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State-run algorithms should stay in the realm of science fiction

* Early-computing.jpgMarket forces are more powerful than any computer.

The control room is hexagonal, containing a circle of white, fibreglass swivel-chairs with red-brown cushions and inbuilt push-button panels.

The room is reminiscent of Star Trek, but it is no film set. Project Cybersyn was an attempt in the early 1970s to algorithmically manage the Chilean economy in accordance with democratic socialist principles under President Salvador Allende. 

The idea was not entirely a new one. Between the wars, economists debated the "socialist calculation" problem: could a benevolent central planner somehow co-ordinate all the production and consumption necessary to run a modern economy, bypassing the greed and waste of the market with a more rational system? 

The answer was not obvious to economists - at least, not then. The uncompromising Ludwig von Mises argued that it was logically impossible, others that it was merely impractical. But Oskar Lange suggested it could be done: if an economy could be described as a series of simultaneous equations for supply and demand, then the central planner could solve those equations, if only by trial and error.

5th December 2017




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