Forums of the Libertarian Left

[Zanthorus]

So I've been reading some of the literature on the calculation problem and I have some criticisms. So first off how would you best sum up the calculation problem? To my mind it's something like:

"Given a limited set of means to satisfy a limited set of ends a socialist society has no rational way of determining which means to use to satisfy which ends."

Correct? Anything else to add?

It'd also help my argument if you laid out how you think the market mechanism solves the problem.

[Cork]

This is too large of a problem to be discussed in sound-bite form, but a pretty decent explanation can be found here:

http://mises.org/pdf/humanaction/pdf/ha_26.pdf

IMO, it is a fairly devastating critique of communism--a far greater hurdle than "human nature" and all the other popular arguments that are made against it.

There are socialists who acknowledge the force of the argument as well. For anyone interested, David Schweickart (a "market socialist") explains the unworkability of non-market systems here:

http://homepages.luc.edu/~dschwei/parecon.htm

[Zanthorus]

http://mises.org/pdf/humanaction/pdf/ha_26.pdf

Which method should the director choose? He cannot reduce to a common denominator the items of various materials and various kinds of labor to be expended.

Can't he? What does Von Mises mean by 'Various kinds' of labour? Labour is human exertion pure and simple, I'm pretty certain that with modern technology we could calculate the amount of effort and energy expounded during the production of different goods. And what about democratic methods?

He cannot attach either to the waiting time (period of production) or to the duration of serviceableness a definite numerical expression.

It appears that when it comes to economics Austrians will conveniently forget the existence of units of time in order to further their arguments eh? Maybe when trying to compare different ends this might be a problem but if you've already established your ends then choosing means in terms of period of production and duration of serviceableness shouldn't really be a problem.

But there is the embarrassing multitude of producers’ goods and the infinite variety of procedures that can be resorted to for manufacturing definite consumers’ goods. The most advantageous location of each industry and the optimum size of each plant and of each piece of equipment must be determined. One must determine what kind of mechanical power should be employed in each of them, and which of the various formulas for the production of this energy should be applied.

In typical austrian fashion he's just asserting this without recourse to any actual facts or statistics. If we've already established what good is going to be produced then we've already limited down our choices of what producer's goods and procedures we're going to use by a massive amount and choosing between them shouldn't be overly hard.

It is permissible to say that the present state of technological knowledge makes it possible to produce almost anything out of almost everything.

The more I read through this the more unbelievably absurd it seems. If Von Mises is to be believed then we're already living in the kind of unimaginable state of abundance which is pretty much a prerequisite for communism. So which is it? Are we stuck with limitied resources and thus economic calculation isn't particularly difficult? Or do we have unlimited resources and thus the whole question is null and void.

the only reason why the synthetic production of drinking water today—perhaps not at a later day—is out of the question is that economic calculation in terms of money shows that it is a more expensive procedure than other methods. Eliminate economic calculation and you have no means of making a rational choice between the various alternatives.

But what makes economic calculation via money so superior to a random choice apart from the process behind it? Monetary value isn't some magical fixed value with innate qualities it's an artificial construct given to it by human beings on the market. As far as I can see it has no more weight than deciding the value of things by rolling a dice or flipping a coin.

If he invests today in the canning industry, it may happen that a change in consumers’ tastes or in the hygienic opinions concerning the wholesomeness of canned food will one day turn his investment into a malinvestment. But how can he find out today how to build and equip a cannery most economically?

How does he find out in a market society? This is the problem I've seen in all the literature on this debate. It assumes money has some kind of objective quality, it's absurd.

There are various mechanisms that could be used to deal with problems at each stage of the production and manafacturing process of goods that don't rely on market mechanisms. Von Mises just seems to like over-inflating the scale of the problem and then dogmatically asserting that calculation is impossible.

[Cork]

Nice and simple, eh? I'm sure there are others who will be willing to have a lengthy debate over the separate details of Mises' argument with you, but I'll admit I don't have the will. The subject has been discussed quite a bit over at libcom:

http://libcom.org/forums/thought/econom ... n-argument

All I can say is: until I see a large-scale, non-market economy exist for a sustained period of time in real life (not in armchair theory), I have no more reason to believe in it than I do Zeus, Yahweh or Ganesh. I admire your willingness to at least try to learn more about the problem, but wonder whether you've really considered just how complex, widespread and spontaneous an economy is. We are talking about god-knows how many tens of thousands of consumer goods here, produced in different ways in different places all over the world (the production itself dependent still on other goods made in different places, etc). It is not just 'Austrians 'who are critical of non-market systems btw, but virtually all economists including the lefties.

