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The First Socialization Debate (1918) and Early Efforts Towards Socialization pp 223–235Cite as

On the (Im)Possibility of Socialist Calculation: Marschak Versus Mises

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Part of the book series: The European Heritage in Economics and the Social Sciences ((EHES,volume 23))

Abstract

The article focuses on Marschak’s critical inspection of Mises’s thesis of impossibility of economic calculation in the socialist commonwealth in the first socialization debate in the German language area after WWI. Although Arrow classifies it as one of Marschak’s papers with the greatest permanent interest, it has almost fallen into oblivion in modern debates. Marschak’s important critique is of an empirical as well as of a theoretical nature. Thus Marschak states that the advantages of monopolization exist precisely in those two areas which are particularly affected by Mises’s scepticism: in the economic calculation for goods of higher order and in the sphere of dynamics.

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Notes

  1. 1.

    For Marschak’s Recollections of Kiev and the Northern Caucasus, 1917–18, see Marschak (1971).

  2. 2.

    For more details on Marschak’s life and work see Arrow (1978, 1979), Radner (1984) and Hagemann (1997, 2006).

  3. 3.

    See Sect. 3 ‘Economics of Socialism’ in the obituary of Lederer by Marschak, Kähler and Heimann (1941, 93–100, esp. 94).

  4. 4.

    Lederer and Rudolf Hilferding, who both were members of the first German Socialization Commission appointed by the Ministry of Economics could persuade Schumpeter to become a member too in January 1919. Due to his appointment as Austrian minister of finance Schumpeter had to resign in March.

  5. 5.

    See also the debate on Lederer’s contribution at the conference, pp. 193–201.

  6. 6.

    It should be pointed out that central command over the means of production does not necessarily require the legal abolition of private property. This marks a major difference between Nazi Germany and Soviet Russia.

  7. 7.

    This argument is more elaborated by Mises in the second edition of Die Gemeinwirtschaft. See Part IV, Chaps. VI and VII of Mises (1932).

  8. 8.

    Marschak implicitly assumes the Austrian case dating back to Böhm-Bawerk in which only working capital, ie. intermediate means of production, exist.

  9. 9.

    Hayek also accuses Schumpeter to be “the original author of the myth that Pareto and Barone have ‘solved’ the problem of socialist calculation”. Furthermore, he emphasizes that “Pareto himself … far from claiming to have solved the practical problem, in fact explicitly denies that it can be solved without the help of the market” (Hayek 1945, 529, n. 1 and 1940, 125).

  10. 10.

    Marschak (1924, 519) criticizes Mises for his standard procedure to refer to exceptional cases such as (non-) smoking or the use of narcotics where this homogeneity is not given.

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Authors and Affiliations

  1. Institute of Economics, University of Hohenheim, Stuttgart, Germany

    Harald Hagemann

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Editors and Affiliations

  1. Faculty of Economics, Law and the Social Sciences, Erfurt University, Erfurt, Germany

    Jürgen Backhaus

  2. Department of Economic Research (Retired), Austrian Chamber of Labour, Vienna, Austria

    Günther Chaloupek

  3. Schumpeter School of Business and Economics, University of Wuppertal, Wuppertal, Nordrhein-Westfalen, Germany

    Hans A. Frambach

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Hagemann, H. (2019). On the (Im)Possibility of Socialist Calculation: Marschak Versus Mises. In: Backhaus, J., Chaloupek, G., Frambach, H. (eds) The First Socialization Debate (1918) and Early Efforts Towards Socialization. The European Heritage in Economics and the Social Sciences, vol 23. Springer, Cham. https://doi.org/10.1007/978-3-030-15024-2_14

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