Development and Underdevelopment in the History of Economic Thought

Eternal Validity of “Die Wirtschaftrechnung im sozialistischen Gemeinwesen”: A Centenary Appraisal

OKON Hiroyuki, Kokugakuin University

One hundred years ago, in January 1920, Ludwig von Mises presented an article “Die Wirtschaftrechnung im sozialistischen Gemeinwesen,” at a meeting of Nationalokonomische Gesellschaft, and, the same year, a German jouranal Archiv für Sozialwissenschaft und Sozial Politik published it, which would cause intense controversy concerning the possibility of socialism among economists first in German speaking world, and then in English speaking world. The debate named ‘socialist economic calculation debate’ have been still going on and Mises’s article has been still examined, criticized, and referred to beyond the century. Although his intention was, the tile of the article clearly shows, to demonstrate the theoretical impossibility of rational economic calculation under socialism, behind Mises’s criticism of socialism, we can discern his deepest insight into workings and institutions of capitalist economy. In fact, Mises’s analysis of capitalist and socialist societies is just the two sides of a coin, and the head is his understanding of capitalist system. This article sheds more light on his insight into the natures, workings, and institutions of capitalist economy. The economy as he sees is highly developed and utterly complicated in terms of productions of goods. The working of this developed and complicated economy depends on the rational economic calculation by entrepreneurs for the efficient use of scares resources. For the smooth and coordinated workings of the economy, both private ownership of the means of production and the use of money are institutional requisites. “Die Wirtschaftrechnung im sozialistischen Gemeinwesen” demonstrates Mises’s insight into the most fundamental essence of capitalist system more than the impossibility of economic calculation and rational resource allocation in a socialist society. For this reason, it will be valid eternally for our understanding of capitalist economy.

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Keywords: Socialist Calculation Debate, Ludwig von Mises, Socialism