When you get diarrhea, you want to drive to the nearest store and get some damn pills, not plan it out months in advance in some council or committee.

If the experiment is ever tested in real life and is a fantastic success (which I highly doubt), I will be quite happy to concede that you were right about everything. Deal?

[neverfox]

All I can say is: until I see a large-scale, non-market economy exist for a sustained period of time in real life (not in armchair theory), I have no more reason to believe in it than I do Zeus, Yahweh or Ganesh.

Plug in "anarchy" for "large-scale, non-market economy" and I don't think you'll have an argument you'd want to endorse, am I right?

[Cork]

Apples and oranges. You can't compare a different political system (or lack thereof) to an entirely different economic order. They're different concepts. Political scientists can debate the merits and disadvantages of democracy, republic or anarchy, but it all has zero relevance to economics. Economics has immovable laws that we can't pick and choose based on "merits" or personal preferences or our own imagination. Time and time again, those laws have been validated.

Furthermore, states have monopolized all the land by force, making anarchy impossible. But nothing is stopping people from creating producer's cooperatives and pooling their goods without money. So the analogy is not convincing.

[neverfox]

I wasn't really saying it is relevant to economics. I only thought what you were saying was that you weren't prepared to believe something that didn't prove itself to work in real life through historical example. That seems like it has its own logic independent from economics vs. politics. Why is historical success of an economic system more compelling than that of a political system? There are no true anarchies in history and I could see (I do see) people argue that this must mean that something fundamental about society prevents it from being stable or successful. Fortunately, I don't think such arguments have merit and rest on a fallacy. I'm on your side (as far as I can tell) of the EC debate but I was just pointing out that you might be better served with sticking to a priori reasons than empirical ones, precisely because the variables are so hard to untangle. One could just as easily argue that the apparent success of markets is undermined by the fact that we often seen saying that we don't have true markets due to the state; that would mean that the free-marketeers don't really have an example of a working model either.

[Cork]

Why is historical success of an economic system more compelling than that of a political system?

For the same reason that the law of gravity can't be repealed.

As I said, economics has immovable laws. It is a science. Because of this, only certain economic ideas work in reality. Politics is not the same thing. Any political system "works" in the sense that it does as it is intended. We're left to argue our preferences based on what we see as each system's merits and disadvantages.

To be more clear: I'm obviously not solely basing my argument on the fact that it's never been done historically. If someone were to argue for a crazy new political system called Brautarchy, in which representatives are chosen based on who makes the best beer brauts, I might think it's silly but wouldn't dispute it could exist. But if someone is arguing against the law of gravity, at some point I'm just going to say, "Whelp, I'll believe it when I see it. Until then I have to assume it's a load of BS."

[Zanthorus]

Nice and simple, eh? I'm sure there are others who will be willing to have a lengthy debate over the separate details of Mises' argument with you, but I'll admit I don't have the will. The subject has been discussed quite a bit over at libcom:

http://libcom.org/forums/thought/econom ... n-argument

The sbuject has also been discussed at length over at RevLeft which was one of the reasons why I wanted to spark up this debate again:

http://www.revleft.com/vb/autrian-schools-economic-t115051/index.html
http://www.revleft.com/vb/economic-calculation-argument-t113038/index.html
http://www.revleft.com/vb/economic-calculation-problem-t88432/index.html
http://www.revleft.com/vb/understanding-economic-calculation-t92043/index.html

All I can say is: until I see a large-scale, non-market economy exist for a sustained period of time in real life (not in armchair theory), I have no more reason to believe in it than I do Zeus, Yahweh or Ganesh. I admire your willingness to at least try to learn more about the problem, but wonder whether you've really considered just how complex, widespread and spontaneous an economy is. We are talking about god-knows how many tens of thousands of consumer goods here, produced in different ways in different places all over the world (the production itself dependent still on other goods made in different places, etc). It is not just 'Austrians 'who are critical of non-market systems btw, but virtually all economists including the lefties.

