Computability and Economic Planning

Greg Michaelson
School of Mathematical & Computer Sciences Heriot-Watt University

Overview
computability results misused in other domains
e.g. philosophy: Nagel & Newman (1959) on Gdel results

motivation often ideological in economics longstanding debates between free market and rational planning planning presented as demonstrable failure in pre-1989 Soviet-style economies

Overview
arguments that planning inherently infeasible
Marciszewski (2002)
planning is hypercomputational;

Murphy (2006)
planning undermined by Cantor diagonalisation;

Nove (1983)
planning is computationally intractable

Planning
planning formulated as input-output model Sraffa (1960) Aapa+Bapb+...+Kapk = Apa Abpa+Bbpb+...+Kbpk = Bpb ... Akpa+Bkpb+...+Kkpk = Kpa where:
I = total annual quantity of commodity I Ij = quantity of commodity j used to produce commodity I pj = unknown value of commodity j

Planning
reformulate as: MP = QP where:
M = matrix of Ij P = vector of Pj Q = diagonal matrix of I Aapa+Bapb+...+Kapk = Apa Abpa+Bbpb+...+Kbpk = Bpb ... Akpa+Bkpb+...+Kkpk = Kpa where:
I = annual quantity of commodity I Ij = quantity of commodity j used to produce commodity I pj = unknown value of commodity j

solve:
(M-Q)P = 0 for P

Is planning hypercomputational?
Marciszewski argues that:
Among the simplifications made in the [Club of Rome] Report there was the total omitting of the factors of scientific research and technological invention ... Obviously, such factors cannot be grasped in central economic planning. Even if the Laplacean demon revealed what is to be going on in the heads of future discoverers, the unimaginable complexity of each brain separately and still greater of their world-wide interactions would unavoidably hamper any computer-based predictions. On the other hand, an intuitive understanding as expressed in axiom-like maxims, e.g. the more economic freedom, the more economic information may prove more reliable and more useful than the results of algorithmic procedures. Do such understandings result from some hypercomputational processes in our brains? This is an open question.

Is planning hypercomputational?
reminiscent of Nagel & Newmans response to Gdels Godels results couldnt be mechanized
but human brain can construct these results so brain is of greater computational power than machine

Ammon (1993) provided a mechanisation

Is planning computational?
Murphy argues that:
list of prices P is infinite
must take into account all possible future commodities

list of prices P is uncountably infinite

diagonalise over prices

Are prices uncountably infinite?

diagonalisation
lay out prices in table construct unique new price which differs from price in row I at column J

Are prices uncountably infinite?

diagonalisation applies to irrational numbers
prices are of fixed precision at worst rational diagonalisation inapplicable

prices are of commodities

number of possible distinct commodities is countably infinite enumerate sequences of atoms in distinct commodities

if infinite, prices are countably infinite

Is there an infinite number of prices?

an infinite number of potential commodities has an infinite number of prices but it doesnt matter at any given moment:
a finite number of producers from a finite range/quantity of actual input commodities produce a finite range/quantity of possible output commodities with a finite number of prices

so even if the system is infinite, instances are very sparse

Is planning tractable?
solving (M-Q)P = 0 for N prices using Gaussian elimination is O(N3)
poor algorithm

can approach O(N2)

each commodity only requires a small proportion of other commodities (S) heuristic iteration of 10-12 cycles

for 10,000,000 prices S*10*1014 * C(ost of base ops) current processors are 3*109 instructions per sec there are 60*60*24 = 86*103 secs in a day need S*C*1015*/(3*109*86*103) = S*C*4 days on one processor Google has 250,000 processors...

Acknowledgements
joint work with Paul Cockshott (University of Glasgow) and Allin Cottrell (Wake-Forrest University) more details in:
A. Cottrell, P. Cockshott and G. J. Michaelson, `Is economic planning hyper-computational? The argument from Cantor diagonalisation', International Journal of Unconventional Computing, to appear, 2009 P.Cockshott, A. Cottrell, G. Michaelson, I. Wright and V. Yakovenko, Classical Econophysics, Routledge, May 2009

References
Nagel, E. and J. R. Newman (1959) Gdels Proof, Routledge and Kegan Paul. Ammon, K. (1993) An automatic proof of Gdels incompleteness theorem, Artificial Intelligence, 61(2): 291306. W. Marciszewski. (2002). Hypercomputational vs. Computational Complexity A Challenge for Methodology of the Social Sciences. Free Market and Computational Complexity. Essays in Commemoration of Friedrich Hayek (1899-1992). Series: Studies in Logic, Grammar and Rhetoric, 5:18. Alex Nove. (1983). The Economics of Feasible Socialism. George Allen and Unwin, London. R.P. Murphy. (2006). Cantors Diagonal Argument: an Extension to the Socialist Calculation Debate. Quarterly Journal of Austrian Economics, 9(2):3..11.