Public Choice and Socialism (original) (raw)

Retrospectives: Lange and von Mises, Large-Scale Enterprises, and the Economic Case for Socialism

Journal of Economic Perspectives, 1991

In the debates over “economic calculation” launched by Ludwig von Mises in 1920 and extending well into the 1940s, the central issue concerned the ability of a socialist economy to achieve allocative efficiency. Von Mises emphasized that a collectivist state would have great difficulty in gathering and acting on relevant information; therefore, under socialism, even well-intentioned bureaucrats would lack a meaningful system of values on which to calculate. Defenders of socialism, such as Oskar Lange, countered that a market socialism could match demand to supply just as well as capitalism and meet the range of static conditions required for Pareto optimality. That debate is a rich and interesting story that has been told many times before. But in all that has been written, an important aspect of the original debate has been lost. Somewhat oddly, both the socialists like Oskar Lange and the advocates of private ownership like von Mises and Friedrich Hayek maintained that they were d...

Laws of Economics under Socialism

The Journal of Libertarian Studies, 2023

The article argues that the praxeological method allows one to derive the objective laws of economics. Praxeology can explain the emergence of the socialist idea but considers socialist means above economic comprehension. The article posits that the immutability of market economic laws does not allow society to achieve a full-fledged communist reality. Using the example of the Soviet Union, it is shown that the market economy was not eradicated, despite all efforts, but was omnipresent, even though outlawed. Paradoxically, the greater the collectivization of means of production, the greater the revival of market relations in a shadow form. The article posits that Mises’ strong conclusion about the principal impossibility of economic calculation under socialism is fully applicable to a specific case of the highest stage of communism, theorized in Marxism. In relation to socialism in a broader sense, the Mises principle should be understood as a continuing economic calculation impairment under socialism as the collectivization of the means of production grows. Socialist thinkers failed to rebuff Mises' reasoning as all their proposals violated the economic uncertainty principle, which is, the exact price structures before the exchange are unknown and are in superposition.

Socialism and the Market : Methodological Lessons from in the Economic Calculation

2006

1. There is a renewed interest in ideas that are broadly known as market socialism. 2. The relation between socialism and the market has been an issue of contention among socialists since Marx’s own time. For instance, Marx, criticized Pierre Joseph Proudhon as “the paradigmatic theorist of petty bourgeois socialism” who “sought to improve society not by abolishing commodity production but, rather, by purifying commodity exchange.” (McNally 1993:139) Proudhon offered a vision of a socially regulated network of private smallholdings through the administration of mutual aid including such means as interest free credit. 3. The first great debate on the relationship between socialism and the market was initiated by Ludwig von Mises (1920) who claimed that without private property market exchanges could not take place and without them rational valuation would cease resulting in economic chaos. The historical background to this debate was the establishment of the Soviet power in Russia in...

Some Limitations of the Socialist Calculation Debate

Schmollers Jahrbuch, 2016

One of the most important debates in the history of economics is known as the 'socialist calculation debate'. It was initiated in 1920 by the Austrian school economist Ludwig von Mises and continued by Friedrich Hayek, who forcibly criticised the schemes for socialist planning developed by Oskar Lange, Henry Dickenson and others. But the earlier critique of socialism by the German historical school economist Albert Schäffle has been largely overlooked. Furthermore, the rightful emphasis on the role of information and knowledge in the Austrian case, ironically suggests some limits on property and markets, as well as endorsing their continuing importance. This essay points to the neglect of the detailed character of institutions on both sides of the debate. Not only were adequate notions of property and exchange absent from the general equilibrium theory used by the socialists in their attempted justifications of planning, but they were also threadbare on the Austrian side. Hence, ironically, the Austrian defence of capitalism was inadequate.

REVIEW: THE DEVELOPMENT OF SOCIALIST ECONOMIC THOUGHT

Dobb was the most prominent Marxian political economist in Britain during the middle years of the 20th century. He was actively writing from the early 1920s to the 1970s. In this short book 1 , Brian Pollitt has brought together a number of publications from the last period of Dobbs life some of which have never appeared before in English. Taken together they give a revealing insight into the thoughts of an erudite Western Marxist as he tried to report on and come to terms with the economic debates going on in Eastern Europe at that time.

Market Socialism: A Case for Rejuvenation

Journal of Economic Perspectives, 1992

is unfortunate that the momentous events in socialist countries since 1989 have persuaded many that socialism as a political, economic, and intellectual movement is now to be dismissed as bankrupt and practically moribund. The economic experiment that has clearly failed was characterized by three features: (1) public or state ownership of the means of production; (2) non-competitive, non-democratic politics; and (3) command/administrative allocation of resources and commodities. In this paper, we will outline a feasible economic mechanism of "competitive socialism" in which (2) and (3) are negated-there would be competitive politics and competitive allocation of most commodities and resources-but in a major part of the economy we do not replace state or public ownership of the principal means of production with traditional private ownership. Public ownership in the narrow sense of state control of firms is not necessary to achieve one of socialism's goals, a relatively egalitarian distribution of the economy's surplus. We take public ownership, in a wider sense, to mean that the distribution of the profits of firms is decided by the political democratic process-yet the control of firms might well be in the hands of agents who do not represent the state. What the Eastern European experience has shown is that a system of pervasive state control of firms, plus the absence of markets, does not work. Our claim is that competitive markets are necessary to achieve an efficient and vigorous economy, but that full-scale private ownership is not necessary for the successful operation of competition and markets. Contrary to popular impression, this claim has not yet been disproved by either history or

Debate on Market Socialism

Radical Philosophy, 1985

Beyond the Market? comments on Boris Frankel The editors have asked me to comment on Frankel's Beyond the State?, since Frankel devotes several pages to a criticism of the sort of arguments which I advanced in my Economics of Feasible Socialism and in some other works. The key issue is evidently the relationship between socialism and the market mechanism. Frankel also criticises the ideas of many other thinkers, and-challenges some aspects of Marxist orthodoxy. Let me say at once that I found his work refreshing, vigorous and honest. Agreements He devotes much space to a CrItIcIsm of received ideas about the state, and he is right to do so. Its role in modern societies, in East and West alike, is very different indeed from the 'orthodox' models, both of Marx and of the 'ideal-type images of capitalism' of 'Chicago' laissez-faire. The traditional distinctions between the state and 'civil society', between base and superstructure, are in urgent need of drastic amendment. Frankel rightly focuses on many confusions: should (for instance) a movement such as Poland's 'Solidarity' be demanding freedom of social institutions from the state, or control by society over the state? What role should the state, and state planning, play in models of socialism which stress the autonomy of selfmanaged productive units? Perhaps, as he claims, 'stateless socialism will probably only guarantee unfreedom and inequality.' What, within any sort of class analysis, should be the status of state employees, which in more developed countries constitute a sizeable percentage of the total workforce? Evidently, such categories as 'exploitation' and 'surplus' value do not relate to them. A large part of our economy no longer fits into the Marxist division of it into 'Departments I and II'. These and some other 'sacred cows of Marxian orthodoxy' must be abandoned, argues the author. It is not my intention to enter more deeply into discussion of these matters, only to stress that Frankel is fully justified in raising these issues, and does so in ways which stimulate and inform. Who is 'productive'? This reader was, however, worried about his retention of one element of the dogmatic tradition: the treatment of 'unproductive' (or non-surplus-generating) labour. The problem here is not one of the typical employee in the public sector: obviously, a hospital nurse, probation officer, city architect, street sweeper, tax inspector, do not generate surplus value in any sense of the word, and their incomes evidently arise out of taxation. Marx, as is known, treated