The Soviet Union.. Holy Shit

[bilby]

We have supercomputers and vast real-time data collected by satellites and ground stations, and we still can't predict the weather to an arbitrary degree of accuracy over short timescales. The reason for this is that complex dynamic systems, like weather and economics, are chaotic - model outputs can diverge wildly from each other in very small numbers of cycles due to incredibly small variations in input.

Modelling based on a perfect and accurate record of all transactions cannot work for a useful amount of time before they break down due to unpredictable elements of the environment - indeed the weather is one such element. You can't use this week's umbrella sales as an indicator of sales for the same week next year; sales depend on non-economic factors.

It's known to be impossible to predict the weather more than about four days in advance with reasonable accuracy (and even that relies on a very woolly definition of 'reasonable'); it's impossible to predict the economy without an accurate weather forecast, and an accurate political forecast, and accurate forecasts of a whole bunch of other factors, any one of which, if slightly wrong, could lead your model to be total garbage.

Central planning of an economy is mathematically impossible. It doesn't matter how powerful your computer is; the only way to get accurate results is to look at the actual economy; and not only can you not see the future with that methodology; you are being over ambitious if you are trying to see the present. That's why governments produce quarterly statistics only many weeks or months after the end of the quarter to which they relate.

With totalitarian and universal data collection and hugely powerful computers, it might be possible to get a grip on what happened yesterday. It will never be possible to accurately and reliably predict what will happen tomorrow.

Aren't all economic systems technically reactionary?

Technically, central planning is predictive - GOSPLAN attempted a series of Five Year Plans, which implied balancing the production of resources and intermediate assemblies and parts with the planned production of finished goods, all founded in a projected target in each sector of the economy; so the first Five year Plan in 1928 attempted to predict requirements in the economy for materials at all levels out to 1933.

This was, of course, a failure, because as I set out above, while economic systems may be predictive, economies themselves are necessarily reactive - it is mathematically impossible for a predictive system to actually work, partly because of non-economic variables (such as weather, natural disasters, political decisions, fashion, war, and a host of others); But mainly because accurate prediction of the future state of a chaotic system is mathematically impossible without a perfect model of the same granularity as the system being modeled - and such a perfect model is a practical impossibility even if you could get away with assuming that all those non-economic variables were known (and of course that's an absurd assumption).

 

[bilby]

We have supercomputers and vast real-time data collected by satellites and ground stations, and we still can't predict the weather to an arbitrary degree of accuracy over short timescales. The reason for this is that complex dynamic systems, like weather and economics, are chaotic - model outputs can diverge wildly from each other in very small numbers of cycles due to incredibly small variations in input.

Modelling based on a perfect and accurate record of all transactions cannot work for a useful amount of time before they break down due to unpredictable elements of the environment - indeed the weather is one such element. You can't use this week's umbrella sales as an indicator of sales for the same week next year; sales depend on non-economic factors.

It's known to be impossible to predict the weather more than about four days in advance with reasonable accuracy (and even that relies on a very woolly definition of 'reasonable'); it's impossible to predict the economy without an accurate weather forecast, and an accurate political forecast, and accurate forecasts of a whole bunch of other factors, any one of which, if slightly wrong, could lead your model to be total garbage.

Central planning of an economy is mathematically impossible. It doesn't matter how powerful your computer is; the only way to get accurate results is to look at the actual economy; and not only can you not see the future with that methodology; you are being over ambitious if you are trying to see the present. That's why governments produce quarterly statistics only many weeks or months after the end of the quarter to which they relate.

With totalitarian and universal data collection and hugely powerful computers, it might be possible to get a grip on what happened yesterday. It will never be possible to accurately and reliably predict what will happen tomorrow.

This is a good post.

As an aside, while some might find this depressing, I think of it as a relief. Things like the polarization of the U.S. and the rise of people like Trump can be attributed to the random evolution of the world, rather than some type of rationalized design that went wrong. In this sense you just kinda gotta.. accept things as they are.

Yes - conspiracy theorists have a far greater respect for the ability of conspirators to foresee the end results of their plans and machinations than is justified. Even the best connected and most powerful cabal of Illuminati would find that their plans lead to unintended consequences as often as not.

