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Market Co-Ordination

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Austrian Economics: Tensions and New Directions

Part of the book series: Recent Economic Thought Series ((RETH,volume 30))

Abstract

Ludwig von Mises’ (1920, 130) claim that “rational economic planning is impossible in a socialist commonwealth” initiated the once-famous planning debate, which was widely thought to have been resolved by Lange (1938) in favour of the planners. Further development of general equilibrium theory apparently strengthened the proposition that, in Frank Hahn’s (1984, 347) words, “anything the ideal economy can do the state can also do, but not vice versa since there may be externalities and public goods”. Dasgupta (1986, 30-31), having shown how formidable the task is of acquiring the knowledge needed to devise an endowment set that would generate a desired Pareto optimum as a competitive equilibrium, correctly observes that there is no obvious reason why planners who possess such knowledge should not impose that optimum directly. He continues: “The Second Fundamental Theorem of Welfare Economics — which is so often seen by economists as providing a reason why the state ought to rely on markets — holds true only in circumstances where there is no need to rely on markets at all. I have no explanation for this paradox” — which he thereafter ignores, failing to see that the neo-Walrasian models of planning and markets share a basic flaw.

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Authors
  1. Brian J. Loasby
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  2. Christopher Torr
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Editor information

Editors and Affiliations

  1. Department of Economics Joseph M. Bryan School of Business and Economics, University of North Carolina at Greensboro, 462 Bryan Building, Greensboro, NC, 27412-5001, USA

    Bruce J. Caldwell

  2. Faculty of Social and Economics Studies Institute of Economics, Karl-Franzens University of Graz, Graz, A-8010, Austria

    Stephan Boehm

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© 1992 Springer Science+Business Media New York

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Loasby, B.J., Torr, C. (1992). Market Co-Ordination. In: Caldwell, B.J., Boehm, S. (eds) Austrian Economics: Tensions and New Directions. Recent Economic Thought Series, vol 30. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-2186-6_5

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  • DOI: https://doi.org/10.1007/978-94-011-2186-6_5

  • Publisher Name: Springer, Dordrecht

  • Print ISBN: 978-94-010-4968-9

  • Online ISBN: 978-94-011-2186-6

  • eBook Packages: Springer Book Archive

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