Will "Big Data" Make A Centrally Planned Economy Possible?

Will “Big Data” Make A Centrally Planned Economy Possible?

Will “Big Data” Make A Centrally Planned Economy Possible?

Many of us were once convinced that idea of the centrally-planned economy, both in theory and in practice, had been completely buried. Most economists today would argue that the planned economy doesn't work, and in the last two decades of the twentieth century, almost all the planned economies shifted toward market economics.

However, with the development of new technologies such as cloud computing, big data, and artificial intelligence, some people are starting to believe that - with the help of powerful new technologies - we can finally achieve a planned economy.

In a recent speech, Jack Ma, one of China's most famous entrepreneurs and Founder and Chairman of Board of Alibaba Group, has expressed his optimism for the future recovery of the planned economy. He declares:

Over the past 100 years, we have always felt that the market economy is excellent, but in my opinion, in the next three decades will be a significant change, the planned economy will become increasingly large. Because we have access to all kinds of data, we may be able to find the invisible hand of the market. ... [I]n the age of data, it is like we have an X-ray machine and a CT machine for the world economy, so 30 years later there will be a new theory [on planned economy] out.

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Well, as a grand, romantic dream of the humankind — although the planned economy has failed several times in its operation in the real world — I am not surprised to know that it is still quite attractive to social elites such as Jack Ma.

It is true, to some extent, that with the development of technologies, central planners now can obtain more data and information, and their ability to analyze these data and the information is greatly enhanced as well. Moreover, in the foreseeable future, those skills will be further enhanced. Ma believes a planned economy can be achieved in the future precisely because of his companies, Taobao and Alipay, are ubiquitous in the areas of e-commerce and payment in China and therefore can collect an enormous amount of consumption data.



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