 

[DrZoidberg]

As an aside, while some might find this depressing, I think of it as a relief. Things like the polarization of the U.S. and the rise of people like Trump can be attributed to the random evolution of the world, rather than some type of rationalized design that went wrong. In this sense you just kinda gotta.. accept things as they are.

I don't think the rise of Trump, Brexit and ISIS are random at all. They're all symptoms of the same thing. It's the rise of the Internet. Idiots are feeling more empowered than ever before. I think today, more than ever, people live in bubbles, never challenging their beliefs. Never before has fighting cognitive dissonance been easier. It's led to intolerance. Every bubble or island has ever increasingly stringent rules for acceptable behavior.

I'm still a big fan of democracy. But never before has it been more important to disempower politicians. Their main function today is to maintain people's cognitive bubbles. That's a dangerous development.

 

[rousseau]

As an aside, while some might find this depressing, I think of it as a relief. Things like the polarization of the U.S. and the rise of people like Trump can be attributed to the random evolution of the world, rather than some type of rationalized design that went wrong. In this sense you just kinda gotta.. accept things as they are.

I don't think the rise of Trump, Brexit and ISIS are random at all. They're all symptoms of the same thing. It's the rise of the Internet. Idiots are feeling more empowered than ever before. I think today, more than ever, people live in bubbles, never challenging their beliefs. Never before has fighting cognitive dissonance been easier. It's led to intolerance. Every bubble or island has ever increasingly stringent rules for acceptable behavior.

I'm still a big fan of democracy. But never before has it been more important to disempower politicians. Their main function today is to maintain people's cognitive bubbles. That's a dangerous development.

That's an interesting theory.

I figured polarization in the US is increasingly due to brain drain from rural areas. The smartest and most liberal of the country-side leave for cities where they can find a job, and.. those most likely to vote for a guy like Trump remain in rural areas. This means that small-town America gets more and more red, and urban America gets more and more blue.

So, if true, that would imply that the issue can be traced back to the effects of automation and globalization, and rural America being increasingly less fit to live in. So toward my point it's something that literally no one has control over.

 

[BH]

I'm curious about something. I wrote a post earlier on page one about how prices were deliberately set very low so theoretically anyone in the USSR pretty much had most things in their purchasing power. The problem was only so much could be made at any given time and the products that were desired most flew out the door, with sharks coming in and buying many of them up at a time to sell under the table for higher prices or exchange for other goods.

I was wondering if the Soviet or other communist police forces keep track of what those sharks were charging for the goods when they caught them? I'm wondering if maybe the price they sold stuff for might still have often ended up still being far less as a percentage of the average USSR income than its comparable counterpart sold in a store shelf in the USA and the average USA wage.

Does anyone know if this study has been done or who I could talk to who might know?

 

[barbos]

I'm curious about something. I wrote a post earlier on page one about how prices were deliberately set very low so theoretically anyone in the USSR pretty much had most things in their purchasing power. The problem was only so much could be made at any given time and the products that were desired most flew out the door, with sharks coming in and buying many of them up at a time to sell under the table for higher prices or exchange for other goods.

I was wondering if the Soviet or other communist police forces keep track of what those sharks were charging for the goods when they caught them? I'm wondering if maybe the price they sold stuff for might still have often ended up still being far less as a percentage of the average USSR income than its comparable counterpart sold in a store shelf in the USA and the average USA wage.

Does anyone know if this study has been done or who I could talk to who might know?

Prices were not affordable at all. I remember early 80s. Typical salary was around 120 rubles per month.
Here is a price list on some "luxury" items:
Black/White TV 220 rubles
Color TV 700 rubles
Decent (by soviet standards) car about 7000 rubles and you have to wait in line 10-15 years
Cheapest Transistor radio: 30
Pocket calculator - 70
Tape recorder 200
Bicycle 50
Ice cream 0.13-0.2 rubles
Bread 0.8kg 0.2 rubles
Bottle of Vodka ~4 rubles
Bus ticket in the city - 0.05 ruble
In general all western import was ridiculously expensive. Imagine paying monthly salary for pair of import jeans.
Thieves were stealing jeans literally not to mention electronics
And it did not get much better after the fall of USSR. I remember paying monthly salary for Sony Walkman around 1994.

