In Soviet Union, Optimization Problem Solves You (2012)
It seems to me, contrary to what is often claimed, the problem of central planned economies (not just state-wide ones, but also company-wide ones) is too much optimization at the expense of robustness.<p>In top-down planned systems, there is always somebody who says something like &quot;we only need this one thing for everybody&quot;. For example, in communist Czechoslovakia, there was only one factory designated to produce certain electronic chips. But then everybody becomes dependent on that one factory, and if that one factory slips in schedule, everything that depends on it will slip.<p>There is a fundamental trade-off to be made. You can have an efficient system but it&#x27;s robustness (ability to withstand a failure or adapt to change) will be very low.<p>But the planners are often willing to take risk of being less robust for the sake of efficiency, because it usually gives you a free promotion in human status hierarchies.<p>(If you ever worked in a large company, I am sure you can recognize the above effect, somebody hyper-optimizing through a mandate, and it has 2nd order effects in decrease of efficiency.)<p>Compare that with market economy, which actually has huge overabundance of production capacity, and multiple producers of almost everything. This is less efficient but works really well in practice. (However, it has the other kind of problem; there is no way the free market can recognize that there is too much companies, without the agony of &quot;malthusian&quot; overcrowding and associated nasty effects such as more stress for everybody. Things like bullshit jobs are probably an end result.)