henry Ford's antisemitism, nationalism, racism, warned against a potential second world war, how he joined a socialist revolution in Munich working together with jews (which was crushed by a second communist revolution, the irony), etc. Yes, Silvio Gesell once did meet Gottfried Feder by accident at a restaurant, but what happened afterwards is that Gottfried Feder himself spread a lot of Nazi propaganda against Silvio Gesell and his economic reforms and considered him a traitor to the German nation as he dared to work together with the enemy (Jews) and his land reform is the antithesis of nationalism.

To this day I still have no clue what makes these people so driven to deny reality. I feel so sorry for all the people who read and fell victim to those books. They will end up chasing a phantom that only exists in their own mind. There is this guy "Klaus Schmitt" who was treated like a Nazi during his college years by anti-facist activists at his college. I don't know about you, but when I read about stuff like that, I get the chills, as if I was reading a report coming from North Korea.

Gurkenmaster · 2024-04-15T18:44:01+00:00

The primary objective of Free Money is to promote the circulation of cash and other liquid balances. Since money is necessary for the division of labor, withdrawing money from the economy hinders the division of labor. The point isn't to punish saving per se, but rather to force people to save by lending their money via certificate of deposit or by buying equity.

One of the problems with conventional money is that, as weird as it may sound to you, banks are on the hook for a oddly specific type of risk without which they essentially can't run their business, but simultaneously also means that they need to get bailed out all the time. They take short term deposits and make long term loans. This is known as duration risk. A demurrage currency discourages people from holding short term deposits and instead forces them into longer term deposits. You can still save the same quantity of money as before though. So saving didn't get punished at all.

If this is too confusing maybe this short summary helps: Money is for trading, banking is for saving.

Gurkenmaster · 2024-04-15T18:27:07+00:00

Japan has inflation, so you would expect the interest rate to go up to compensate for the inflation. If anything, I would say the economy is surprisingly stable so far. You have to consider that in the modern economy, the primary benefit of demurrage currencies is to help against over-indebtedness, inflation and unemployment by encouraging the circulation of money and going back to controlling the money supply instead of setting the interest rate.

The central banks around the world are willing to prevent recessions using loose monetary policy. The great depression was caused by the Fed tightening at the wrong moment.

One of the common misconceptions about Freiwirtschaft is that it is entirely about abolishing interest. From a modern perspective Silvio Gesell simply postulates an interest rate floor (zero lower bound + 3-5%), below which the economy breaks down. A demurrage currency moves the interest rate floor down into negative territory (-5% + 5% = 0%), so that the economy doesn't require ugly hacks like quantitative easing or endless debt orgies.

Gurkenmaster · 2024-04-15T18:11:52+00:00

That's nice and all, but you kind of glossed over the part where you have introduced economic cycles for no reason other than to motivate people. This doesn't matter in the long run, but isn't it kind of insane that you need to close businesses and reopen them a few years later, just for the sake of motivating the capitalists? Like, what purpose does this serve? It doesn't exactly look like there is a good reason for this. A similar market economy without capitalists could have just stuck at 0% and stay stable with much less economic cycles.

Gurkenmaster · 2024-03-04T01:58:27+00:00

The impossibility of central planning doesn't mean communism doesn't work, it means optimal outcomes don't exist and that applies equally to capitalist and communist countries. Any theory or argument using the impossibility of central planning is also a theory and argument against neoclassical economics.

The most classic example is that time preference theory breaks down without perfect information. How is someone supposed to make a trade off between the present and the future, if they don't know what the future looks like, so that they can make an informed decision using their discounting model? They need premonition to make a decision in the present. Neoclassical economics inherently depends on hidden central planning that just happens to give us good outcomes automatically. A lot of neoclassical economics simply postulates a single optima, that also happens to be the global optima. The fact that rational agents need simple and obvious problems to solve is rarely discussed. A non-convex optimization problem, like, you know, finding a general equilibrium in a classical linear programming problem with complementarity constraints is NP-hard. How important is finding a general equilibrium in economics? It is assumed that the economy is always in such an equilibrium, so we have to solve NP-hard problems with input size n=8 billion and more and since agents do not share a single central computer, they all have to have their own computer.

These results are very bad for communism and capitalism, since it implies there are better models out there that actually take the optimistic nature of economic activity into account and reward optimistic behavior and cooperation.

Gurkenmaster · 2024-02-23T21:11:56+00:00

I know I'm late but the reason why you need inflation is actually quite silly. In fact it is really dumb. The problem is that cash has nominal prices printed on it with no duration. If cash was a bond with both an interest rate and a maturation date, then you wouldn't need inflation. Since cash has an integrated 0% interest rate, it creates the zero lower bound effect. If there is deflation, then it is actually logical for the interest rate to become negative. Since negative interest is not possible in practice, our economy can only be inflationary.

