Socialist Calculation Debate

The socialist calculation debate revolves around the question of whether central planners can, at least in principle, make the economic calculations necessary to achieve the rational, efficient allocation of society's economic resources. In 1920, Ludwig von Mises argued powerfully that such economic calculation cannot be made; economic theory demonstrates that rational central planning is simply impossible. This situation set off a vigorous interwar debate, in which a number of German, British, and other economists attempted to refute Mises's argument and in which Mises and others, particularly F. A. Hayek, sought to rebut these attempts. After World War II, mainstream economic literature uncritically assumed that Mises's thesis had been definitively refuted. However, in the 1980s, Don Lavoie challenged this orthodoxy and, on the basis of insights ...