Market Socialism: The Current Debate.

• Author: Bostaph, Samuel

State socialism - which Marx characterized in his Critique of the Gotha Program as the "defective" phase or "political transition period" of communism - has all but lost its once considerable cachet among professional intellectuals and practical social reformers. Attempts at its practice are dwindling and it survives in academe mainly as an artifact in the Jurassic Park of extinct ideologies.

On the theoretical level, socialism of all brands has been dogged for most of this century by the critiques of Ludwig Mises and Friedrich Hayek. No intellectual artifice ever successfully surmounted Mises' argument that the omission of producer goods markets, financial capital markets and the incentive of profit-maximization from theories of the state socialist economy meant the omission of any means to efficiently set producer prices and allocate scarce resources.

When Oscar Lange conceded the point by attempting to graft the neoclassical Walrasian general equilibrium model onto the economic theory of socialism, Hayek responded that the disaggregated and subjective nature of economic calculation itself made the neoclassical model irrelevant and thus precluded even the possibility of a "competitive socialism." Hayek's point has never been accepted by socialists (or neoclassicals for that matter), and they continue to grapple with the Mises-inspired question of how to design a theoretically palatable and experientially workable graft of neoclassical markets and socialism.

The present book is a contribution to the continuing argument, with articles both pro and con. Unfortunately, none of them are by contemporary "Austrians" and, perhaps as a result of this, the Hayekian dimension is almost completely missing. Nevertheless, there is much that is worth reading for those interested in the ingenuity with which the problem originally posed by Mises has been addressed and concessions to his arguments subsequently granted. The surprising thing is how weak emerges the argument for some version of market socialism, and how strong remain the criticisms.

In their introduction, the editors first provide a brief history of the debate that manages to avoid attributing to Mises the essential points of his critique. They also manage to avoid addressing Hayek's emphasis on the implications for economic calculation of the subjectivity of costs and personal knowledge, and even of the economic calculation process itself. It is this characteristic of the market process that...