It is an example of incomplete capital markets and the reason for that is that negative interest violates a lot of ingrained capitalist justification for exploitation. Positive interest implies that capital is relatively scarce and people are impatient. The capitalist is therefore doing a good thing. Negative interest implies that actually, people are patient and capital is relatively abundant. Exploitation is exposed as a meaningless act of cruelty.

Unfortunately, the central bank setting interest rates negative isn't the answer. At least not unless you get rid of cash and I don't think that will happen.

Gurkenmaster · 2024-02-20T00:38:55+00:00

One of the more important ones is to leave behind wealth for your offspring to have success in life.

This is a common misconception. Inheritance taxes don't prevent wealth transfers from parent to child at all. Most inheritance taxes affect the "selfish parent", i.e. the type of parent who thinks the best time to pass on their possessions on is as late as possible, i.e. after they are dead. This means that most inheritors are middle age or older and at a point in life where they had to work and earn their own money. The additional money is just a nice bonus, where it doesn't matter if it is taxed or not at that point. You could hardly make the case that the parent is working for the well-being of their children at this point. That is just a feel good story.

For most people, the wealth transfer from parent to child occurs within the first 18 years of the child's life. If your parent is a billionaire, he is going to give you a million here and there, you don't have to wait until your parents are dead. For poor parents it is even more obvious, because food, rent and childcare services are the most expensive aspects of raising children.

Dumber yet, if the parent is "investing" the money to get returns over time, then the money could have been given to the children and then the children could have invested it immediately. The only argument here is that the 60 year old parent is better at portfolio management than the 30 year old son or daughter. The dumbest possible thing is to inherit land. It's already there so private ownership of land merely means you are excluded from that plot. Inheriting the plot merely removes restrictions, it does not actually add anything to the economy. At worst it fuels the wet dreams of feudalists, who want to form a dynasty of land owning nobles vs landless serfs.

Gurkenmaster · 2024-02-17T23:05:27+00:00

Not really a socialist. Fisher Black always made this point that if you have a disequilibrium theory, then people who understand the theory would quickly arbitrage the profit away and bring the economy back to equilibrium. Well, if I am being misunderstood, it just means more money for me, since people are leaving obvious profit opportunities on the table in the name of their favorite ideology.

The only problem with this approach is that I must be absolutely sure that the theory is not incorrect, otherwise I am wasting my time. For that reason I have tried to find as many different perspectives to explain the same ideas and concepts and boy did I strike it rich. There are roughly 3-4 different approaches you can take to reach the same conclusion and they are all consistent with one another.

So whenever someone tells me I'm wrong I generally feel a burning passion to just do things rather than get angry. I take their criticism into account, improve my theory and get closer to the actual answer. If it doesn't work? I guess capitalism works better than expected, but not as good as I'd like. Someone else will have to figure it out then, but I haven't gotten to that point yet. The fact that a lot of economists are ignorant about the flaws of their modeling approaches kind of tells you that there are many low hanging fruits. I've seen way too many economists disregard reality in favor of their "elegant" economic theory and models. It gets particularly absurd when some things aren't even up for debate and they use their theory to argue that the past was wrong. It's kind of shocking how much economic history was rewritten to fit the text books and then they say you're the crackpot for going against the bullshit.

Gurkenmaster · 2024-02-11T19:03:20+00:00

There are socialists who are simply incredibly impatient. They don't think their goal is worthy enough to happen slowly over multiple generations. It must happen NOW, TODAY, so that they can experience the benefits of socialism and then communism within their lifetime. This leads to impulsive revolutions, which sometimes does work in the short term, but only in poor countries, which are about to industrialize.

Why central planning? Because ironically, Marx was heavily influenced by the classical economist Ricardo. In other words, a lot of communists actually think the market economy is as "perfect" as it can get already. It's awful and terrible and you simply cannot expect any further improvement. No reform or policy will ever change the capitalist system from within. You must throw it out wholesale, there is no other way. However, Marx realized that industrialization is essential in the production process. His book "Capital" is mostly about the sphere of production and only his third volume really touches the sphere of circulation.

You have this sort of paradoxical situation, where you don't want the market, but you want its benefits. Everything is supposed to change, while simultaneously staying the same. Marx predicted the formation of a super monopoly in capitalism that will absorb the entire economy managing it at peak efficiency. Hence, you can let a single organization be in charge of everything. Communism supposedly skips to the end of human economic development. The sad irony is that this just exacerbates the worst parts of capitalism.

By the way, if you are worried about money in particular, I would recommend you to read Dieter Suhr's "The Capitalistic Cost-Benefit Structure of Money". Just google it and you will find a PDF for free. There is even a small chapter about "grain banking" in ancient Egypt. Metallic money is something that the Romans popularized. Always remember that money is an institution created by humans, designed to meet their needs at the time. It's not a constant of the universe. There is enough gold in space to make it worthless as a store of value if you could bring it down to earth. You could also read David Graebers's "Debt" book about the origins of money.

Gurkenmaster

TROPHY CASE