Allende's Central Planning Machine

March 30, 2008 9:10 PM by Peter G. Klein

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.

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Et Tu, Opera?

December 13, 2007 6:06 PM by Peter G. Klein

[Cross-posted at Organizations and Markets]

Opera is an innovative company that makes a fine web browser and has a devoted following. I use Opera Mini, which is in many ways superior to the native browser on my BlackBerry. So I was dismayed to learn that Opera has adopted the "if you can't beat 'em, file an antitrust suit against 'em" approach to its dealings with Microsoft. Happily for Opera, the company is based in Norway, allowing it to file its complaint with the Microsoft-unfriendly European Commission without being accused of forum-shopping. But, really, haven't we been through all this already?

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Ignorant of Markets, and Proud of It

November 20, 2007 2:40 PM by Peter G. Klein

From a letter in today's Wall Street Journal:

If we allow ourselves to buy labor services from the poor, we encourage the idea that they are mere instruments to be used by us at will and thereby corrode one of our most central convictions: All persons, including those in poverty, have dignity and aren't simply things to be purchased at the right price.

In other words, to participate in the labor market -- to exchange one's labor services for money -- is to lose one's dignity. Wage contracts -- perhaps all economic transactions -- should therefore be banned.

Oh, wait, it wasn't "to buy labor services from the poor," it was "to buy organs from the poor." The writers, Samuel J. Kerstein of Harvard's Program in Ethics and Health and Luc Noel of the World Health Organization are arguing against organ markets.

My advice to college and professional students: flee from courses with "ethics" in the title as fast as you can.

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