The "socialist calculation" debate was about whether neoclassical general
equilibrium analysis could be the basis of socialist central planning. Read the
contributions. Of course, for Hayek and Mises (and others) there were other
issues at stake, but those followed from what the answer to that question was.
Israel Kirzner is very clear on this, by the way, and for me, that is an
infinitely more reliable and respectable Austrian source than Steele, no offense
intended. Again, the knowledge issues were brought up in the context of
neoclassical general equilbrium analysis, its assumptions (about knowledge and
foresight), framework, limitations. Lerner was enamored with Walras (who as
someone else mentioned also considered himself a "semi-socialist", as did many
early neoclassicals, the Fabian Wicksteed for example). Of course the Austrians
were critical of NCE, that part I said I agree with much of the criticism of
perfect competition, equlibrium, perfect knowledge and foresight, etc. But do
you or do you not think that planners can employ tacit knowledge and discovery
or is there some logical reason that they are exempt from these faculties while
scientists and entrpreneurs are not?
-----Original Message-----
From: Justin Schwartz [mailto:[EMAIL PROTECTED]]
Sent: Wednesday, February 07, 2001 5:06 PM
To: [EMAIL PROTECTED]
Subject: [PEN-L:7879] Re: RE: Re: RE: Re: RE: Critique of mathematical
economi cs
No, the calculation debate was NOT about whether neoclassical economic would
apply to a socialist economy. AT least that's not what the Austrians
thought. Hayek and Misesw ere onto the knowledge problem to start with. They
were also critics of NCE. The initial socialist response by Lange et al.
were neoclassical, but even Lange later realized that missed the point.
David Ramsey Steele, From Marx to Mises, offers an good historical overview
from an Austrian perspective.
--jks
>
>Justin writes:
>
> >"I like the book, but I _do_ buy the old Austrian take on the calculation
>problem, no "almost" about it. -jks"
>
>me:
>
>the socialist "calculation" debate was not about socialism versus
>capitalism,
>it was about whether or not neoclassical economics could apply to a
>"socialist"
>economy. of course it does not, neoclassical economics doesn't even apply
>to a
>market economy. so if that is what you mean by the Austrians winning, then
>fine.
>But the socialist calculation debate has been re-interpreted in more recent
>Austrian literature as about the "knowledge problem." See for example Don
>Lavoie's work. There are knowledge problems in all spheres of social life.
>Understanding requires interpretation. Goal-oriented activity has to deal
>with
>these issues. The Austrians like to think of market activity as analogous
>to
>scientific investigation, entrepreneurs are like scientists who are trying
>to
>"discover." Planners are somehow exempt from these creative powers.
>Scientists
>and entrpreneurs can take advantage of tacit knowledge, but planners
>cannot.
>Why? Why can't policymakers and planners also employ tacit knowledge,
>creative
>discovery? What is it that exempts policy makers and planners from
>overcoming
>knowledge problems just as scientists and entrepreneurs do? there is a
>dichotomous view of "market" and "state" here. will planners make mistakes
>sometimes? of course, just as entrepreneurs and scientists make mistakes.
>the
>Austrians were right in critiquing "rational" planning, but there are other
>types of planning: mixed-scanning, general systems, learning-adaptive,
>approaches provide insights, as does some "postmodern" planning.
>
>Lachmann called the "concept of 'plan'...a fundamental hermenutic notion"
>and
>stated that it "will have to be introduced into the theory of consumption"
>asking "If firms can make plans, why not households?" And why, we must ask,
>not
>other social groups, like neigborhoods, communities, cities, states,
>nations,
>and regions? as my professor of economic planning, Tom Vietorisz, wrote,
>planning, as an "exercise in social intent...shares the characteristics of
>all
>deliberate action...all deliberate human action aims in part at social
>effects."
>
>i hope to someday see a statue of Michael Polanyi right outside the
>Ministry of
>Planning.
>
>Mat
>
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