Arnold Kling has another post up which I think is still problematic, but considerably more thoughtful. "More thoughtful" is probably even a little unfair insofar as it suggests the first one wasn't thoughtful - really it's "much better expressed".
That having been said, there are still problems. He's still shoe-horning modern conceptions of market failure into the Soviet outlook. This is simply wrong. I know the idea of "failure" is appealed to by both, but that doesn't quite cut it. Modern ideas of "market failure" are very specific, and they were around in some form or another when the Soviet Union was established, and they did a fine job distinguishing themselves from it then. I am not strictly in the Hayek-Friedman camp or the Lenin camp when it comes to my understanding of the market process. But if you were to figure out where I was, I'd be about six inches outside of the Hayek-Friedman camp and nowhere near the Lenin camp. This is where I think the vast majority of people who appeal to market failure are today. What the Soviet Union taught us is that governments can't plan economies and they can't do what the price mechanism does. It didn't teach us much of anything about the points that modern proponents of "market failure" are talking about.
One of the major mistakes I think Kling makes is in expressing the "market failure" perspective as "experts will know what to do". Needless to say, I disagree with that assessment, and its certainly not what I think. I don't have time to disagree in detail, but my series of posts contrasting "calculation problems" with "incentive problems" does a reasonable job sketching out my take on all that.
The bottom line is this: when we compare the U.S. to the U.S.S.R., what we are doing is comparing the Kuehn-Krugman-DeLong-Pigou-Mankiw "intervention in the case of market failures" position with the Marx-Lenin-Stalin-Lange-Lerner "socialism works" position. In that comparison, the Kuehn-Krugman-DeLong-Pigou-Mankiw position comes out unambiguously on top, and the example of the U.S.S.R. is very useful in that sense. What we don't have is a good clean example of the Hayek-Mises-Friedman-Kling-George-Mason position to compare to the Kuehn-Krugman-DeLong-Pigou-Mankiw position (and honestly, Friedman and Hayek could both arguably go with me in some cases!). As a rough cut, one can use the U.S.S.R. vs. U.S. example to compare the Hayek-Mises-Friedman-Kling-George-Mason position to the Marx-Lenin-Stalin-Lange-Lerner position, but that's only a very rough cut because:
(1.) The U.S. really isn't an example of the Hayek-Mises-Friedman-Kling-George-Mason position in aciton, and
(2.) To a large extent, the totalitarianism of the U.S.S.R. might even lead guys like Marx, Lange, and Lerner to say that that doesn't represent them (presumably Lenin and Stalin wouldn't hesitate to embrace it).
Why Kling thinks the Soviet Union can arbitrate between his position and mine I still don't think he adequately explains - and I think it's because he's stuck on this idea that we have some kind of mystical faith in experts and models.
1 hour ago