Replace 'non-market' for 'Actually free-market' and then you'll see how silly this argument is. I personally have yet to be shown an actual working example of your market anarchist paradise so as far as I'm concerned we're both running on blind faith here.

When you get diarrhea, you want to drive to the nearest store and get some damn pills, not plan it out months in advance in some council or committee.

Cool, nice straw man. I'm pretty sure no one has so far put forward the suggestion that absolutely every single thing must be planned.

If the experiment is ever tested in real life and is a fantastic success (which I highly doubt), I will be quite happy to concede that you were right about everything. Deal?

Deal

[Cork]

Replace 'non-market' for 'Actually free-market' and then you'll see how silly this argument is. I personally have yet to be shown an actual working example of your market anarchist paradise so as far as I'm concerned we're both running on blind faith here.

I've explained why this is a poor analogy. We see markets working every second of every day, so it is quite easy to see how it is theoretically possible for them to handle most of the state's vital functions.

We see non-market economies working...well...nowhere. The two aren't even in the same ballpark. Economic theories require a far higher burden of proof than political theories.

Cool, nice straw man. I'm pretty sure no one has so far put forward the suggestion that absolutely every single thing must be planned.

Welp, planning is the only alternative I can see to markets. I'll be happy to read through your RevLeft threads, but have little doubt the hard questions will be totally avoided.

[Cork]

Looking through the threads, the 'answers' are even less impressive than I thought. All of them are some variation on ad hominem attacks ("free market economists are all bought off by corporations!"--even if it's true, so what?), apathy ("don't waste your time arguing with capitalists"), and laughable claims that mathematical models or computer programs will solve the problem.

Is there some answer there you find compelling? If so, post it. I'd like to hear it.

[Zanthorus]

I've explained why this is a poor analogy. We see markets working every second of every day, so it is quite easy to see how it is theoretically possible for them to handle most of the state's vital functions.

But we don't see free-markets working every second of every day. We see markets working that are cartelised and highly regulated by the state.

We see non-market economies working...well...nowhere. The two aren't even in the same ballpark. Economic theories require a far higher burden of proof than political theories.

How was the internet developed? What about Linux or everything else in the free software movement?

Welp, planning is the only alternative I can see to markets. I'll be happy to read through your RevLeft threads, but have little doubt the hard questions will be totally avoided.

Yes but not that kind of planning. I presume the planning would be more along the lines of "Well last quarter we had to order in 4.5% extra when our supplies ran out so we'll order 5% on top of our usual load this quarter", basically the same way corporations work because of course, contrary to what free market economists would have you believe, businesses don't react instantly to changes in the market. It takes a lot of time.

Edit:

Is there some answer there you find compelling? If so, post it. I'd like to hear it.

This piece by Paul Cockshott and Alan Cottrell: http://ricardo.ecn.wfu.edu/~cottrell/socialism_book/calculation_debate.pdf

[Cork]

But we don't see free-markets working every second of every day. We see markets working that are cartelised and highly regulated by the state.

Of course they are burdened by state interference. But they exist on every corner of the globe. It's not too big of a leap to imagine markets existing without the state.

What about Linux or everything else in the free software movement?

Free software is great, but nothing on the internet has to deal with the constraints scarcity imposes on the real world.

Yes but not that kind of planning. I presume the planning would be more along the lines of "Well last quarter we had to order in 4.5% extra when our supplies ran out so we'll order 5% on top of our usual load this quarter", basically the same way corporations work because of course, contrary to what free market economists would have you believe, businesses don't react instantly to changes in the market. It takes a lot of time.

Surprising, then, that no non-market system has ever worked as smoothly as its advocates have promised. "Bread line" would not be a term in the English language if what you're saying is true. Let’s imagine that all gasoline were available for free tomorrow. What would happen? Oh yeah, it would all be gone within an hour. Remember the gas lines of the 70’s? Not much fun.

The beginning of the paper you linked claims it is possible to base economic calculation on “labor time.” Seriously? If that’s the argument then I don’t need to read the whole thing (unless you’d like to provide a quick summary with the main points).

