5 Pages Posted: 8 Oct 2011
Date Written: October 2011
The merits and demerits of what we call ‘capitalism’ have been a source of much attention since Adam Smith wrote his seminal treatise on the salutary effects of free commerce and before. We consider the criticisms of the capitalist system as stated most prominently by Karl Marx, and we evaluate Marx's proposed solution to the evils of capitalism – specifically, socialism. We also explore the contributions of Ludwig von Mises and Friedrich Hayek to the debate about whether Marx's proposed alternative was really an alternative. Mises and Hayek provide powerful critiques of Marx's socialist vision by addressing the problem of economic calculation and the inability of central authorities to acquire knowledge diffused and distributed across an entire society. We question whether Marx offered a solution and then consider more recent attacks on capitalism and its alleged destruction of cultural capital. The theoretical contributions of Mises and Hayek are supported by recent empirical contributions suggesting that liberal political economy is robust.
Keywords: Capitalism, socialism, Smith, Hayek, Marx, culture
Suggested Citation: Suggested Citation
Butgereit, Brent and Carden, Art, Capitalism, Socialism and Calculation (October 2011). Economic Affairs, Vol. 31, Issue 3, pp. 41-45, 2011. Available at SSRN: https://ssrn.com/abstract=1940804 or http://dx.doi.org/10.1111/j.1468-0270.2011.02114.x
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