Socialist calculation debate

The socialist calculation debate, sometimes known as the economic calculation debate, was a discourse on the subject of how a socialist economy would perform economic calculation given the absence of the law of value, money, financial prices for capital goods and private ownership of the means of production. More specifically, the debate was centered on the application of economic planning for the allocation of the means of production as a substitute for capital markets and whether or not such an arrangement would be superior to capitalism in terms of efficiency and productivity.^[1]^[2]

The historical debate was cast between the Austrian School represented by Ludwig von Mises and Friedrich Hayek, who argued against the feasibility of socialism; and between neoclassical and Marxian economists, most notably Cläre Tisch (as a forerunner), Oskar R. Lange, Abba P. Lerner, Fred M. Taylor, Henry Douglas Dickinson and Maurice Dobb, who took the position that socialism was both feasible and superior to capitalism. A central aspect of the debate concerned the role and scope of the law of value in a socialist economy. Although contributions to the question of economic coordination and calculation under socialism existed within the socialist movement prior to the 20th century, the phrase socialist calculation debate emerged in the 1920s beginning with Mises' critique of socialism.^[3]

While the debate was popularly viewed as a debate between proponents of capitalism and proponents of socialism, in reality a significant portion of the debate was between socialists who held differing views regarding the utilization of markets and money in a socialist system and to what degree the law of value would continue to operate in a hypothetical socialist economy.^[4] Socialists generally held one of three major positions regarding the unit of calculation, including the view that money would continue to be the unit of calculation under socialism; that labor time would be a unit of calculation; or that socialism would be based on calculation in natura or calculation performed in-kind.^[5]

Debate among socialists has existed since the emergence of the broader socialist movement between those advocating market socialism, centrally planned economies and decentralized planning. Recent contributions to the debate in the late 20th century and early 21st century involve proposals for market socialism and the use of information technology and distributed networking as a basis for decentralized economic planning.^[6]

^ Levy, David M.; Peart, Sandra J. "Socialist calculation debate". The New Palgrave Dictionary of Economics (2nd ed.).
^ Durlauf, Steven N.; Blume, Lawrence E., eds. (2008). The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 2 February 2013. doi:10.1057/9780230226203.1570.
^ A Companion to the History of Economic Thought, Wiley-Blackwell by Biddle, Jeff and Samuels, Warren and Davis, John. 2006. (p. 319): "What became known as the socialist calculation debate started when von Mises (1935 [1920]) launched a critique of socialism."
^ Economic Calculation under Socialism: The Austrian Contribution, by Vaughn, Karen. 2004. Economic Inquiry, vol. 18, issue 4, p. 537. 1980: Although it is conventional to treat the economic calculation controversy as a debate between those who favored socialism and those who opposed it, this is not descriptive of the actual course of events...by that time, the real debate, in so far as one took place in the journals, was among the socialists themselves..."
^ Buick, Adam; Lawrence, Pieter (1984). "How Socialism Can Organise Production Without Money". Libertyandsocialism.org. Archived from the original on 15 October 2014. Retrieved 13 February 2013.
^ Schweickart, David (2007). "Democratic Socialism". In Anderson, Gary L.; Herr, Kathryn G., eds. Encyclopedia of Activism and Social Justice. SAGE Publications. p. 448. ISBN 9781452265650. Archived 17 June 2012 at the Wayback Machine. Retrieved 6 August 2020. "Virtually all socialists have distanced themselves from the economic model long synonymous with socialism (i.e., the Soviet model of a nonmarket, centrally planned economy. [...] Some have endorsed the concept of market socialism, a postcapitalist economy that retains market competition but socializes the means of production and, in some versions, extends democracy to the workplace. Some hold out for a nonmarket, participatory economy. All democratic socialists agree on the need for a democratic alternative to capitalism".

[1] Levy, David M.; Peart, Sandra J. "Socialist calculation debate". The New Palgrave Dictionary of Economics (2nd ed.).

[2] Durlauf, Steven N.; Blume, Lawrence E., eds. (2008). The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 2 February 2013. doi:10.1057/9780230226203.1570.

[A_Companion_to_the_History_of_Economic_Thought,_2006._p._319-3] A Companion to the History of Economic Thought, Wiley-Blackwell by Biddle, Jeff and Samuels, Warren and Davis, John. 2006. (p. 319): "What became known as the socialist calculation debate started when von Mises (1935 [1920]) launched a critique of socialism."

[Economic_Calculation_under_Socialism:_The_Austrian_Contribution,_1980-4] Economic Calculation under Socialism: The Austrian Contribution, by Vaughn, Karen. 2004. Economic Inquiry, vol. 18, issue 4, p. 537. 1980: Although it is conventional to treat the economic calculation controversy as a debate between those who favored socialism and those who opposed it, this is not descriptive of the actual course of events...by that time, the real debate, in so far as one took place in the journals, was among the socialists themselves..."

[5] Buick, Adam; Lawrence, Pieter (1984). "How Socialism Can Organise Production Without Money". Libertyandsocialism.org. Archived from the original on 15 October 2014. Retrieved 13 February 2013.

[6] Schweickart, David (2007). "Democratic Socialism". In Anderson, Gary L.; Herr, Kathryn G., eds. Encyclopedia of Activism and Social Justice. SAGE Publications. p. 448. ISBN 9781452265650. Archived 17 June 2012 at the Wayback Machine. Retrieved 6 August 2020. "Virtually all socialists have distanced themselves from the economic model long synonymous with socialism (i.e., the Soviet model of a nonmarket, centrally planned economy. [...] Some have endorsed the concept of market socialism, a postcapitalist economy that retains market competition but socializes the means of production and, in some versions, extends democracy to the workplace. Some hold out for a nonmarket, participatory economy. All democratic socialists agree on the need for a democratic alternative to capitalism".

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