[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ris/kngedp/2012_006.html
   My bibliography  Save this paper

Revisiting the socialist calculation debate: the role of markets and finance in Hayek’s response to Lange’s challenge

Author

Listed:
Abstract
In the early twentieth century, a range of writers produced visions of a socialist economy whose distinguishing characteristic was an allocation of resources using a ‘technical’ perspective. In the 1930s, Oskar Lange took up the challenge of Ludwig von Mises’ claim of the ‘impossibility’ of constructing a socialist economy on such an engineering basis. He readily acceded to the need for efficiency calculations to be made in value terms rather than using purely natural or engineering criteria, but claimed that these values could emerge without a market for capital goods, and without private ownership of capital. Friedrich Hayek replied stressing the dynamic aspects of competition in the context of the capital market; the latter is to be seen as a discovery procedure wherein production possibilities must not be taken for granted. Thus, socialist calculation is impossible because of the absence of those markets for capital and risk that evaluate the success or failure of different investment decisions under capitalism. Appraising this debate, we emerge with two findings. First, Lange's contribution was based on a one-sided, static conception of the capitalist economy, and therefore of the construction of a socialist alternative. Second, the Austrian approach only surreptitiously concedes the key role of finance in its defence of the dynamic properties of capitalism. And yet it is the very gyrations and instability emerging from the financial sector in capitalism that was one of the central factors motivating the search for an alternative engineering method of allocation in the first place. The latter point invites us to reconsider the place of finance in various schools of economics in mainstream thinking.

Suggested Citation

  • Auerbach, Paul & Sotiropoulos, Dimitris P., 2012. "Revisiting the socialist calculation debate: the role of markets and finance in Hayek’s response to Lange’s challenge," Economics Discussion Papers 2012-6, School of Economics, Kingston University London.
    • Handle: RePEc:ris:kngedp:2012_006
    as

    Download full text from publisher

    File URL: http://eprints.kingston.ac.uk/23463/
    File Function: Full text
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jael, Paul, 2015. "Socialist Calculation and Market Socialism," MPRA Paper 64255, University Library of Munich, Germany.
    2. Auerbach, Paul, 2019. "Productivity Panics – Polemics and Realities," Economics Discussion Papers 2019-3, School of Economics, Kingston University London.
    3. Jael, Paul, 2018. "Calcul socialiste et socialisme de marché [Socialist Calculation and Market Socialism]," MPRA Paper 89521, University Library of Munich, Germany.

    More about this item

    Keywords

    Lange; von Mises; Hayek; risk; finance;
    All these keywords.

    JEL classification:

    • B24 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Socialist; Marxist; Scraffian
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:kngedp:2012_006. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Andrea Ingianni (email available below). General contact details of provider: https://edirc.repec.org/data/sekinuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.