Why is it not sufficient for economic efficiency that the state just tracks which goods consumers take and which goods don't take? For example, if the planning agency makes two types of rain coats- a red one and a blue one, and the blue ones just sit on the shelf all day, is that not evidence enough that production of the blue coat is a huge waste? Why is it so hard for the state planning agency to just keep track of inventory to monitor which goods are being consumed and which goods aren't? Why is the private mechanism of profit so much better (as every real world example has proven) at allocating resources than central command?
link: http://ift.tt/1MBQr11
The main reason is that the economic calculation/knowledge problem is at it's most fundamental not about inventory but cost comparison in investment decisions. The socialist state could just decide that the people would get the coat they decide the people need whether they like it or not. Doing that would not bear directly on the calculation problem. Someone trying to solve the calculation problem would ask "is this coat being produced in the right location, with the right number, and mix of workers, and with the right number and mix of materials in order to leave the greatest amount of resources for other uses". Also just the just tracking "which goods consumers take and which goods don't take?" is backwards looking policy. There is no element of forsight or judgement that is a vital part of capitalist [entrepreneurship](http://ift.tt/TlkGUD). A planning bureaucracy myopically adjusting coat inventory according to official reports and statistics is hardly likely to be able to use local and tacit knowledge out in wider society that will allow them to anticipate entrepreneurial opportunities. Or for that matter are they likely to be particularly motivated to do so. Kevin McFarlane's pamphlet [real socialism won't work either](http://ift.tt/1MBQr13) has a section on Stock Control Socialism & The Problem of Innovation and Entrepreneurship Under Socialism on pages 12 & 13 which I believe answer your question as well. (Although it is probably a good idea to read the preceding pages as well at least from p9 section IV)
- Malthus0
I recomend reading [Hayek's The Use of Knowledge in Society](http://ift.tt/1Ja3zvc). Basically the total amount of knowledge that a central planning board would need to know is too much for one person or institution. Each person has unique knowledge that other people don't and can't know, since some of it is subjective values. A decentralized model of subjective values create the price system, which allow an economy to function properly.
- malbector
What if yellow train coats would sell even better?
- LostCaveman