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The Wiki Man

The Wiki Man IT’s not all that

One argument levelled against command economies by people such as Hayek is that, without the information contained in market prices, it is almost impossible to allocate resources efficiently. In other words, there can be no ‘from each according to his abilities, to each according to his needs’ without some price mechanism to reveal what those abilities and needs might be.

12 February 2011

12:00 AM

12 February 2011

12:00 AM

One argument levelled against command economies by people such as Hayek is that, without the information contained in market prices, it is almost impossible to allocate resources efficiently. In other words, there can be no ‘from each according to his abilities, to each according to his needs’ without some price mechanism to reveal what those abilities and needs might be.

One argument levelled against command economies by people such as Hayek is that, without the information contained in market prices, it is almost impossible to allocate resources efficiently. In other words, there can be no ‘from each according to his abilities, to each according to his needs’ without some price mechanism to reveal what those abilities and needs might be.

What I didn’t know until reading Francis Spufford’s bizarre and wonderful novel Red Plenty was that some brilliant Soviet thinkers understood this argument but believed that you could overcome it. Using cybernetics, it was believed, the same planned approach that had put a man in space could produce abundant luxuries for the masses. The failure of this dream is revealed in a contemporary Russian joke in which Yuri Gagarin’s daughter answers the phone. ‘No, mummy and daddy are out,’ she says. ‘Daddy’s orbiting the earth, and he’ll be back tonight at 7 o’clock. But mummy’s gone shopping for groceries, so who knows when she’ll be home.’


Later, in Allende’s Chile, a brilliant British cybernetics expert called A. Stafford Beer was given an IBM 360/50 mainframe and a bank of telex machines to run a central planning function called Cybersyn from a futuristic control room. This computerised approach to government (which died in infancy with Pinochet’s coup) is also explored in a 1967 episode of Star Trek where Kirk destroys Landru, a dirigiste computer which co-ordinates the activities of a subservient population on the planet Beta III.

Before right-wing free-marketers get too smug about all this, it now seems we may have been as naively seduced by the economic promise of information technology as any commie. Since advances in IT and consumer electronics have been rapid, visible and sexy, they may have distracted us from realising that, in all other fields, the developed world’s overall pace of economically valuable innovation has slowed to a crawl. Moreover, compared with seismic inventions such as the car, penicillin or the washing machine, the economic benefits of the digital age may not turn out to be all that great. And unlike the motoring revolution, say, which created millions of blue-collar jobs, any wealth and employment generated by digital innovation may not spread very wide.

Could this be true? And what does it mean for our future if the easy economic pickings from earlier inventions have now mostly been harvested? These are the questions raised by Tyler Cowen’s astounding new ‘book’ The Great Stagnation: How America ate all the world’s low-hanging fruit, got sick and will eventually get better. I say ‘book’ because it is a work as original in form as in content. It is an e-pamphlet, available exclusively in electronic form, at £2.20 for the Kindle edition. (The unkindled can visit http://amzn.to/brjcco and download a free PC reader there.)

Reading The Great Stagnation, it seems my father may have been right when he claimed (fogeyishly it seemed to me at the time) that the 1930s were the high-water mark for invention. For the US enjoyed a large part of its post-war economic gains simply by democratising goods rich families had first enjoyed between 1870 and 1939. When, by the 1970s, this job had been largely done, growth in US median income stalled, and has grown little since.

Under well-known pinkos such as Henry Ford, productivity gains still translated into higher workers’ pay, to a point where workers could afford the cars they were making. Yet IT-led productivity doesn’t seem to work this way. When you reach for your Blackberry this weekend, remember you are probably using it to perform unpaid overtime for someone much richer than you. Maybe it’s time to read Marx after all.

Rory Sutherland is vice-chairman of Ogilvy Group UK


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