Thursday 29 September 2011

Is this just fantasy?

It's fascinating to read people saying that an RBE is just fantasy. It's an interesting word. Clearly in the sense that the RBE is a theory, it is a fantasy - something imagined, but 'fantasy' has the overtone of unachievable and unrealistic. Maybe that's right, but many who make the point also have a 'fantasy' about free market capitalism, which they constantly claim works for just about everybody. But not everybody, though?

Some critics raise the spectre of a centrally planned economy, and one I have just read illustrates the power of our current system by use of a loaf of bread. How does s/he actually think a loaf of bread comes to be on a supermarket shelf? Is some computer not counting how many loaves are sold, and where? Is some bakery not trying to bake the bread just in time, and deliver it just in time, using economies of scale (if they exist)? What is this but central planning? The fact that money changes hands at each stage does not make production and distribution more efficient. If anything it adds friction to the flow of bread from farm to belly.

Is the bakery trying to cut down on waste? Yes of course - as an RBE would do. Does the distributor try to find the mist efficient way of transporting the bread? Yes of course - as an RBE would do. A lot of the mechanisms are there and the RBE would use them as they are, improving them where possible.

What's different in an RBE, continuing with this analogy? Well (1) if you want / need a loaf of bread, but haven't got the money to pay for it, forget it. Resources are allocated by ability to pay, not human need. (2) Part of what you pay at the till is for advertising and marketing. Yes, someone trying to persuade you to eat more bread, or bread 'a' instead of bread 'b'. What is the right amount of bread to eat - and the best kind - for human health and happiness? No matter - this is about making a profit.

Opponents of an RBE scoff at computer control of distribution, whilst completely ignoring the fact that the big suprmarkets do exactly that. They also ask "who programmes the computers?" to suggest doubt about the motivation. Well first, who programs them now? Their motivation is profit. Second, as already explained, computers collect information about where things are sold (as a proxy for where they are needed). Technically there's no important difference. Imagine online shopping as it is now, but without the bit where you pay.

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