The Socialist Calculation Debate
The main problem with socialism is the inability of central planners to determine the proper prices to
place on any given commodity. Without this information, it is impossible to properly allocate resources.
Notice that I didn't say to "rationally" allocate resources. This is because the 'science' of economics is a
social science where the word 'social' refers to communities of human beings. Humans are more
rational than most other animals, but they are not all that rational from an objective standpoint.
The Road to Surfdom is the book for which Frederich Hayek is most famous. According to the interview
on C-SPAN2, at one point in history it was popular to think that since democracy and capitalism had
failed (as seen by the depression) and since Nazism and Communism were obviously wrong, that the
only possibility left was Socialism. Hayek and Keynes debated this from the point in time when they met
at the London School of Economics.
Wiki:
"The economic calculation problem is a criticism of socialist economics. It was first proposed by Ludwig
von Mises in 1920 and further expounded by his student Friedrich Hayek. According to this criticism,
without information provided by market prices it is impossible to rationally allocate resources. Those who
agree with this criticism claim it is a refutation of socialism and that it shows that a socialist planned
economy could never work. The debate raged in the 1920s and 1930s, and that specific period of the
debate has come to be known by economic historians as the The Socialist Calculation Debate."
Libbot
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The main problem with socialism is the inability of central planners to determine the proper prices to
place on any given commodity. Without this information, it is impossible to properly allocate resources.
Notice that I didn't say to "rationally" allocate resources. This is because the 'science' of economics is a
social science where the word 'social' refers to communities of human beings. Humans are more
rational than most other animals, but they are not all that rational from an objective standpoint.
The Road to Surfdom is the book for which Frederich Hayek is most famous. According to the interview
on C-SPAN2, at one point in history it was popular to think that since democracy and capitalism had
failed (as seen by the depression) and since Nazism and Communism were obviously wrong, that the
only possibility left was Socialism. Hayek and Keynes debated this from the point in time when they met
at the London School of Economics.
Wiki:
"The economic calculation problem is a criticism of socialist economics. It was first proposed by Ludwig
von Mises in 1920 and further expounded by his student Friedrich Hayek. According to this criticism,
without information provided by market prices it is impossible to rationally allocate resources. Those who
agree with this criticism claim it is a refutation of socialism and that it shows that a socialist planned
economy could never work. The debate raged in the 1920s and 1930s, and that specific period of the
debate has come to be known by economic historians as the The Socialist Calculation Debate."
Libbot
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Libertarian Opinions