"Big Data" Isn't Enough to Make Socialism Work
03/16/2018Tho Bishop
When sharing Bob Murphy's excellent article today on the Knowledge-Calculation Debate, one of the most common responses has been "Murphy makes a good case, but why does this really matter?"
Beyond the value of grasping intellectual nuance, I think this debate has actually increased in real world importance over time with the rise of "Big Data."
Increasingly we see entrepreneurs, economists, and other thought leaders discuss the possibility of using improved data collection and algorithms to solve the "knowledge problem" Hayek famously outlined.
Now, of course, these big data central planners still suffer from their own fatal conceit, as brilliantly discussed in this article by Per Bylund. Still though, laissez-faire skeptics are able to use Hayek's knowledge critique of socialism as a way of justifying their new tech-backed schemes.
The same can't be said for the Misesian critique of socialism grounded in economic calculation, as Xiong Yue noted last year:
[T]hose who consider the problem of socialism as merely a problem of information failed to understand that the core problem of socialism lies in the absence of prices in a centrally-planned economy. The role of prices in the market economy is unique because money prices offer an indispensable tool in economic calculation. As Mises writes in Human Action,
One cannot add up values or valuations. One can add up prices expressed in terms of money, but not scales of preference.
https://mises.org/power-market/big-data-isnt-enough-make-socialism-work