Can big data help to resurrect the planned economy?

Source:Global Times Published: 2017/6/14 22:33:39

Editor's Note:

While it is generally believed that the planned economy doesn't work, Alibaba founder Jack Ma Yun has expressed his confidence in the recovery of the planned economy with the help of new technologies. This opinion provoked debate, and prominent Chinese economists Wu Jinglian, Qian Yingyi and Zhang Weiying have all refuted the view on different occasions since late last year. Here are some extracts of their viewpoints.

Jack Ma Yun, founder and chairman of Alibaba Group, speaking at the World Zhejiang Entrepreneurs Convention in November 2016 and China International Big Data Expo in May

Over the past 100 years, we have come to believe that the market economy is the best system, but in my opinion, there will be a significant change in the next three decades, and the planned economy will become increasingly big. Why? Because with access to all kinds of data, we may be able to find the invisible hand of the market.

The planned economy I am talking about is not the same as the one used by the Soviet Union or at the beginning of the founding of the People's Republic of China. The biggest difference between the market economy and planned economy is that the former has the invisible hand of market forces. In the era of big data, the abilities of human beings in obtaining and processing data are greater than you can imagine.

With the help of artificial intelligence or multiple intelligence, our perception of the world will be elevated to a new level. As such, big data will make the market smarter and make it possible to plan and predict market forces so as to allow us to finally achieve a planned economy.

Zhang Weiying, a professor at Peking University, speaking at the EMBA opening ceremony at the National School of Development at Peking University in April

It is completely wrong for some people to believe that big data could make a planned economy succeed.

Although knowledge and data are useful for entrepreneurs, the real entrepreneurial spirit goes beyond that. Decision-making based only on data is scientific but not entrepreneurial.

Entrepreneurs need to see what is behind the knowledge and data, and different entrepreneurs may see different things.

Such uncertainty means that we cannot predict the future based on the past, and that's why we need entrepreneurs. If we could simply use data to predict the future, then we would only need managers or robots instead of entrepreneurs.

Qian Yingyi, dean and professor of the School of Economics and Management at Tsinghua University, speaking at the 2016 China Economics Awards ceremony in December 2016

One of the major events in the global economy in the 20th century was that people tried to replace the market economy with the planned economy in the hope of creating a more fair and efficient economic operation mechanism. Decades of practice showed that the planned economy could not achieve that goal, and that it not only lagged behind market economies in developed countries but also failed to compete with emerging market economies.

With the development of big data, cloud computing and artificial intelligence, some people are starting to think about the planned economy again. However, machines cannot replace people. Since people have imagination, passion and ideals that machines do not have, they also need incentives.

If the planned economy is only about information collection and calculation, then with the progress of big data and artificial intelligence, it seems promising. However, as long as people's decision-making still plays a decisive role, the incentive problem should not be overlooked.

Wu Jinglian, a Chinese economist, speaking at the Shanghai Advanced Institute of Finance under Shanghai Jiao Tong University in April

For a long time, we could not work out why the market economy is superior to the planned economy. In fact, in the early 20th century, scholars demonstrated that the planned economy could be highly efficient provided that it could draw on a sufficient amount of information. But later, scholars proved that it is impossible to establish an adequate information collection mechanism under a planned economy. Given the information asymmetry, it is impossible for an important economic planning authority to collect complete information about economic activities.

When working with the State Planning Commission (SPC), the predecessor of the National Development and Reform Commission, I noticed that local authorities usually overstated some data in their reports to the SPC, and the SPC was aware of it and thus made certain downward adjustments to the data. When the local authorities knew that the SPC would adjust the data, they inflated the data even more so as to leave enough room for the SPC adjustment. In this sense, it is ridiculous to assume that a planned economy can work by using big data.



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