[shawnpwilbur]

Cork,

A zero-price free-for-all seems like a far cry from what most calculators intend. (Many of the zero-price theorists simply take themselves out of the conversation by assuming conditions more or less without scarcity.) But don't we ultimately see, within actually-existing "market" economies, planned resource allocations at larger and larger scales? I would think the current world economy might be a (somewhat cautionary) argument in favor of some kind of economic calculation. On the one hand, the trend is towards centralization is many industries, so that the market signals that take precedence are primarily top-down demands from the capital and credit markets, where government manipulation is the greatest. What we see "working" in these instances is pretty obviously not really working for laborers, who are facing increasing precarity, and is arguably not working terribly well for consumers. The discount-heavy "convenience" economy is a command economy in many ways. On the other hand, where there seems to be some increase in competition, as in the global labor market, we see systematic governmental deformation of that market--essentially planning on a global level--and while the results may not be grand for any particular nation state, capitalist globalism seems to be muddling along with all the grace of a soviet farm-collectivization scheme. Except, of course, that it doesn't actually "work" for most of the actors we would expect to benefit from any free arrangement.

Obviously, there are lots of reasons to think genuinely free markets solve many economic problems pretty elegantly. There are also good reasons to believe that even the most elegant solutions will suffer from the GIGO principle when they wrestle with complex, large-scale problems. What isn't clear is that we have any current examples of complex, large-scale economies that don't pretty closely resemble the planned economies they are supposed to be an alternative to.

[Zanthorus]

Free software is great, but nothing on the internet has to deal with the constraints scarcity imposes on the real world.

I meant the development of the internet was done entirely by the government. Noam Chomsky gave a pretty interesting talk actually where he noted that when MIT was being funded by the pentagon they were pretty much free to innovate and research whatever they wanted and that declined with the decrease in funding from the government since corporations generally tend to have an agenda to satisfy instead of actual pursuit of genuine knowledge. Similarly with the internet 'net-neutrality' is now under threat thanks to corporations. The right-libertarian idea that corporations are bastions of innovation is simply ridiculous, corporations on a market exist to satisfy the consumer generally speaking that will be at odds with genuine creativity and innovation.

This is what irritates me about market anarchists. A lot of what they say about the efficiency of the market vs the stagnation of planned economies sounds like it was taken from Glenn Beck's website.

"Bread line" would not be a term in the English language if what you're saying is true.

Remind me again what type of economy we were using when the great depression happened? Remind me further what type of economy was being implemented in Russia during their period of massive scale industrialisation?

And russia wasn't even a good example of a planned economy (Little to no democratic control, quite a bit of the money being siphoned off by bueracrats)

[ProstheticConscience]

There are socialists who acknowledge the force of the argument as well. For anyone interested, David Schweickart (a "market socialist") explains the unworkability of non-market systems here:

http://homepages.luc.edu/~dschwei/parecon.htm

Small quibble, the linked article doesn't claim to explain the unworkability of all possible non-market systems, just of Parecon. It's an extremely good critique of Parecon, though.

You might argue that all non-market (but non-Soviet) systems have the same kind of problem -- too many meetings, too much paperwork. I might agree with you -- one of the things I like about mutualism is that it seems to be syndicalism with fewer meetings. But it's still possible that we might just be suffering from a failure of imagination.

[Cork]

I meant the development of the internet was done entirely by the government.

Hurray for the glorious US military? In fact, the history of the internet is far more complicated than that.
http://www.lewrockwell.com/blog/lewrw/a ... 23540.html

This is what irritates me about makret anarchists. A lot of what they say about the efficiency of the market vs the stagnation of planned economies sounds like it was taken from Glenn Beck's website.

Is this supposed to be an argument? And thanks for admitting that a non-market economy is indeed planned. Nice defense of Russia too (I've met few lefties with the stomach to defend that). Onward to the next Holodomor, comrade!

[Juan]

I meant the development of the internet was done entirely by the government.

I don't think that's true. The internet is the outgrowth of more than 200 years of advance in electronics. The internet wouldn't exist if people at bell labs didn't develop the transistor, for instance. Computer networks are just an extension of telephone networks which are an extension of telegraph networks. Crediting the gov't for the existence of the net is just gov't propaganda.

