All the necessary techno-infrastructure required to enable a post-capitalist society to function effectively already exists today; we don’t need to reinvent the wheel. A self-regulating system of stock control involving ‘calculation-in-kind’, making use of disaggregated physical magnitudes (for instance, the number of cans of baked beans in stock in a store) rather than some single common unit of accounting (such as money) as the basis for calculation, is something that already operates well enough under our very noses within capitalism, alongside monetary accounting. Any supermarket today would, operationally speaking, rapidly grind to a complete halt without recourse to calculation-in-kind to manage and monitor the flow of goods in and out of the store.
At any point in time our supermarket will know more or less exactly how many tins of baked beans it has on its shelves. The computerisation of inventory management has made this task so much simpler. Our supermarket will know, also, the rate at which those tins of baked beans are being removed from the shelves. On the basis of this information it will know when, and how much fresh stock, it will need to order from the suppliers to replenish its existing stock – this simple arithmetical procedure being precisely what is meant by ‘calculation-in-kind’. It is applicable to every conceivable kind of good – from intermediate or producer goods to final or consumer goods.
Calculation-in-kind is the bedrock upon which any kind of advanced and large-scale system of production crucially depends. In capitalism, monetary accounting coexists alongside in-kind accounting but is completely tangential or irrelevant to the latter. It is only because goods – like our tins of baked beans – take the form of commodities that one can be beguiled into thinking that calculation-in-kind somehow depends on monetary calculation. It doesn’t. It firmly stands on its own two feet.
Market libertarians don’t appear to grasp this point at all. For instance, according to Jésus Huerta de Soto:
‘… the problem with proposals to carry out economic calculation in natura or in kind is simply that no calculation, neither addition nor subtraction, can be made using heterogeneous quantities. Indeed, if, in exchange for a certain machine, the governing body decides to hand over 40 pigs, 5 barrels of flour, 1 ton of butter, and 200 eggs, how can it know that it is not handing over more than it should from the standpoint of its own valuations?’ (Socialism, Economic Calculation and Entrepreneurship, 1992, Ch 4, Section 5).
This passage reveals a complete misunderstanding of the nature and significance of calculation-in-kind in a post-capitalist society. Such a society is not based on, or concerned with, economic exchange at all. Consequently, the claim that ‘no calculation, neither addition nor subtraction, can be made using heterogeneous quantities’ is completely irrelevant since such a society is not called upon to perform these kinds of arithmetic operations involving a common unit of account. This is only necessary within an exchange-based economy in which you need to ensure exchanges are objectively equivalent.
On the other hand, even an exchange-based economy, like capitalism, absolutely depends on calculation in kind. As Paul Cockshott rightly notes:
‘Indeed every economic system must calculate in kind. The whole process of capitalist economy would fail if firms like Honda could not draw up detailed bills of materials for the cars they finally produce. Only a small part of the information exchanged between companies relates to prices. The greater part relates to physical quantities and physical specifications of products’ (Reply to Brewster, Paul Cockshott’s Blog, 28 August 2017).
In his Economic Calculation in the Socialist Commonwealth Mises claimed that the application of in-kind calculation would be feasible only on a small scale. However, it is possible to identify extant or past examples of calculation-in-kind being implemented on a fairly – or even very large scale. For instance, Cockshott refers us to the fascinating case of the first Pyramid at Saqqara, built under the supervision of Imhotep, an enormous undertaking by any standard, involving nothing more than calculation-in-kind. Another example was the Inca civilisation, a large-scale and complex civilisation that effectively operated without money.
However, it was really the emergence of linear programming that has effectively delivered the coup de grâce against this particular line of argument peddled by Mises and others. It has removed what Mises considered to be the main objection to calculation in kind – that it could not be applied on a large scale basis.
Linear programming is an algorithmic technique developed by the Soviet mathematician Leonid Kantorovich in 1939 and, around about the same time, the Dutch-American economist, T. C. Koopman. As a technique it is widely and routinely used today to solve a variety of problems – such as the logistics of supply chains, production scheduling, and such technical issues as how to best to organise traffic flows within a highly complex public transportation network with a view to, say, reducing average waiting times.
To begin with, the computational possibilities of this technique were rather limited. This changed with the development of the computer. As Cockshott notes:
‘Since the pioneering work on linear programming in the 30s, computing has been transformed from something done by human ’computers’ to something done by electronic ones. The speed at which calculations can be done has increased many billion-fold. It is now possible to use software packages to solve huge systems of linear equations’ (Paul Cockshott, 2007, Mises, Kantorovich and Economic Computation, Munich Personal RePEc Archive, Paper No. 6063).
Computerised linear programming allows us to solve some very large-scale optimisation problems involving many thousands of variables. It can also help to solve small-scale optimisation problems.
In short, linear programming provides us with a method for optimising the use of resources – either by maximising a given output or by minimising material inputs or both. The problem with any single scalar measure or unit of accounting (such as market price or labour values) is that these are unable to properly handle the complexity of real world constraints on production which, by their very nature, are multi-factorial. Calculation-in-kind in the guise of linear programming provides us with the means of doing precisely this since it is directly concerned with the way in which multiple factors interact with – and constrain – each other.
While a non-market system of production could operate well enough without linear programming, there is little doubt that the availability of such a tool has now put the matter of whether such a system is feasible or not, beyond dispute.
Robin Cox
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