Idiot in economics: We already live in a planned economy — could corporations pave the way to socialism?

New book The People’s Republic of Walmart challenges the myth of market supremacy.

Idiot in economics: We already live in a planned economy — could corporations pave the way to socialism? Gettyimages-696676192

Idiot in economics: We already live in a planned economy — could corporations pave the way to socialism? Gettyimages-696676192

In 1919, Viennese economist Otto Neurath wrote a pamphlet entitled War Economy. During the First World War the state assumed the role of economic planner, mobilising industry to serve military and civilian needs. Economists “often denied the possibility that war could enrich a people”, Neurath observed, but the results of the First World War appeared to disprove this: with the state acting as manager, the economy became a vehicle for securing common goals. During peacetime, Neurath asked, “could the same, or even a better result” be achieved? Could a state-planned economy be more effective than its free market counterparts?

Neurath’s theory was swiftly denounced by libertarian economists. Ludwig von Mises and Friedrich von Hayek both argued that free markets act as signalling devices, providing information about consumer choices and preferences in real time through the rise and fall of prices. State planners, by contrast, could never access the volumes of information required to gauge the demands of a population.

Yet Neurath’s theory was vindicated by events. The US New Deal of the 1930s showed that state planning, rather than cutthroat competition, could stimulate economic recovery. The UK’s GDP rose by 27 per cent from 1938-43 as a result of economic planning during the Second World War. But Mises’ ideas endured. As the post-war Keynesian consensus collapsed in the late 1970s, heralding the birth of neoliberalism, politicians retreated from planning and embraced free markets. Today, the concept of state planning evokes memories of the USSR where consumers were condemned to drive Lada cars and fetishise Western consumer choice from behind the Iron Curtain.

https://www.newstatesman.com/politics/economy/2019/03/we-already-live-planned-economy-could-corporations-pave-way-socialism

Idiot in economics: We already live in a planned economy — could corporations pave the way to socialism?

Idiot in economics: We already live in a planned economy — could corporations pave the way to socialism?

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