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Some Confusion About Intellectuals and Socialism

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Via Economic Policy Journal

“People who are smart tend to believe they can engineer others’ actions to a better outcome. However, since they don’t have the sensibilities of the others — i.e. most of economics is about WANT, not NEED — they fail miserably.

“The free market is a neural network, and intellectuals try to apply sequential programming to it. It’s like trying to replace your brain with an IBM chip running Microsoft. It’s the wrong architecture.”

There is a mix of some truth and a lot of confusion in this comment.

It may be true that many intellectuals believe they can engineer others’ actions to a better outcome but the second part of the comment “they don’t have the sensibilities of the others — i.e. most of economics is about WANT, not NEED — they fail miserably,” is not the problem.

The problem is there is too much information, changing all the time, that makes central planning unsuccessful, even if individuals “sensibilities” matched up with the general public. In short, it is not the type of person doing the planning that is the problem but that no person, group, or computer could successfully do central planning.

Finally, calling free markets a “neural network” confuses things even more. It suggests that free markets can be modeled, at least on a theoretical basis, to reach some sort of equilibrium but this is not the case at all. The free market is about adjusting to circumstances that are always changing and no neural network or sequential programming can, so to speak, “solve the problem” because the data is always changing.

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RW


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