Rationality of the Individual and Rationality of the System: A Critical Examination of the Economic Calculation Problem Over Socialism

  • Ennio E. Piano
  • Peter J. BoettkeEmail author


We restate Mises’ argument about the impossibility of socialist calculation through the lenses of modern developments in microeconomic theory. In so doing, we provide an alternative interpretation of the debate between Austrians and Market Socialists, which we believe should inform economists’ understanding of the market process.


  1. Anderson, G. M., & Boettke, P. J. (1993). Perestroika and public choice: The economics of autocratic succession in a rent-seeking society. Public Choice, 75, 101–118.CrossRefGoogle Scholar
  2. Anderson, G. M., & Boettke, P. J. (1997). Soviet venality: A rent-seeking model of the communist state. Public Choice, 93(1–2), 37–53.CrossRefGoogle Scholar
  3. Barone, E. (1908). Il ministro della produzione nello stato collettivista. Giornale degli economisti, 37, 267–293.Google Scholar
  4. Bergson, A. (1948). Socialism. In A survey of contemporary economics. New York: Blakiston.Google Scholar
  5. Bergson, A. (1967). Market socialism revisited. The Journal of Political Economy, 75, 655–673.Google Scholar
  6. Blaug, M. (1997). Economic theory in retrospect. Cambridge University Press.Google Scholar
  7. Boettke, P. J. (1990). The political economy of Soviet socialism: The formative years, 1918–1928. Berlin: Springer Science & Business Media.Google Scholar
  8. Boettke, P. J. (1993). Why perestroika failed. UK: Routledge.Google Scholar
  9. Boettke, P. J. (ed) (2000). Socialism and the market economy: The socialist calculation debate reconsidered (vol. 9). London: Routledge.Google Scholar
  10. Boettke, P. J. (2002a). Calculation and coordination: Essays on socialism and transitional political economy. UK: Routledge.Google Scholar
  11. Boettke, P. J. (2002b). Information and knowledge: Austrian economics in search of its uniqueness. The Review of Austrian Economics, 15(4), 263–274.Google Scholar
  12. Boettke, P. J. (2005). On reading Hayek: Choice, consequences and the road to serfdom. European Journal of Political Economy, 21(4), 1042–1053. Google Scholar
  13. Boettke, P. J. (2006). Hayek and market socialism. In E. Feser (Ed.), The Cambridge companion to Hayek. Cambridge: Cambridge University Press.Google Scholar
  14. Boettke, P. J., & Leeson, P. T. (2005). Still impossible after all these years: Reply to caplan. Critical Review, 17(1–2), 155–170.Google Scholar
  15. Buchanan, J. M. (1969). Cost and choice: An inquiry in economic theory. Chicago: University of Chicago Press.Google Scholar
  16. Bukharih, N. I., & Preobrazhensky, E. [1919] 1979. The ABC of communism: A popular exploration of the program of the communist party of Russia (E. Paul & C. Paul., Trans.). Ann Arbor: University of Michigan Press.Google Scholar
  17. Caplan, B. (2004). Is socialism really “impossible”?. Critical Review, 16(1), 33–52.Google Scholar
  18. Demsetz, H. (1982). Economic, legal, and political dimensions of competition (Vol. 4). North Holland.Google Scholar
  19. De Soto, J. H. (2010). Socialism, economic calculation and entrepreneurship. Edward Elgar.Google Scholar
  20. Dickinson, H. D. (1933). Price formation in a socialist community. The Economic Journal, 237–250.Google Scholar
  21. Dickinson, H. D. (1939). The economics of socialism. Oxford: Oxford University Press.Google Scholar
  22. Dobb, M. (1935). Economic theory and socialist economy: A reply. The Review of Economic Studies, 2(2), 144–151.CrossRefGoogle Scholar
  23. Durbin, E. F. (1936). Economic calculus in a planned economy. The Economic Journal, 46(184), 676–690.CrossRefGoogle Scholar
  24. Goldman, M. I. (1971). Comparative economic systems: A reader. Random House.Google Scholar
  25. Hayek, F. A. (1933). The trend of economic thinking. Economica, 40, 121–137.CrossRefGoogle Scholar
  26. Hayek, F. A. (1935a). The nature and history of the problem. In Collectivist economic planning (pp. 1–40). London: Routledge.Google Scholar
  27. Hayek, F. A. (1935b). The present state of the debate. In: Collectivist economic planning (pp. 201–243). London: Routledge.Google Scholar
  28. Hayek, F. A. (1937). Economics and knowledge. Economica, 4(13), 33–54.CrossRefGoogle Scholar
  29. Hayek, F. A. (1944) The road to serfdom. London: Routledge.Google Scholar
  30. Hayek, F. A. (1945). The use of knowledge in society. The American Economic Review, 35(4), 519–530.Google Scholar
  31. Hayek, F. A. (1948). Individualism and economic order. Chicago: University of Chicago Press.Google Scholar
  32. Hayek, F. A. (1952). The counter-revolution of science: Studies on the abuse of reason. Glencoe, Illinois: The Free Press.Google Scholar
  33. Hayek, F. V. (1940). Socialist calculation: The competitive solution’. Economica, 7(26), 125–149.Google Scholar
  34. Hurwicz, L. (1973). The design of mechanisms for resource allocation. The American Economic Review, 63(2), 1–30.Google Scholar
