Comment by xpe

Ok, but recall the context (see above): I’m saying one can understand how firms operate without making a connection to central planning (setting production targets and investment decisions from the top-down without prices).

Economists have concepts and models for monopolies and oligopolies — and the way they operate are quite different from the practice of central planning.

I’m talking from within the frame of economic concepts, and I’m striving to use words as understood in the field. At times I value metaphorical thinking, but here in the case of economics, we don’t need to bend words when other fitting concepts are readily available and battle-tested.

An example: If someone calls corporate consolidation “central planning,” they’ve lost the ability to analyze it properly. The relevant questions for oligopolies (strategic behavior, barriers to entry, tacit collusion) are completely different from central planning questions (calculation problems, information aggregation, incentive alignment).

When technical fields have already solved a conceptual problem through careful definition and model building, importing loose metaphorical language degrades analytical clarity.

If you want to point to or propose a different model than the usual economic dogma, I’m all ears, by the way.

> Company prices resources within itself completely arbitrarily.

I wouldn’t phrase it this way — to me, this implies unpredictability and/or a lack of rationale. Perhaps you simply mean “internal managers at companies do not necessarily price resources using market mechanisms” which I would agree with.

Many fields of study give insight to the various kinds of distortions that arise from human psychology and negotiation, etc.

To make sure we’re on the same page… In economics, “central planning” refers to a system where a central authority (typically the state) makes comprehensive decisions about production, investment, and resource allocation across an entire economy, replacing market mechanisms. This is associated with command economies like the Soviet Union’s Gosplan system.

And of course I will grant firms use hierarchical coordination mechanisms internally (managers allocate resources by command rather than prices).

I suppose my angle here is to be clear that firms are typically a kind of hybrid entity: they mix various coordination mechanisms (prices and hierarchy). This makes them quite different from centrally planned economies.