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Allende's Central Planning Machine

March 30, 2008

Oskar Lange famously believed that the development of high-speed computers would render Mises's and Hayek's critiques of socialism obsolete. "Were I to rewrite my [1936] essay today," he wrote in 1967, "my task would be much simpler. My answer to Hayek and Robbins would be: So what's the trouble? Let us put the simultaneous equations on an electronic computer and we shall obtain the solution in less than a second. The market process with its cumbersome atonnements appears old fashioned. Indeed, it may be considered as a computing device of the pre-electronic age."

Lange was only a little ahead of his time. Just before Augusto Pinochet's 1973 coup put him out of business Chilean socialist leader Salvador Allende had installed a central planning machine, called Cybersyn, intended to plan the Chilean economy. As the New York Times reports:

The project . . . was the brainchild of A. Stafford Beer, a visionary Briton who employed his "cybernetic" concepts to help Mr. Allende find an alternative to the planned economies of Cuba and the Soviet Union. . . .
A Star Trek-like chair with controls in the armrests was a replica of those in a prototype operations room. Mr. Beer planned for the room to receive computer reports based on data flowing from telex machines connected to factories up and down this 2,700-mile-long country. Managers were to sit in seven of the contoured chairs and make critical decisions about the reports displayed on projection screens.
While the operations room never became fully operational, Cybersyn gained stature within the Allende government for helping to outmaneuver striking workers in October 1972. That helped planners realize — as the pioneers of the modern-day Internet did — that the communications network was more important than computing power, which Chile did not have much of, anyway. A single I.B.M. 360/50 mainframe, which had less storage capacity than most flash drives today, processed the factories' data, with a Burroughs 3500 later filling in.

The Times's reporter pokes gentle fun at the clunky and primitive Cybersyn but doesn't seem to grasp that computing power has nothing to do with the problem. Even today, Mises's 1920 essay is little understood.

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