The Socialists Won The Economic Calculation Debate

Contrary to popular belief among Austrian School economists and right-libertarians, it is not readily apparent that the Austrians won the socialist calculation debate. The responses of Enrico Barone, Fred Taylor, Oskar Lange, and Abba Lerner were quite adequate. Most economists even thought that the socialists had won the debate.

How would socialized industry set prices? The same way capitalist industry does! It guesses at the correct price and makes adjustment to the price if necessary, until it finds the right price to clear the market. This is exactly what takes place under capitalism too. The only difference is in who the profits go to, whether they go to the workers/society or whether they go to capitalist exploiters.

What about the knowledge problem? Well, as Kevin A. Carson pointed out, Hayek’s knowledge problem really only serves as a critique of centralization and hierarchy. Centralized and hierarchical capitalistic firms have the same problems as Hayek supposes centrally-planned socialist industry would. If you take a libertarian socialist approach or a municipal socialist approach, then Hayek’s “knowledge problem” doesn't apply.

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