François CholletVerified account

Central planning is unbeatable as a resource allocation mechanism for small systems. As you attempt to scale it up, it becomes terribly ineffective, to such an extent that decentralized control algorithms wastly outperform it, despite being inherently wasteful

You don't need to look at country-scale economies to observe this effect (obviously free markets >> central planning), it applies even to large companies. Past a certain scale you need teams that compete against each other with overlapping products. But why?

I think it's a technology problem, not an intrinsic issue. Better cybernetics will enable us to scale efficient central control (while taking into account uncertainty and exploration) to increasingly large systems in the future

So ... as a person with leftist convictions that started a successful company, I have opinions on this. The experience of markets as decentralized resource allocation has deeply influenced my thinking. Thread:

The experience of being 23 years old, having no business experience, but building something people wanted, was extremely influential. It would have been near-impossible for me to convince "established" forces to allocate resources to what I was doing.

But once I had built something people liked, a virtuous circle kicked in: I could sell it, and be allocated more resources in a decentralized manner, so I could build more of it.

I am often a fierce critic of the failures, excesses, and mis-allocations in our current capitalist system. But the one redeeming property is decentralized resource allocation *not* influenced by historical patterns. Markets are infirmation-processors and resource allocators, ...