The Socialist Calculation Debate and its Normative Implications

Advances in Austrian Economics 23 (2018): 29-44.

16 Pages Posted: 30 Apr 2018 Last revised: 6 Nov 2018

See all articles by Rosolino Candela

Rosolino Candela

Mercatus Center at George Mason University

Date Written: April 11, 2018

Abstract

During the socialist calculation debate, Ludwig von Mises and F. A. Hayek made a positive argument regarding the impossibility of economic calculation under socialism. In this study, I argue that the arguments made by Mises and Hayek have normative implications for capitalism. I do so by drawing an analogy between an Austrian account of the market process and a neo-Aristotelian account of human flourishing. Neither economic calculation follows passively from implementing a set of profit-maximizing rules nor does human flourishing follow passively from following a set of universal moral norms (be they of utilitarian, deontological, or natural law inspiration). Both economic calculation and human flourishing are inherently based on individual acts of knowledge creation, actualized only by self-directed individuals. In both cases, the creation of such knowledge is both contextual and specific to the unique circumstances of each individual of a particular time and place. Therefore, to assume that such knowledge exists ex ante, and is objective and transpersonal across time, place, and institutional context renders both economic calculation and human flourishing into a technological problem of given means and given ends, in essence defining both activities out of existence. The possibility of economic calculation and human flourishing are therefore dependent upon a political/legal order that protects the possibility of self-directed knowledge creation in both the economic and moral realms, that is, to say an institutional framework of private property rights.

Keywords: Austrian Economics; economic calculation; entrepreneurship; eudaimonia; Ludwig von Mises; F.A. Hayek; Israel Kirzner

JEL Classification: B53; H11; P16

Suggested Citation

Candela, Rosolino, The Socialist Calculation Debate and its Normative Implications (April 11, 2018). Advances in Austrian Economics 23 (2018): 29-44. . Available at SSRN: https://ssrn.com/abstract=3162253 or http://dx.doi.org/10.2139/ssrn.3162253

Rosolino Candela (Contact Author)

Mercatus Center at George Mason University ( email )

4400 University Drive
Fairfax, VA 22030
United States

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