Noam Chomsky gave a pretty interesting talk actually where he noted that when MIT was being funded by the pentagon

Oh, now we should thank the most brutal military on earth for having invented the internet ? So according to Chomsky, the military do some good things after all (actually they don't) ?

[Zanthorus]

Hurray for the glorious US military? In fact, the history of the internet is far more complicated than that.
http://www.lewrockwell.com/blog/lewrw/a%20...%2023540.html

I don't think that's true. The internet is the outgrowth of more than 200 years of advance in electronics. The internet wouldn't exist if people at bell labs didn't develop the transistor, for instance. Computer networks are just an extension of telephone networks which are an extension of telegraph networks. Crediting the gov't for the existence of the net is just gov't propaganda.

The internet was originally developed at CERN (Which recieves its funding from several governments in europe) by Tim Berners lee as a way of communicating between universities. I'm not saying that a market economy couldn't have done similar, just that in reality it was the planned sector of the economy that delivered the goods. In fact if memory serves the first electronic computer was developed by the british government for decoding messages from the Nazi's (Jesus Christ I'm having to do a lot of statist apologism in this thread).

Is this supposed to be an argument?

No, just an observation.

And thanks for admitting that a non-market economy is indeed planned.

I didn't. And the market came after the gift economies that existed in primitive societies.

Nice defense of Russia too (I've met few lefties with the stomach to defend that).

That wasn't a defence of russia, just an observation of an area in which a planned economy surpassed a market economy.

Oh, now we should thank the most brutal military on earth for having invented the internet ? So according to Chomsky, the military do some good things after all (actually they don't) ?

Chomsky quote had nothing to do with the internet it was just something I remembered on the same theme. And the world isn't black and white by the way.

[Cork]

That wasn't a defence of russia, just an observation of an area in which a planned economy surpassed a market economy.

Let's have a look at this "glorious" economy:

In real terms, the workers' standards of living tended to drop, rather than rise during the industrialisation. Stalin's laws to “tighten work discipline” made the situation worse: e.g. a 1932 change to the RSFSR labor law code enabled firing workers who had been absent without a reason from the work place for just one day. Being fired accordingly meant losing “the right to use ration and commodity cards” as well as the “loss of the right to use an apartment″ and even blacklisted for new employment which altogether meant a threat of starving[2]. Those measures, however, were not fully enforced, as managers often desperately needed to hire new workers. In contrast, the 1938 legislation, which introduced labor books, followed by major revisions of the labor law, were enforced. For example, being absent or even 20 minutes late were grounds for becoming fired; managers who failed to enforce these laws faced criminal prosecution. Later, the Decree of the Presidium of the Supreme Soviet, 26 June 1940 “On the Transfer to the Eight-Hour Working Day, the Seven-day Work Week, and on the Prohibition of Unauthorized Departure by Laborers and Office Workers from Factories and Offices″[3] replaced the 1938 revisions with obligatory criminal penalties for quitting a job (2–4 months imprisonment), for being late 20 minutes (6 months of probation and pay confiscation of 25 per cent) etc.

While undoubtedly marking a tremendous leap in industrial capacity, the first Five Year Plan was extremely harsh on industrial workers; quotas were difficult to fulfill, requiring that miners put in 16 to 18−hour workdays. Failure to fulfill the quotas could result in treason charges. Working conditions were poor, even hazardous. By some estimates, 127,000 workers died during the four years (from 1928 to 1932). Due to the allocation of resources for industry along with decreasing productivity since collectivization, a famine occurred. The use of forced labor must also not be overlooked. In the construction of the industrial complexes, inmates of labor camps were used as expendable resources. But conditions improved rapidly during the second plan. Throughout the 1930s, industrialization was combined with a rapid expansion of education at schools and in higher education.

From 1921 until 1954, during the period of state−guided, forced industrialization, it is claimed 3.7 million people were sentenced for alleged counter−revolutionary crimes, including 0.6 million sentenced to death, 2.4 million sentenced to labor camps, and 0.7 million sentenced to expatriation. Other estimates put these figures much higher. Much like with the famines, the evidence supporting these high numbers is disputed by some historians, although this is a minority view. The peak of the repressions was during the great Purge of 1937–8, and it had the effect of greatly slowing down production in 1937.

http://en.wikipedia.org/wiki/Soviet_industrialization

But hey, it got “industrialized” right?

