I haven't read the book, but I believe one of the largest problems that centrally-planned institutions (like large corporations) face is that the planners tend to remove redundancy too much (in the pursuit of minimal cost).
For example, let say you have chain of 50 products that need to be made into a product. If each of these is produced by one factory and supplied into another, and each factory is late for a week, your new thing is one year late!
This was a frequent problem, that the planners tended to designate one producer of some product, in order to save costs. But the product wasn't good enough or late, and then you had a cascade of failure ending up in shortages of goods.
So there seems to be a tradeoff between redundancy and cost. What is optimal? Would you think it's optimal to say, send the cheapest possible rocket to the orbit, with no backup systems?
However, in the free market, you cannot control redundancy. It just happens through freedom. That pushes it out of the cost optimum but makes it lot more robust, and winning in the real world. A good example of "worse is better" indeed.
I also don't think the actual planning problem is very difficult. There are multinationals that are larger than some state economies and still can do that. So I think traditional economic textbook explanations of central planning failures are wrong, because they ignore the tradeoff.
One example of this is the Toyota Just-in-time system, where i believe they have a number of suppliers, some of them mom and pop producers in a basement or loft somewhere, that are gathered up and delivered to the factory as needed.
And i think you find a structure somewhat similar on Germany as well, where quite a bit of the parts manufacturing is done by smaller companies dotted around the nation.
As for traditional economic textbooks being wrong by ignorance, no surprises there. Check out Steve Keen's book on the topic, Debunking Economics.
Also, as best i can tell the soviet system was pretty much a perversion of what Marx was musing about back in the day. I think he even told Lenin that the latter was barking up the wrong tree.
Of course you can include it in models, but the problems is in the planners who build the models. They get it wrong, because they are human. They will risk to save costs to appear better to the upper management, and so the model will be skewed. That's why, for all its problems, it's actually pretty good idea to trust in the inhumane system which is the free market.
For example, let say you have chain of 50 products that need to be made into a product. If each of these is produced by one factory and supplied into another, and each factory is late for a week, your new thing is one year late!
This was a frequent problem, that the planners tended to designate one producer of some product, in order to save costs. But the product wasn't good enough or late, and then you had a cascade of failure ending up in shortages of goods.
So there seems to be a tradeoff between redundancy and cost. What is optimal? Would you think it's optimal to say, send the cheapest possible rocket to the orbit, with no backup systems?
However, in the free market, you cannot control redundancy. It just happens through freedom. That pushes it out of the cost optimum but makes it lot more robust, and winning in the real world. A good example of "worse is better" indeed.
I also don't think the actual planning problem is very difficult. There are multinationals that are larger than some state economies and still can do that. So I think traditional economic textbook explanations of central planning failures are wrong, because they ignore the tradeoff.