On the other hand free health care and housing but very crappy housing and and you have to wait for it to get it.
In general pricing was artificially set low on essential stuff and high on non-essential.

 

[barbos]

Aren't all economic systems technically reactionary?

Technically, central planning is predictive - GOSPLAN attempted a series of Five Year Plans, which implied balancing the production of resources and intermediate assemblies and parts with the planned production of finished goods, all founded in a projected target in each sector of the economy; so the first Five year Plan in 1928 attempted to predict requirements in the economy for materials at all levels out to 1933.

This was, of course, a failure, because as I set out above, while economic systems may be predictive, economies themselves are necessarily reactive - it is mathematically impossible for a predictive system to actually work, partly because of non-economic variables (such as weather, natural disasters, political decisions, fashion, war, and a host of others); But mainly because accurate prediction of the future state of a chaotic system is mathematically impossible without a perfect model of the same granularity as the system being modeled - and such a perfect model is a practical impossibility even if you could get away with assuming that all those non-economic variables were known (and of course that's an absurd assumption).

You are digging too deep. Soviet system failed because central planning just does not work. People who did the planning just could not do it but they could let it go either.

 

[Cheerful Charlie]

I'm curious about something. I wrote a post earlier on page one about how prices were deliberately set very low so theoretically anyone in the USSR pretty much had most things in their purchasing power. The problem was only so much could be made at any given time and the products that were desired most flew out the door, with sharks coming in and buying many of them up at a time to sell under the table for higher prices or exchange for other goods.

I was wondering if the Soviet or other communist police forces keep track of what those sharks were charging for the goods when they caught them? I'm wondering if maybe the price they sold stuff for might still have often ended up still being far less as a percentage of the average USSR income than its comparable counterpart sold in a store shelf in the USA and the average USA wage.

Does anyone know if this study has been done or who I could talk to who might know?

In some cases, yes, goods were subsidized by the state. Some food stuffs like bread and cabbage were almost given away. But in other cases there were always shortages. The USSR potato harvest was notorious for enormous losses due to lack of proper equipment and theft by organized gangs.

After Khrushchev, there came the nomaclatura system. Many goods were reserved for party officials in special stores, available only to a select few. Soviet stores were notorious for their bare shelves, and when they got something to sell, long lines. It was an inconsistent sets of systems that didn't work well, and the Soviet leadership could never figure out how to run. Some were sibsidized, some not.

Some of this was more subtle. Industry may have problems but the military always got what it wanted. No matter the cost. Thus there were always shortages in the civilian market, but the military got subsidized for its material needs.

I had a few books in the past that went into all of this in glorious detail, and it was just crazed. But with bread costing the equivalent of 3 cents a loaf, one wasn't likely to outright starve in the Soviet Union. At that level, subsidized food costs kept the USSR going.

 

[bilby]

Technically, central planning is predictive - GOSPLAN attempted a series of Five Year Plans, which implied balancing the production of resources and intermediate assemblies and parts with the planned production of finished goods, all founded in a projected target in each sector of the economy; so the first Five year Plan in 1928 attempted to predict requirements in the economy for materials at all levels out to 1933.

This was, of course, a failure, because as I set out above, while economic systems may be predictive, economies themselves are necessarily reactive - it is mathematically impossible for a predictive system to actually work, partly because of non-economic variables (such as weather, natural disasters, political decisions, fashion, war, and a host of others); But mainly because accurate prediction of the future state of a chaotic system is mathematically impossible without a perfect model of the same granularity as the system being modeled - and such a perfect model is a practical impossibility even if you could get away with assuming that all those non-economic variables were known (and of course that's an absurd assumption).

You are digging too deep. Soviet system failed because central planning just does not work. People who did the planning just could not do it but they could let it go either.

Of course they couldn't do it. Even with modern supercomputers it would be impossible; they tried to do it with pencil and paper.

It was as likely to succeed as a Bronze Age tribe trying to put a man on the Moon. Perhaps less so, as at least there's no mathematical reason why getting to the Moon is impossible.

