One lovely young lady named Mabel

Placed a comment on my Calculation Problem Article, saying it’s a fable.

I took no offense,

Did not say, “Get thee hence”,

But laid all my cards on the table.

Mabel claimed the Calculation Problem was solved by 1970, and linked to a matrix that apparently solves it.

I think that matrix is a wonderful tool, not to refute the Calculation Problem, but to give a nice visual of where the problem actually is. That neat little matrix shows exactly where the Calculation Problem exists [no data to fill in the first column] and how it gums up the works in a socialist economy. [No data in first column means no numbers for the matrix to crunch, rendering it useless].

So for all you math whizzes and computer science guys out there, who get things better when they are laid out in neat tables and stuff, here’s the required info:

Here are the links to my humble article, which explains the Calculation Problem. It’s in three parts. Part One. Part Two. Part Three.

Here’s Mabel’s comment in full:

Hi,

I am prepared to defend the premise that the calculation problem was solved by 1970.

I know that is a challenging premise, so I request that you click over to http://www.sfecon.com and ask yourself: could these arrays of numbers be regenerating themselves if the calculation problem were not solved? The software generating this demonstration is freely available for you to run on your own desktop.

I would like to address the premise that economic calculation is impossible because only free markets can generate the prices needed to guide economic order into the general optimum. All this tells me is that a true science of macroeconomics would present an understanding of how free markets generate such prices – hence macroeconomics is not yet a science. We all knew that.

All the Austrians tell me is they cannot fathom how anyone might map out the complexity behind how markets compute prices, and that this is supposed to be a sufficient proof that no else can possibly penetrate that complexity, ergo: anyone’s demonstration of the ‘swarm intelligence’ creating the ‘information-carrying particles’ of money prices is ipso factor a fraud. Invincible argument, but utterly trite.

As a partisan of the free market, I am not upset by a mathematically determined solution to the calculation problem. On the contrary, I wish to develop that solution into educational software that extolls the virtues of the freest possible markets. We would likely agree that the self-interested disposition of private property is, first and foremost, an aspect of liberty. If liberty is the objective, the we should choose markets even if they were not efficient.

I am afraid the Austrian’s insistence on merely verbal argumentation to the exclusion of objective demonstrata will ultimately be used to discredit liberty along with their harebrained economic commentaries. Anyone care to discuss a separation of these issues?

My reply:

0. Thank you for the link to that little matrix. It helps show exactly what the calculation problem is, once we grasp why that whole matrix is null and void in a socialist economy.

1. The boo-boo is in the very first column of green numbers. That whole first column, all of it, is a blunder, when applied to a socialist economy. In a socialist economy, there are no Expenditures. The State owns all factors of production. They pay no one for them. So where are all those green numbers going to come from, which represent Expenditures on means of production? On the other hand, you can’t say Expenditures are actually zero, because means of production are being used up. There are Expenditures, but no way to calculate what they are. That’s the calculation problem.

Naturally, when that whole first column is filled with question marks, the rest of that beautiful little matrix becomes useless. No data to input means no output, obviously.

2. The humble article did not say the problem was complexity of something or other. Notice that the example it used was not complex at all. There is no mention of “information carrying particles of money”, either. All it had was one factor of production, phosphorescent plastic, and two possible products, skeletons and laptops. And yet, there was an unsolvable calculation problem.

3. I don’t know whether the complexity/information carrying argument is invincible, or utterly trite. I do know that bringing it up in a comment about my humble article, and about Mises’s calculation problem, is like the bride wearing a football helmet at her wedding. Out of place.

4. Do you know why Austrians insist on verbal argumentation? What is your rebuttal of their reasoning?

5. Do you know why they claim objective demonstrata are useless in predictive economics? What is your rebuttal of their reasoning?

6. Have you read America’s Great Depression, by Rothbard?

Have you noticed how full it is of objective demonstrata?

How do you reconcile that book with your presumption that Austrians exclude objective demonstrata?

I’ll give away the secret. In fact I already have, right here: https://smilingdavesblog.wordpress.com/2014/01/31/thoughts-on-ae-and-interpreting-data/

7. Can you please give examples of what you consider harebrained economic commentaries? What is your rebuttal of their reasoning?

8. Liberty and Austrian Economics have been separated on the Internet, with many people waving the liberty flag, but lacking the intellectual capacity, or honesty, or energy, to grasp AE.