Trajectories for Dealing with Allocative Efficiency

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Max Grunberg:

"Who gets what in the economy at a given point in time?

So far, our imaginative space seems to be constrained to five general trajectories of dealing with the static aspect of allocative efficiency.

The first trajectory for solving this problem is the status quo of the market order. It is the price mechanism still present in market socialist proposals, which steers the flow of scarce resources into the direction of the most profitable enterprises. As a point of departure, this is what socialists still dedicated to the idea of an economic plan wish to transcend.

Second, following on from Soviet command planning, these allocative decisions could be taken up again by bureaucrats. Marx disparagingly called this the ‘papacy of production’, and – after the experience of actually existing socialism – any such return to economic despotism seems to present the least desirable alternative.

Third, as an inversion of such bureaucratic centralism, one could agree to grant the immediate producers full control over the allocation of the products of their labour, which would amount to an equally irrational dictatorship of the periphery, or an anarchism without markets, due to their particular interests and limited scope of societal needs.

A fourth trajectory, favoured by most anti-authoritarians today, would be to solve this problem through a deliberative negotiation process involving everyone affected to reach consensus. Based on voluntarist principles, it is the utopian belief that the allocative efficiency of a world economy would harmoniously emanate from the multitude. In a slightly more bureaucratic form, this hope is articulated today in Pat Devine’s (1988) call for negotiated coordination. Even in the unlikely case that consensus on the allocation of millions of scarce goods could be achieved among the participants4 by horizontal means with a myriad of meetings taking place simultaneously, each individual allocation decision would have cascading effects within the economy resulting in a recursive loop of permanent renegotiation, which would paralyse the economy in an inconclusive state and reinforce desperate calls for a rationing by price or bureaucratic hierarchies to resolve persistent conflicts.

Finally, the fifth and last resort humanity seems to have for coming to terms with the complexity of this allocative task is some form of algorithmic mediation."