Like so much in Stalin's reign, it was decided at the top that it would be done, and the fact that it was impossible wasn't allowed to be considered for a moment. So everyone just did what they needed to do to deflect the blame for the inevitable failure onto someone else, with varying degrees of success. The price of failure was to be shot, success was impossible, so avoiding the blame became an art form.

 

[barbos]

I'm curious about something. I wrote a post earlier on page one about how prices were deliberately set very low so theoretically anyone in the USSR pretty much had most things in their purchasing power. The problem was only so much could be made at any given time and the products that were desired most flew out the door, with sharks coming in and buying many of them up at a time to sell under the table for higher prices or exchange for other goods.

I was wondering if the Soviet or other communist police forces keep track of what those sharks were charging for the goods when they caught them? I'm wondering if maybe the price they sold stuff for might still have often ended up still being far less as a percentage of the average USSR income than its comparable counterpart sold in a store shelf in the USA and the average USA wage.

Does anyone know if this study has been done or who I could talk to who might know?

In some cases, yes, goods were subsidized by the state. Some food stuffs like bread and cabbage were almost given away. But in other cases there were always shortages. The USSR potato harvest was notorious for enormous losses due to lack of proper equipment and theft by organized gangs.

After Khrushchev, there came the nomaclatura system. Many goods were reserved for party officials in special stores, available only to a select few. Soviet stores were notorious for their bare shelves, and when they got something to sell, long lines. It was an inconsistent sets of systems that didn't work well, and the Soviet leadership could never figure out how to run. Some were sibsidized, some not.

Some of this was more subtle. Industry may have problems but the military always got what it wanted. No matter the cost. Thus there were always shortages in the civilian market, but the military got subsidized for its material needs.

I had a few books in the past that went into all of this in glorious detail, and it was just crazed. But with bread costing the equivalent of 3 cents a loaf, one wasn't likely to outright starve in the Soviet Union. At that level, subsidized food costs kept the USSR going.

I am not sure where you get your potato information. They had proper equipment - school children and students, I participated while in school.
Most potato losses were due to lack of proper storage. But potato was not something you could buy in official government stores (except in bigger cities) Most people in "smallish" towns were growing their own potato and other tomato like cucumbers, etc (And oldish generations still does that)
We even had pigs and chickens while living in a small town.
Now back to central planning. It does not work well for theoretical reasons you provided but I would not blame central planning for everything. I think central cause for failure of soviet system was simply ignoring market economy where people are rewarded for producing stuff people need and doing so efficiently.
People who sucked at their work were "rewarded" the same way as people who did not suck. No unemployment in USSR. Of course it all applies to wast majority of people only. In case of nomenclatura you could lose your job if you fail produce nice (but meaningless) numbers. And millitary complex was quite separate and had much better "signaling" and was closer to market economy if we could say that.

 

[DrZoidberg]

BTW, everybody clear on that having a centrally planned economy was never part of Karl Marx's theories? That was something that the USSR started with because they... well... Lenin really liked having power. It started as an emergency measure just to get bread to starving people. Then Lenin really enjoyed the power trip of that. Then Stalin came alone and... well... he was nuts. A paranoic who had a pathological need to have power and control. No shit he expanded that system.

Karl Marx's idea was quite simply to remove the "capitalism" part of the economy. This can be done in any number of ways. The most popular socialist method is simply through progressive taxation. Which is so popular it's ubiquitous in the world. This was the policy favoured by the Mensheviks. Ie the political party who first managed to grab power in the Russian revolution. They lost power because they misjudged the sentiments of the people regarding the war effort. Which had nothing to do with the economy.

It's really important not to let the Soviet union get to define socialism or Karl Marx. The USSR was a version of socialism that's more akin to fascism and totalitarianism than sensible policies promoting equality and fairness.

 

[barbos]

Well, Lenin contributed his thoughts into Marxism, did not he?
Then Mao did some contribution too.

 

[DrZoidberg]

Well, Lenin contributed his thoughts into Marxism, did not he?
Then Mao did some contribution too.

