Laws of Economics under Socialism (original) (raw)

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...

Capitalism, Socialism and Calculation

Economic Affairs, 2011

The merits and demerits of what we call 'capitalism' have been a source of much attention since Adam Smith wrote his seminal treatise on the salutary effects of free commerce and before. We consider the criticisms of the capitalist system as stated most prominently by Karl Marx, and we evaluate Marx's proposed solution to the evils of capitalism-specifically, socialism. We also explore the contributions of Ludwig von Mises and Friedrich Hayek to the debate about whether Marx's proposed alternative was really an alternative. Mises and Hayek provide powerful critiques of Marx's socialist vision by addressing the problem of economic calculation and the inability of central authorities to acquire knowledge diffused and distributed across an entire society. We question whether Marx offered a solution and then consider more recent attacks on capitalism and its alleged destruction of cultural capital. The theoretical contributions of Mises and Hayek are supported by recent empirical contributions suggesting that liberal political economy is robust.

From Marx to Mises: Post-Capitalist Society and the Challenge of Economic Calculation

The British Journal of Sociology, 1994

David Ramsay Steele, a former Marxist, shares with us his odyssey through the socialist "calculation problem"-how to know the value of goods and services, or whether outputs are more valuable than inputs, in the absence of a market system. That issue greatly interested me a quarter of a century ago. After examining it, I concluded in my book,

Tensions Between Theory and History in Von Mises’s Critique of Socialism

Revista de Economia Contemporânea, 2018

The article investigates the relation between praxeology and history in the critique Mises directs at the possibility of the long-term existence of a socialist commonwealth. We argue that Mises makes no clear distinction between the praxeological concept of 'private property' (associated with the possession of means of production) and the historical concept of the ideal-type 'private property' (associated to property rights - see HODGSON, 2015). The lack of precision between the theoretical and the historical concepts of private property prevents Mises’s critique from being an 'exact law', as he would have it. Finally, we show in the last section the consequences for Mises’s critique of socialism of having a historical and a praxeological concept of private property.

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.

The German historical school on monetary calculation and the feasibility of socialism

Journal of Institutional Economics

Several scholars anticipated Ludwig von Mises's calculation argument against socialism. The present paper summarises the contributions by the members of the German Historical School of Economics who preceded Mises and provides several examples of anticipation that have not been discussed in the literature. Furthermore, the paper explains why it is not a coincidence that members of the Historical School claimed as early as the nineteenth century that socialism was unfeasible due to calculation and knowledge problems. In their attempts to understand historically specific features of capitalism, they developed an approach to capital that involved the institutions of private property, money, the market, the enterprise, and monetary calculation. Starting from this institutional approach to capital and capitalism, it was only a small step to the question of what it means for socialist systems that those institutions are lacking.