price signal. central planning.

Price signal is the mechanism through which cost accounting affects the interaction of supply and demand. So if I want to build cars, and the total cost of me building a car is $1000 per unit, and people want to buy cars but the maximum price they're willing to pay is $999 per unit, I receive a price signal that says, "Don't build any cars." There is significant demand for cars, and there's a supply of the stuff used to make cars, but the price signal says, "STOP!" Then if something changes to either lower my costs or increase the maximum price consumers are willing to pay, the price signal will say, "GO!"

Central planning is when supply, and sometimes demand, are controlled by a central bureaucracy for policy reasons that may or may not have to do with price signal. So if I were running the department of cars in a central planning system, and I determined that the reduced transit time and the commensurate increase in production time had greater value than the net social cost of car manufacturing, I might order the car factory to start pumping out cars whether there was sufficient demand for them or not. Then I might issue car ration coupons to people and have them go get them. I might cover my costs by cutting back on the steel used in rowboats. So now rowboats are made of fiberglass, everyone has a car, everyone spends an hour a day less commuting and puts in an hour-longer day at the factory. Meanwhile perhaps you will win victory over yourself. You will love Big Brother.

These are both gross oversimplifications, but they'll do for our purposes.

Once upon a time, there was a lot of debate about which of these two methods was "best". The argument went something like -- "Yes, we love the flexibility and individuality of a price signal system, but central planning uses resources more efficiently by reducing transaction costs and opportunity costs." And there were sort of archetypal examples of the successes of these systems. There was the Ford Motor Company, and there was Sputnik. But then the Soviet Union collapsed and computers went a long way toward lowering transaction costs and streamlining opportunity costs, and the general consensus, even among communists, came to be that price signal won.

It's true as far as it goes -- price signal is the superior system for certain kinds of transactions and certain kinds of economies. Once you've made the decision, for example, that you're going to allow logging in a National Forest, price signal is the best way for logging companies to decide whether or not to work a timber lease and it's the best way for a pulp mill to decide whether or not to buy the logs and so on.

What people don't talk about so much -- or what some people don't like to talk about -- is that price signal isn't necessarily the best tool for making the initial decision: whether or not to log the National Forest in the first place. And there are various arguments for why it is a good tool for making that decision -- there are pure utilitarians who will pose questions about what cash value should be placed on a National Forest, including all subsidiary interests such as aesthetics and oxygen production and so on. But most of us can agree that these people are assholes. Nobody wants to live in a world without trees, at any price.

The reason there's even any debate about this shit is that there is a disconnect that individuals experience, where the benefit to them is immediately quantifiable and the harm is speculative or difficult to visualize. It's the reason fire departments aren't subscriber based (or have had serious legal and ethical problems when they have been), and it's the reason there are no more cod left in the Atlantic. And as far as that goes it's very strange to me that the Republicans, who bend over backwards to support the War on Drugs, seem to have such a difficult time imagining that their own decision-making, at the individual level, may be impaired by the serotonin spike they get from off-roading in their Hummer, or shooting off their ridiculously enormous guns. Or -- and this is really the issue -- they don't seem to be able to acknowledge that the profits derived from extraction industries are not tied to the effort of engaging in the industry. Finding the last salmon will probably require a lot more expensive equipment than finding the first one did, but catching it will involve pretty much exactly the same amount of work. There's no special virtue in commodifying shit that's just lying around and making a profit off it. The idea that we have a moral duty to allow people with mid-range IQs to "earn an honest living" by chopping down every tree they can find is just ridiculous. There are cheaper ways to keep people employed. Sacrificing our natural resources to create the illusion of independence is a chump's game.

I mention this, essentially, to lay the groundwork for a conversation about surplus labor, but I think the point is worth making on its own.