Yes. It is interesting that when Stalin started with the five year plans (Lenin was dead at this point) USSR switched from being Marxist to being Marxist-Leninist. It's like they were admitting that they couldn't possibly pass this off as socialism, so they just tacked "-Leninism" on there. Maoism is ever further removed from the Marxist core because it's based on Marxist-Leninism. So Marxism-Leninism-Maoism. The Peruvian communists, Sendero Luminoso, were Marxist-Leninist-Maoist-Gonzaloist. There's a pattern here. When Communists seize power realise that socialist theory is inconvenient for an aspiring emperor who wishes to crown themselves as the father of a new imperial dynasty. So they have to smack their own name to the end of it, create a new theory, which makes their delusions of grandeur ok. Ghaddafi also did this. "Islamic socialism" Lol. Castro... there's a long list here.

I've read several Maoist biographies. That man had no illusions about how dysfunctional communism was. He didn't care. He was just in it for the power. And lived like a Chinese emperor with all the trimmings. Whether or not Lenin really had a socialist mindet is anyone's guess. But Stalin, reportedly lived a really simple life. And he enforced all his officials to live equally simply. So he seems like he really was a communist. Same deal with Khrushchev. But then we get Brezhnev who was all about the fancy palaces, hookers and blow.

Yeah, so many communist leaders made "contributions" to socialist thought.

 

[barbos]

Well, Lenin contributed his thoughts into Marxism, did not he?
Then Mao did some contribution too.

Yes. It is interesting that when Stalin started with the five year plans (Lenin was dead at this point) USSR switched from being Marxist to being Marxist-Leninist. It's like they were admitting that they couldn't possibly pass this off as socialism, so they just tacked "-Leninism" on there.

Leninism was tacked in for purely political reasons. Stalin needed some credibility and appearance of continuity from Lenin, so Lenin became Jesus like figure and Stalin was his closest follower. In reality Lenin did not like Stalin at all.
Boy, I hated all that boring crap in school.

 

[BH]

Aren't all economic systems technically reactionary?

Technically, central planning is predictive - GOSPLAN attempted a series of Five Year Plans, which implied balancing the production of resources and intermediate assemblies and parts with the planned production of finished goods, all founded in a projected target in each sector of the economy; so the first Five year Plan in 1928 attempted to predict requirements in the economy for materials at all levels out to 1933.

This was, of course, a failure, because as I set out above, while economic systems may be predictive, economies themselves are necessarily reactive - it is mathematically impossible for a predictive system to actually work, partly because of non-economic variables (such as weather, natural disasters, political decisions, fashion, war, and a host of others); But mainly because accurate prediction of the future state of a chaotic system is mathematically impossible without a perfect model of the same granularity as the system being modeled - and such a perfect model is a practical impossibility even if you could get away with assuming that all those non-economic variables were known (and of course that's an absurd assumption).

But the problems you cite are just as much problems with feudalism or capitalism as well. There is no one hundred percent fool proof way to have complete efficiency (depending on which goals you measure efficiency by).

I work next to a Walmart. You would be absolutely shocked how much stuff they throw away in dairy, bakery, and deli departments because it doesn't sell. You would be surprised how much they package up and send off to be destroyed in their non-perishable departments as well. Where I work I throw away lots of candy that is expired and have to take a loss on lots of shoes or purses that simply will not sell or simply yellow with age.

I can't remember his name right now but will try to find it. There was a Soviet dissident who hated Stalin and the Soviet system. Then he came over here and saw how we do things. He also went back after the fall of the USSR and saw what happened to folks then. He apologized for opposing the Soviet Union and said in the end it was the better system over all. The most interesting comment he made was that he was led to believe the Soviet beuracracy was too big--so big it always messed everything up. But he said he looked into it when he saw so many failings in our system and found out our beauracracy was larger over here.

I do not see why it would be impossible to plan out an economy, especially the most basic goods and services. However, I admit I could be wrong. If anyone would like to share a few book titles about just how you plan out an economy I'd like to read them. It is so hard to find anything here in the states that really goes into detail about the Soviet economic system---just exactly how a particular industry was planned out and regulated.