  35. Kirzner, I. M. (1988). The economic calculation debate: lessons for Austrians. The review of Austrian economics, 2(1), 1–18.CrossRefGoogle Scholar
  36. Knight, F. H. (1936). The quantity of capital and the rate of interest: I. The Journal of Political Economy, 44, 433–463.Google Scholar
  37. Lachmann, L. M. (1986). The market as an economic process. Wiley-Blackwell.Google Scholar
  38. Landauer, C. (1947). The theory of national economic planning. California: University of California Press.Google Scholar
  39. Lange, O. (1936). On the economic theory of socialism: part one. The review of economic studies, 4(1), 53–71.CrossRefGoogle Scholar
  40. Lange, O. (1937). On the economic theory of socialism: part two. The Review of Economic Studies, 4(2), 123–142.CrossRefGoogle Scholar
  41. Lange, O. (1967). The computer and the market. In C. H. Feinstein (Ed.), Socialism, capitalism, and economic growth: Essays presented (pp. 158–161). Cambridge: Cambridge University Press.Google Scholar
  42. Leontief, W. (1941). The structure of the american economy 1919–1929. Oxford University Press.Google Scholar
  43. Lavoie, D. (1983). Some strengths in Marx’s Disequilibrium theory of money. Cambridge Journal of Economics, 7, 55–68.Google Scholar
  44. Lavoie, D. (1985). Rivalry and central planning: the socialist calculation debate reconsidered. Cambridge: Cambridge University Press.Google Scholar
  45. Lavoie, D. (1990). Computation, incentives, and discovery: the cognitive function of markets in market socialism. The Annals of the American Academy of Political and Social Science, 507, 72–79.Google Scholar
  46. Lekachman, R. (1959). A history of economic ideas. Harper.Google Scholar
  47. Lenin, V. I. (1920). State and revolution. Sidney: Australian Socialist Party.Google Scholar
  48. Lerner, A. P. (1937). Statics and dynamics in socialist economics. The Economic Journal, 47(186), 253–270.CrossRefGoogle Scholar
  49. Lerner, A. P. (1938). Theory and practice in socialist economics. The Review of Economic Studies, 6(1), 71–75.CrossRefGoogle Scholar
  50. Levy, D. M. (1990). The bias in centrally planned prices. Public Choice, 67(3), 213–226.CrossRefGoogle Scholar
  51. MacKenzie, D. W. (2007). Trial and error in the socialist calculation debate. History of Political Economy.Google Scholar
  52. Marx, K. (1938). Critique of the Gotha programme. New York: International Publishers.Google Scholar
  53. Marx, K. (1953). Grundrisse. Pelican Books.Google Scholar
  54. Marx, K. (1967). Capital: A critique of political economy (Vol. 2). International Publishers.Google Scholar
  55. Marx, K., & Engels, F. (2009). The economic and philosophic manuscripts of 1844 and the Communist manifesto. Prometheus Books.Google Scholar
  56. Mises, L. V. (1920). Economic calculation in the socialist commonwealth. In Hayek, F. A. (ed.), Collectivist economic planning (pp. 30–31). London: Routledge.Google Scholar
  57. Mises, L. V. [1922] 1981. Socialism: An economic and socialogical analysis. Indianapolis: liberty Press.Google Scholar
  58. Mises, L. V. [1933] 1960. Epistemological problems of economics. Auburn: Ludwig von Mises Institute.Google Scholar
  59. Mises, L. V. [1949] 2007. Human action: A treatise on economics. Indianapolis: Liberty Fund.Google Scholar
  60. Neurath, O. (1973). Through war economy to economy in kind. In Empricism and Sociology. Boston.Google Scholar
  61. O’Driscoll Jr, G. P., & Rizzo, M. (2014). Austrian economics re-examined: The economics of time and ignorance (Vol. 33). London: Routledge.Google Scholar
  62. Pareto, V. [1927] 1971. Manual of political economy. New York: Kelley.Google Scholar
  63. Robbins, L. (1935). The great depression. London: Macmillan & Co.Google Scholar
  64. Robbins, L. (1971). An economist’s autobiography. Macmillian.Google Scholar
  65. Schumpeter, J. A. (1942). Socialism, capitalism and democracy. New York: Harper and Brothers.Google Scholar
  66. Schumpeter, J. A. (1954). History of economic analysis. London: Routledge. 2006.Google Scholar
  67. Sherman, H. J. (1969). The soviet economy. Little, Brown.Google Scholar
  68. Shleifer, A., & Vishny, R. W. (1994). The politics of market socialism. The journal of economic perspectives, 8(2), 165–176.CrossRefGoogle Scholar
  69. Taylor, F. M. (1929). The guidance of production in a socialist state. The American Economic Review, 19, 1–8.Google Scholar
  70. Varian, H. (1978). Microeconomic analysis. WW Norton.Google Scholar
  71. Viner, J. (2013). Jacob Viner: Lectures in economics 301 (Vol. 301). New Jersey: Transaction Publishers.Google Scholar
  72. White, L. H. (2012). The clash of economic ideas: the great policy debates and experiments of the last hundred years. Cambridge University Press.Google Scholar
  73. Wieser, F. V. (1914). Social economics. London: Allen and Unwin. 1927.Google Scholar

Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  1. 1.George Mason UniversityFairfaxUSA

Personalised recommendations