Economic Calculation in the Socialist Commonwealth
Encyclopedia
"Economic Calculation In The Socialist Commonwealth" is an article by Austrian School
Austrian School
The Austrian School of economics is a heterodox school of economic thought. It advocates methodological individualism in interpreting economic developments , the theory that money is non-neutral, the theory that the capital structure of economies consists of heterogeneous goods that have...

 economist and libertarian
Libertarianism
Libertarianism, in the strictest sense, is the political philosophy that holds individual liberty as the basic moral principle of society. In the broadest sense, it is any political philosophy which approximates this view...

 thinker Ludwig von Mises
Ludwig von Mises
Ludwig Heinrich Edler von Mises was an Austrian economist, philosopher, and classical liberal who had a significant influence on the modern Libertarian movement and the "Austrian School" of economic thought.-Biography:-Early life:...

. Its critique against economic calculation
Economic calculation problem
The economic calculation problem is a criticism of central economic planning. It was first proposed by Ludwig von Mises in 1920 and later expounded by Friedrich Hayek. The problem referred to is that of how to distribute resources rationally in an economy...

 in a planned economy
Planned economy
A planned economy is an economic system in which decisions regarding production and investment are embodied in a plan formulated by a central authority, usually by a government agency...

 triggered the decades-long economic calculation debate.

The article was first published 1920 in German
German language
German is a West Germanic language, related to and classified alongside English and Dutch. With an estimated 90 – 98 million native speakers, German is one of the world's major languages and is the most widely-spoken first language in the European Union....

 under the title "Die Wirtschaftsrechnung im sozialistischen Gemeinwesen". It is based on a lecture Mises gave in 1919 as a response to a book by Otto Neurath
Otto Neurath
Otto Neurath was an Austrian philosopher of science, sociologist, and political economist...

 arguing for the feasibility of central planning. Mises argued that no prices for capital goods could be obtained in a socialist economy if the government owned the means of production
Means of production
Means of production refers to physical, non-human inputs used in production—the factories, machines, and tools used to produce wealth — along with both infrastructural capital and natural capital. This includes the classical factors of production minus financial capital and minus human capital...

, since all exchanges would merely be internal transfers rather than "objects of exchange", setting the price mechanism out of order.

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