 

[bilby]

Technically, central planning is predictive - GOSPLAN attempted a series of Five Year Plans, which implied balancing the production of resources and intermediate assemblies and parts with the planned production of finished goods, all founded in a projected target in each sector of the economy; so the first Five year Plan in 1928 attempted to predict requirements in the economy for materials at all levels out to 1933.

This was, of course, a failure, because as I set out above, while economic systems may be predictive, economies themselves are necessarily reactive - it is mathematically impossible for a predictive system to actually work, partly because of non-economic variables (such as weather, natural disasters, political decisions, fashion, war, and a host of others); But mainly because accurate prediction of the future state of a chaotic system is mathematically impossible without a perfect model of the same granularity as the system being modeled - and such a perfect model is a practical impossibility even if you could get away with assuming that all those non-economic variables were known (and of course that's an absurd assumption).

But the problems you cite are just as much problems with feudalism or capitalism as well.

Of course. I am talking about central planning of economies; communism doesn't imply central planning, and capitalism doesn't imply its absence. But it was the system used by the Soviet Union for most of its existence, so it is directly relevant to this discussion, whether or not it is relevant to (or specific to) communism in the wider sense. It's the major reason that the USSR failed to thrive economically, and led to her downfall.

 

[BH]

Yes. It is interesting that when Stalin started with the five year plans (Lenin was dead at this point) USSR switched from being Marxist to being Marxist-Leninist. It's like they were admitting that they couldn't possibly pass this off as socialism, so they just tacked "-Leninism" on there.

Leninism was tacked in for purely political reasons. Stalin needed some credibility and appearance of continuity from Lenin, so Lenin became Jesus like figure and Stalin was his closest follower. In reality Lenin did not like Stalin at all.
Boy, I hated all that boring crap in school.

I read somewhere that Stalin thought of Marx as Abraham and Lenin was like Moses. He thought his part was to be the Joshua in the Soviet story and we all know Joshua went around giving the ax to everyone that didn't do things the way his religion said it should be.

I know the phrase "be fair" may seem rather strange when applied to Stalin, but didn't the researchers prove that the people supposedly killed by him were a whole, whole, whole, lot lower than the claims of 50 million or 20 million. I want to think the purges of 1936-1938 turned out to be more like 600,000.

 

[barbos]

BH, size of the bureaucracy is an indicator of how efficient (at production) economy is. Efficient (capitalist) economy can afford bigger bureaucracy.
But yeah, no candy were ever thrown out in USSR, you can be sure of that.

 

[Horatio Parker]

Leninism was tacked in for purely political reasons. Stalin needed some credibility and appearance of continuity from Lenin, so Lenin became Jesus like figure and Stalin was his closest follower. In reality Lenin did not like Stalin at all.
Boy, I hated all that boring crap in school.

I read somewhere that Stalin thought of Marx as Abraham and Lenin was like Moses. He thought his part was to be the Joshua in the Soviet story and we all know Joshua went around giving the ax to everyone that didn't do things the way his religion said it should be.

I know the phrase "be fair" may seem rather strange when applied to Stalin, but didn't the researchers prove that the people supposedly killed by him were a whole, whole, whole, lot lower than the claims of 50 million or 20 million. I want to think the purges of 1936-1938 turned out to be more like 600,000.

I thought the large numbers reflected prisoners sent into the Gulag. Not so many executed, by many imprisoned. IIRC, Solzhenitsyn put it at 66M. That's not just during the purge, tho.

 

[barbos]

Leninism was tacked in for purely political reasons. Stalin needed some credibility and appearance of continuity from Lenin, so Lenin became Jesus like figure and Stalin was his closest follower. In reality Lenin did not like Stalin at all.
Boy, I hated all that boring crap in school.

I read somewhere that Stalin thought of Marx as Abraham and Lenin was like Moses. He thought his part was to be the Joshua in the Soviet story and we all know Joshua went around giving the ax to everyone that didn't do things the way his religion said it should be.

I don't think we can say for sure what he thought.

I know the phrase "be fair" may seem rather strange when applied to Stalin, but didn't the researchers prove that the people supposedly killed by him were a whole, whole, whole, lot lower than the claims of 50 million or 20 million. I want to think the purges of 1936-1938 turned out to be more like 600,000.

50 million would be 30% of population.