[Zanthorus]

Let's have a look at this "glorious" economy:

But hey, it got “industrialized” right?

Yeah because britain and america totally didn't have horrendous working conditions during their periods of industrialisation

[Marja]

AFAIK, the problem is not that you need markets to make economic plans. I suspect that markets are less-than-effective planning mechanisms; they abstract the labor requirements, resource requirements, and various forms of privilege in non-free markets into one price. I suspect that planning could give better results in the first iteration. Markets, however, encourage sellers to judge their costs, their demand, and adjust both prices and production accordingly. In principle, they divide the calculational tasks into smaller segments, distribute these, and encourage people to improve their calculations, and to find ways to use rearrange the segments too.

[Cork]

Yeah because britain and america totally didn't have horrendous working conditions during their periods of industrialisation

Welp, whatever helps you rationalize the crimes of the world's most despotic genocidal butchers.

[neverfox]

"Given a limited set of means to satisfy a limited set of ends a socialist society has no rational way of determining which means to use to satisfy which ends."

That's not quite it and is a little too broad. What it actually says is that "in a fully socialized economy, free of competitively generated prices, central planners would have no way to calculate which methods of production would be the most economical" That is, that given the billions of possible combinations of all the economy's resources and possible production projects you might choose to do or not to do, how can you tell if you are doing a good job of it, i.e. not wasting resources or hampering prosperity compared with some other configuration. It's not just some argument that say "If you want to make lemonade, a socialist can't figure out that you need lemons." That would indeed be a silly argument.

Here is Caplan summarizing Mises:

if the state owns all of the capital goods, there will be no market for capital goods; with no market for capital goods, no capital-goods prices; no prices, no numbers to crunch to determine the cheapest way to do things.

The problem is exacerbated by the fact that the choices you make in one process will have ripple effects on all others and "will squander factors of production both material and human".

Marja's summary was a pretty good one IMO. Here is another that puts it in summary form:

1. The basic economic problem is to produce the "right quantity" (and variety) of all goods and services, including any capital goods required to produce the finished goods or services. (Assume for this argument that "goods" refers to both goods and services.)
2. Since the factors of production are finite, producing more of one good means producing less of some other good. Therefore the basic economic problem can be restated thus: given a fixed quantity of the factors of production, how should they be allocated to produce the "right" set of final goods?
3. In a free market, where prices are free to rise and fall without restriction, the price of a good rises when demand increases, and falls when supply increases. If supply is insufficient to meet demand, the price increases, and producers are motivated to make more of that good. If demand is insufficient to purchase the available goods, then prices fall, and less of the good is produced. This is what it means when an economist of the Austrian school says that prices are the mechanism that matches supply with demand.
4. Under socialism, prices are not free to rise and fall. Instead, prices are set by central planners. Put differently, because there is no private property in the means of production, individuals have no power to set prices in response to supply and demand.
5. Due to these price controls, there is no reliable source of information about demand, and hence no way to decide how much of a good to produce. This is the economic calculation problem.
6. Since producing too much of one good implies producing too little of another, the result of the calculation problem is that there will be chronic shortages of one good or another. Inherent in the calculation problem is the conclusion that it is impossible to predict which goods will experience shortage, since if that could be predicted, production could be adjusted to eliminate the shortage, and the calculation problem would in fact be solvable. The assertion of Mises is that the calculation problem is inherently unsolvable.

Looking over some of your responses, it seems that they do tend to interpret the ECA as saying that planners can't ever get things done or figure out technically how to produce things. Your pointing out that the government could (and did) produce the internet was indicative of this interpretation. What the argument is saying is that they can't figure our how to do it most economically or "efficiently" without doing an "impossible" number of calculations and knowing about every subjective need and every stock of every resource and every possible technique they could be put to us in etc. And they are all moving relative to each other in ripple effects. The worry is that an economic planner would inevitably be far less optimal than a giant distributed "computer" that is the "market" (if I can make a sloppy analogy) to account for all of billions of people and resources and all there various uses. That doesn't mean there aren't good reasons to be critical of this argument as Shawn and Marja point out but it's probably a good idea to actually get the details right lest we straw man it.

