Market Co-Ordination

  • Brian J. Loasby
  • Christopher Torr
Chapter
Part of the Recent Economic Thought Series book series (RETH, volume 30)

Abstract

Ludwig von Mises’ (1920, 130) claim that “rational economic planning is impossible in a socialist commonwealth” initiated the once-famous planning debate, which was widely thought to have been resolved by Lange (1938) in favour of the planners. Further development of general equilibrium theory apparently strengthened the proposition that, in Frank Hahn’s (1984, 347) words, “anything the ideal economy can do the state can also do, but not vice versa since there may be externalities and public goods”. Dasgupta (1986, 30-31), having shown how formidable the task is of acquiring the knowledge needed to devise an endowment set that would generate a desired Pareto optimum as a competitive equilibrium, correctly observes that there is no obvious reason why planners who possess such knowledge should not impose that optimum directly. He continues: “The Second Fundamental Theorem of Welfare Economics — which is so often seen by economists as providing a reason why the state ought to rely on markets — holds true only in circumstances where there is no need to rely on markets at all. I have no explanation for this paradox” — which he thereafter ignores, failing to see that the neo-Walrasian models of planning and markets share a basic flaw.

Keywords

General Equilibrium Demand Curve Austrian Economic Competitive Equilibrium Plan Failure 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
This is a preview of subscription content, log in to check access.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

