The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Socialist Calculation Debate

  • David M. Levy
  • Sandra J. Peart
Reference work entry


The socialist calculation debate centred on two questions: could a socialist society use planning to replicate the performance of a capitalist society? And could socialism improve on capitalism? Many economists answered both questions in the affirmative until shortly before the demise of the planned economies of the Soviet bloc. The calculation debate was about the interactions among models, motives and incentives. In hindsight, it is evident that the incentives in a planned economy are such that planners are not motivated to promote the public interest.


Barone, E Barter Capitalism Consumer sovereignty Dickinson, H.D Dobb, M.H Eucken, W Godwin, W Hayek, F.A. von Improvement thesis Incentive compatibility Information aggregation keiretsu Lange, O.R Lerner, A.P Malthus, T.R Marginal productivity theory Market socialism Mill, J.S Mises, L.E. von Planning Price mechanism Principal and agent Replication thesis Socialism Socialist calculation debate Soviet Union, economics in Stakhanovism Unemployment 

JEL Classifications

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • David M. Levy
    • 1
  • Sandra J. Peart
    • 1
  1. 1.