It might be possible then to reassess some of your reactions to the Mises article in light of a closer reading of his argument.

Labour is human exertion pure and simple, I'm pretty certain that with modern technology we could calculate the amount of effort and energy expounded during the production of different goods.

Yes, but that's not the problem for Mises. The problem is "what and how many goods do we produce?" and "Is exerting this amount of effort a good use of that effort?", not just the technical specs of how much labor a unit of goods takes. Even if you knew the labor values of ever technical process ever invented, you still need to plan which to do and which to leave on the shelf. The market mechanism claims that the profit incentive drives this invisibly. Mises even says,

the impracticality of measurement is not due to the lack of technical methods for the establishment of measure. It is due to the absence of constant relations. If it were only caused by technical insufficiency, at least an approximate estimation would be possible in some cases. But the main fact is that there are no constant relations.

In typical austrian fashion he's just asserting this without recourse to any actual facts or statistics. If we've already established what good is going to be produced then we've already limited down our choices of what producer's goods and procedures we're going to use by a massive amount and choosing between them shouldn't be overly hard.

Again the problem one step back: how do we decide what good to produce if our goal is to do the right thing for the economy (why else are you planning if you don't have that goal)? Why do you need stats to tell you that there are a lot of resources and goods in that need coordinating and a lot of ways to arrange them? You are thinking only in terms of a single process ("I need nails, 5 pieces of wood and a hammer to make one birdhouse") when the problem that the ECA is addressing is different: "John wants to make birdhouses and Suzy wants to make sculptures out of wood & nails and ....[insert a hundred million other people all wanting wood and nails for their various plans]" and we've only got 100000 pieces of wood and 1000000 nails. What's the best use of them? Who gets what? Who gets turned away and why? Will we have enough wood to keep the process going and growing or will we waste it too fast and die out?" Now take that times a million or so...

The more I read through this the more unbelievably absurd it seems. If Von Mises is to be believed then we're already living in the kind of unimaginable state of abundance which is pretty much a prerequisite for communism. So which is it? Are we stuck with limitied resources and thus economic calculation isn't particularly difficult? Or do we have unlimited resources and thus the whole question is null and void.

He's not really talking about abundance vs. scarcity but that starting with one set in inputs you could find some path to get the a set of outputs. Some paths will be short and direct and other will be long and indirect. Limited resources don't mean limited ends or a small number of variables. It only means that each individual input is not available in endless supply and is not producible without cost. So I don't see the contradiction you point out.

But what makes economic calculation via money so superior to a random choice apart from the process behind it? Monetary value isn't some magical fixed value with innate qualities it's an artificial construct given to it by human beings on the market. As far as I can see it has no more weight than deciding the value of things by rolling a dice or flipping a coin.

That will require a study of the groundwork Mises establishes in the earlier chapters of Human Action. Obviously if you don't agree that prices carry any information then his ECA is going to ring hollow. But given the other aspects of Mises' analysis of economics, namely #3 above, he isn't just rolling dice as far as he's concerned.

All this said, I think it's good to look at this argument critically. More than likely it isn't going to live or die by being found internally or logically inconsistent but rather that disagreement will be found in the groundwork. Your point about demand for example is one to pursue further. Another avenue is to look at any appeal to supply and demand with suspicion, mainly due to the presence of speculators, who have no commitment to one side of the market.

At this point I'll wrap up a too-long post by recommending Carson's chapter (7 I think of O -Theory) on the calculation argument and how it applies to a Coasean theory of the firm.

[neverfox]

It assumes money has some kind of objective quality, it's absurd.

Now things are getting interesting because, in fact, Mises would have a fit if you said he was making such a claim. He was a radical subjectivist; he denied that money (gold) had constant marginal utility and thus was an objective unit of value. You are in effect agreeing with him but for different reasons. There are some arguments, such as that by Antal Fekete, that Mises was wrong: that the monetized commodity, gold, is the exception to the rule of subjective value due to its unique position at the base of the tree, so to speak; that it had, contra Mises, constant marginal utility and thus an objective nature. The ECA does seem, as you picked up on, to flirt with the idea of objective value (if the entrepreneur is to, in the long run, be more right than wrong about costs..see sec. 5 of Roderick Long's argument here) yet this contradicts his views on money's subjective nature.