References

  1. Barro, R. J. 1979. “Second thoughts on Keynesian Economics,” American Economic Review 69(2): 54–9.Google Scholar
  2. Boland, L. A. 1986. Methodology for a New Microeconomics: The Critical Foundations. Boston: Allen and Unwin.Google Scholar
  3. Casson, M. 1982. The Entrepreneur: An Economic Theory. Oxford: Martin Robertson.Google Scholar
  4. Casson, M. 1990. Enterprise and Competitiveness: A Systems View of International Business. Oxford: Clarendon Press.Google Scholar
  5. Coase, R. H. 1937. “The Nature of the Firm,” Economica, NS 4: 386–405. Reprinted in Coase (1988b), 33–55.CrossRefGoogle Scholar
  6. Coase, R. H. 1988a. “The Nature of the Firm: Origin,” Journal of Law,Economics, and Organization 4: 3–17.Google Scholar
  7. Coase, R. H. 1988b. The Firm, the Market,and the Law. Chicago: University of Chicago Press.Google Scholar
  8. Dasgupta, P. 1986. “Positive Freedom, Markets and the Welfare State,” Oxford Review of Economic Policy 2(2): 25–36.CrossRefGoogle Scholar
  9. Demsetz, H. 1988. The Organization of Economic Activity, Volume I: Ownership,Control and the Firm. Oxford: Basil Blackwell.Google Scholar
  10. Dixon, H. 1990. “Equilibrium and Explanation.” In Foundations of Economic Thought, Creedy, J. (ed.) Oxford: Basil Blackwell, 356–93.Google Scholar
  11. Fehl, U. 1986. “Spontaneous Order and the Subjectivity of Expectations: A Contribution to the Lachmann-O’Driscoll Problem.” In Subjectivism,Intelligibility and Economic Understanding, Kirzner, I. M. (ed.) Basingstoke and London: Macmillan.Google Scholar
  12. Fisher, F. M. 1983. Disequilibrium Foundations of Equilibrium Economics.Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  13. Fogel, R. W. 1964. Railroads and American Economic Growth: Essays in Econometric History. Baltimore and London: Johns Hopkins Press.Google Scholar
  14. Garrison, R. W. 1982. “Austrian Economics as the Middle Ground: Comment on Loasby.” In Method, Process,and Austrian Economics: Essays in Honor of Ludwig von Mises, Kirzner, I. M. (ed.) Lexington, MA: D.C. Heath, 131–8.Google Scholar
  15. Gordon, R. J. 1990. “What is new-Keynesian Economics?” Journal of Economic Literature XXVIII: 1115–71.Google Scholar
  16. Hahn, F. H. 1973. On the Notion of Equilibrium in Economics. Cambridge: Cambridge University Press. Reprinted in Hahn (1984), 43–71.Google Scholar
  17. Hahn, F. H. 1984. Equilibrium and Macroeconomics. Oxford: Basil Blackwell. Hayek, F. A. 1931. Prices and Production. London: Routledge.Google Scholar
  18. Hayek, F. A. 1937. “Economics and Knowledge,” Economica, NS 4: 33–54.Reprinted in Hayek (1948), 33–56. Page references are to this reprint.Google Scholar
  19. Hayek, F. A. 1940. “Socialist Calculation: The Competitive ‘Solution”’, Econ-omica, NS 8: 125–49. Reprinted in Hayek (1948), 181–208.Google Scholar
  20. Hayek, F. A. 1945. “The Use of Knowledge in Society,” American Economic Review XXXV: 519–30.Google Scholar
  21. Hayek, F. A. 1948. Individualism and Economic Order. Chicago: University of Chicago Press.Google Scholar
  22. Hey, J. D. 1981. Economics in Disequilibrium. Oxford: Martin Robertson.Google Scholar
  23. Keynes, J. M. 1936. The General Theory of Employment, Interest and Money.London: Macmillan.Google Scholar
  24. Kirzner, I. M. 1973. Competition and Entrepreneurship. Chicago: University of Chicago Press.Google Scholar
  25. Kirzner, I. M. 1985. Discovery and the Capitalist Process. Chicago: University of Chicago Press.Google Scholar
  26. Lachmann, L. M. 1986. The Market as an Economic Process. Oxford: Basil Blackwell.Google Scholar
  27. Lange, O. and Taylor, F. M. 1938. On the Economic Theory of Socialism. New York: McGraw-Hill.Google Scholar
  28. Loasby, B. J. 1990. “Firms, Markets and the Principle of Continuity.” In Centenary Essays on Alfred Marshall, Whitaker, J. K. (ed.) Cambridge: Cambridge University Press.Google Scholar
  29. Marshall, A. 1920. Principles of Economics. London: Macmillan.Google Scholar
  30. Menger, C. 1871 [1950]. Principles of Economics. Translated and edited by James Dingwall and Bert F. Hoselitz. Glencoe, IL: Free Press.Google Scholar
  31. Menger, C. 1883 [1963]. Problems of Economics and Sociology. Edited by L. Schneider and translated by F. J. Knock. Urbana, IL: University of Illinois Press.Google Scholar
  32. Mises, L. von. 1920. “Economic Calculation in the Socialist Commonwealth.” (translated). In Collectivist Economic Planning (1935), Hayek, F. A. (ed.) London: Routledge, 87–130.Google Scholar
  33. Penrose, E. T. 1959. The Theory of the Growth of the Firm. Oxford: Oxford University Press.Google Scholar
  34. Richardson, G. B. 1960. Information and Investment. Oxford: Oxford University Press.Google Scholar
  35. Richardson, G. B. 1972. “The Organization of Industry,” Economic Journal 82: 883–96.CrossRefGoogle Scholar
  36. Rizzo, M. 1989. “Hayek’s Four Tendencies Toward Equilibrium,” C.V. Starr Center for Applied Economics Research Report, 89–32.Google Scholar
  37. Schumpeter, J. A. 1934. The Theory of Economic Development. Cambridge, MA: Harvard University Press.Google Scholar
  38. Simon, H. A. 1969. The Sciences of the Artificial. Cambridge, MA: MIT Press.Google Scholar
  39. Simon, H. A. 1982. Models of Bounded Rationality. Volumes 1 and 2. Cambridge, MA: MIT Press.Google Scholar
  40. Whitaker, J. K. 1975. The Early Economic Writings of Alfred Marshall 18671890. Volumes 1 and 2. London and Basingstoke: Macmillan.Google Scholar
  41. Williamson, O. E. 1985. The Economic Institutions of Capitalism. New York: Free Press.Google Scholar
  42. Williamson, O. E. 1986. Economic Organization: Firms, Markets and Policy Controls. Brighton: Wheatsheaf.Google Scholar

