Disadvantages of dispersal

Having argued that the centralisation of much economic information is feasible, we now consider its desirability. When economic calculation is viewed as a computational process, the advantages of calculation on a distributed or decentralised basis are far from evident; the question hinges on how a multiplicity of facts about production possibilities in different branches of the economy interrelate. Their interrelation is, partially, an image in the field of information of the real interrelation of the branches of the economy. The outputs of one activity act as inputs for another: this is the <#280#>real<#280#> interdependence. In addition, there are <#281#>potential<#281#> interactions where different branches of production function as alternative users of inputs.

It is important to distinguish the two types of interaction. The first represents real flows of material and is a static property of a snapshot of the economy. The second, the variation in potential uses for goods, is not a property of the real economy but of the phase space of possible economies. The latter is part of the economic problem insofar as this is considered to be a search for optimal points within this phase space. In a market economy, the evolution of the real economy---the real interdependencies between branches---provides the search procedure by which these optima are sought. The economy describes a trajectory through its phase space. This trajectory is the product of the trajectories of all of the individual economic agents, with these individual agents deciding upon their next position on the basis of the information they get from the price system.

Following up on Hayek's metaphor of the price system as telecoms system or machinery for registering changes, the market economy as a whole acts as a single analog processor. A single processor, because at any one point in time it can be characterised by a single state vector that defines its position in the phase space of the economic problem. Moreover, this processor operates with a very slow cycle time, since the transmission of information is bounded by the rate of change of prices. To produce an alteration in prices, there must be a change in the real movement of goods (we are abstracting here from the small number of highly specialised futures markets). Thus the speed of information transmission is tied to the speed with which real goods can be moved or new production facilities brought on line. In sum, a market economy performs a single-threaded seach through its state space, with a relatively slow set of adjustments to its position, the speed of adjustments being determined by how fast the real economy can move.

Contrast this now with what can potentially be done if the relevant facts can be concentrated, not in one place---that would be impossible---but within a small volume of space. If the information is gathered into one or more computing machines, these can search the possible state space without any change in the real economy.

Here the question of whether to concentrate the information is very relevant. It is a basic property of the universe that no portion of it can affect another in less time than it takes for light to propagate between them. Suppose one had all the relevant information spread around a network of computers across the country. Assume any one of these could send a message to any other. Suppose that this network was now instructed to simulate <#282#>possible<#282#> states of the economy in order to search for optima. The evolution from one simulated state to another could proceed as fast as the computers could exchange information regarding their own current state. Given that electronic signals between them travel at the speed of light this will be far faster than a real economy can evolve.

But the speed of evolution will be much faster still if we bring all of the computers into close proximity to one another. Massively parallel computers attempt to place all the processors within a small volume, thereby allowing signals moving at the speed of light to propagate around the machine in a few nanoseconds, compared to the hundredths of a second required for telecoms networks. Hence, in general, if one wishes to solve a problem fast, the information required should be placed in the smallest possible volume.

It may be objected that the sheer scale of the economic problem is such that although conceivable in principle, such computations would be unrealisable in practice (Hayek, 1955;5 see also Nove, 1983). We have established elsewhere (Cockshott and Cottrell, 1993; Cottrell and Cockshott, 1993b) that given modern computer technology this is far from the case.