Simon Kongshoj points out that the price system often suffers from "booms and busts". These cycles result when capitalists misread the information the price system offers and overproduce. But a central planner can make the same mistake -- and he would be without the price system to rescue him. When prices fall consumers can increase demand. Socialist consumers hold no money and are powerless to react.
The 1987 Stock crash is a good example. Wealthy investors misread the economy and overbid the prices of capital (firms). They paid for their foolishness with their fortunes when the market fell. But because the fundamental state of the economy was steady, employment and production continued to grow. Working people simple ignored Wall Street's follies and went on producing and consuming. The only ones hurt were the speculators who tried to buy something for more than it was worth.
America suffered a bad crash in the early eighties. New information technology enabled us to produce much more stuff without working so hard. But in order to do this we had to shift employment from the old industrial sectors to the new information sectors. What would have required several five-year plans was accomplished in 3 years. The prices for industrial workers went down and the prices for information workers went up. Workers responded by seeking new skills.
Lastly, Titoism only solves part of the price problem. Breaking up the State into smaller firms my make management easier, but where will these managers get their information?
If consumers cannot signal their needs by bidding up prices on certain goods, the State will be forced to guess, or decide by fiat what they think the people "need". And if they are wrong, a recession will follow...or there will be too few pairs of shoes for the coming winter.
- nat
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