References

  1. Boehm, S. 1986. “Time and Equilibrium: Hayek’s Notion of Intertemporal Equilibrium Reconsidered.” In Subjectivism, Intelligibility and Economic Understanding: Essays in Honor of Ludwig M. Lachmann on His Eightieth Birthday,“Kirzner, I. M. (ed.). New York: New York University Press, 16–29.Google Scholar
  2. Clower, R. W. 1965. “The Keynesian Counterrevolution: A Theoretical Appraisal.” In The Theory of Interest Rates, Hahn, F. H. and Brechling, F. P. R. (eds.). London: Macmillan, 103–25.Google Scholar
  3. Eatwell, I. 1982. “Competition.” In Essays in Honour of Ronald L. Meek,Bradley, J. and Howard, M. (eds.). London: Macmillan, 203–28.Google Scholar
  4. Garegnani, P. 1976. “On a Change in the Notion of Equilibrium in Recent Workon Value and Distribution.” In Essays in modern capital theory, Brown, M.,Sato, K. and Zarembka, P. (eds.). Amsterdam: North-Holland, 25–45.Google Scholar
  5. Hayek, F. A. 1937. “Economics and Knowledge,” Economica, NS, vol. 4. Reprinted inGoogle Scholar
  6. Hayek, F. A. (1976) Individualism and Economic Order. London and Henley: Routledge & Kegan Paul, 33–56.Google Scholar
  7. Keynes, J. M. 1936. The General Theory of Employment, Interest and Money. Reprinted as Vol. VII of The Collected Writings of John Maynard Keynes. London: Macmillan.Google Scholar
  8. Keynes, J. M. 1937. “The General Theory of Employment,” Quarterly Journal of Economics, February 1937. Reprinted in The Collected Writings of John Maynard Keynes, Vol. XIV. London: Macmillan (1973), 109–123.Google Scholar
  9. Kirzner, I. M. 1973. Competition and Entrepreneurship. Chicago: University of Chicago Press.Google Scholar
  10. Kirzner, I. M. 1988. “Welfare Economics: A Modern Austrian Perspective.” In Man, Economy and Liberty: Essays in Honor of Murray Rothbard. Block, W. & Rockwell, L. H. (eds.). Auburn: The Ludwig von Mises Institute, 77–88.Google Scholar
  11. Lachmann, L. M. 1976. “From Mises to Shackle: An Essay on Austrian Economics and the Kaleidic Society,” Journal of Economic Literature, 14: 54–62.Google Scholar
  12. Lachmann, L. M. 1979. “On the Recent Controversy Concerning Equilibration,”Austrian Economics Newsletter 2(2): 6–7.Google Scholar
  13. Leijonhufvud, A. 1968. On Keynesian Economics and the Economics of Keynes. New York: Oxford University Press.Google Scholar
  14. Loasby, B. J. 1976. Choice, Complexity and Ignorance. Cambridge: Cambridge University Press.Google Scholar
  15. Loasby, B. J. 1989. The Mind and Method of the Economist. Aldershot: Edward Elgar.Google Scholar
  16. O’Driscoll, G. P. Jr & Rizzo, M. J. 1985. The Economics of Time and Ignorance. Oxford: Blackwell.Google Scholar
  17. Roncaglia, A. 1978. Sraffa and the Theory of Prices. Chichester: John Wiley and Sons.Google Scholar

Copyright information

© Springer Science+Business Media New York 1992

Authors and Affiliations

  • Brian J. Loasby
  • Christopher Torr

There are no affiliations available

Personalised recommendations